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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to               
Commission File Number 001-39502               
Sumo Logic, Inc.
(Exact name of registrant as specified in its charter)
Delaware
27-2234444
(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)
305 Main Street
Redwood City, California
94063
(Address of principal executive offices)(Zip Code)
(650) 810-8700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.0001 per shareSUMONasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes    No ☒
As of May 23, 2022, the number of outstanding shares of the registrant's common stock was 115,732,441 shares of common stock.


Table of Contents
Table of Contents
Page
PART II. OTHER INFORMATION
1

Table of Contents
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.
Forward-looking statements contained in this Form 10-Q include, but are not limited to, statements about our expectations regarding:
our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in sales and marketing, research and development, and general and administrative expenses, and key business metrics, and our ability to achieve and maintain future profitability;
the impact of the COVID-19 pandemic, including the emergence of new variants of the virus, and any associated economic downturn on our business and results of operations;
our business model and our ability to effectively manage our growth and associated investments;
our beliefs about and objectives for future operations;
market acceptance of our platform;
our ability to maintain and expand our customer base, including by attracting new customers;
our ability to retain customers and expand their adoption of our platform, particularly our largest customers;
the effects of increased competition in our markets and our ability to compete effectively;
our ability to maintain the security and availability of our platform;
our ability to develop new platform features and functionality, or enhancements to our existing platform features and functionality, and bring them to market in a timely manner;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
our relationships with third parties, including channel and technology partners;
our ability to successfully expand in our existing markets and into new markets, including internationally;
our ability to comply with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including with respect to privacy and data protection;
our expectations regarding our ability to obtain, maintain, enforce, defend, and enhance our intellectual property rights;
our ability to successfully defend litigation brought against us;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
our ability to attract and retain employees and key personnel;
future acquisitions or investments; and
economic and industry trends or trend analysis.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should
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not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Risk Factors Summary
Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors,” together with the other information in this Quarterly Report on Form 10-Q. If any of the following risks actually occurs (or if any of those listed elsewhere in this Quarterly Report on Form 10-Q occur), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.
Our revenue growth rate and financial performance in recent periods may not be indicative of future performance;
We have a history of net losses and we may not be able to achieve or maintain profitability in the future;
We face intense competition and could face pricing pressure from, and lose market share to, our competitors, which would adversely affect our business, financial condition, and results of operations;
The markets for our offerings are evolving, and our future success depends on the growth of these markets and our ability to adapt, keep pace, and respond effectively to evolving markets;
We may fail to cost-effectively acquire new customers or obtain renewals, upgrades, or expansions from our existing customers, which would adversely affect our business, financial condition, and results of operations;
Changes to our packaging and licensing models could adversely affect our ability to attract or retain customers;
Our results of operations vary and are unpredictable from period to period, which could cause the market price of our common stock to decline;
The global COVID-19 pandemic has harmed and could continue to harm our business and results of operations;
Our sales cycle can be long and unpredictable, and our sales efforts require considerable time and expense;
The loss of, or a significant reduction in use of our platform by, our largest customers would result in lower revenue and harm our results of operations;
We depend on our sales force, and we may fail to attract, retain, motivate, or train our sales force, which could adversely affect our business, financial condition, and results of operations;
We utilize free trials and other go-to-market strategies, and we may not be able to realize the benefits of these strategies;
If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business, financial condition, and results of operations could be adversely affected;
We may be unable to build and maintain successful relationships with our channel partners or such channel partners may fail to perform, which could adversely affect our business, financial condition, results of operations, and growth prospects;
Our ability to increase sales depends, in part, on the quality of our customer support, and our failure to offer high quality support would harm our reputation and adversely affect our business and results of operations;
Our international operations and continued international expansion subject us to additional costs and risks, which could adversely affect our business, financial condition, and results of operations;
We may fail to effectively manage our growth, which would adversely affect our business, financial condition, and results of operations;
We depend on our management team and other highly skilled personnel, and we may fail to attract, retain, motivate, or integrate highly skilled personnel, which could adversely affect our business, financial condition, and results of operations;
We may be unable to make acquisitions and investments, successfully integrate acquired companies into our business, or our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition, and results of operations;
Our reputation and brand are important to our success, and we may not be able to maintain and enhance our reputation and brand, which would adversely affect our business, financial condition, and results of operations;
We provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts related to unused subscriptions, which could harm our business, financial condition, and results of operations;
A portion of our revenue is generated by sales to government entities, which subject us to a number of challenges and risks;
Our business could be adversely affected by economic downturns;
Our business and results of operations are subject to the effects of a rising rate of inflation;
Our business could be adversely affected by unexpected events such as pandemics, natural disasters, political crises, or social instability;
We use certain third-party services to manage and operate our business, and any failure or interruption in the services provided by these third parties could adversely affect our business, financial condition, and results of operations;
We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term;
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Any actual or perceived security or privacy breach could interrupt our operations, harm our reputation and brand, result in financial exposure, and lead to loss of user confidence in us or decreased use of our platform, any of which could adversely affect our business, financial condition, and results of operations;
Real or perceived defects, errors, or vulnerabilities in our platform could harm our reputation and adversely affect our business, financial condition, and results of operations;
We rely on Amazon Web Services (“AWS”) to deliver our platform to our customers, and any disruption of, or interference with, our use of AWS could adversely affect our business, financial condition, and results of operations;
Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could harm our business, financial condition, and results of operations;
Claims by others that we infringed their proprietary technology or other intellectual property rights would harm our business;
Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to deliver our platform or subject us to litigation or other actions;
We license certain editions of our offerings under an open source licensing model, which may limit our ability to monetize certain of our offerings and present other challenges;
The rapidly evolving framework of privacy, data protection, data transfers, or other laws or regulations worldwide may limit the use and adoption of our services and adversely affect our business;
We incorporate technology from third parties into our platform, and our inability to maintain rights to such technology would harm our business and results of operations;
Our platform may not interoperate with our customers’ infrastructure or with third-party offerings, which would adversely affect our business and results of operations;
We may be subject to claims that we have wrongfully hired an employee from a competitor, or that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers;
Remaining performance obligations and calculated billings may not be accurate indicators of business activity within a period;
We recognize substantially all of our revenue ratably over the term of the relevant subscription period, and as a result, downturns or upturns in sales may not be immediately reflected in our results of operations;
Our metrics and estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business;
Our loan and security agreement provides our lender with a first-priority lien against substantially all of our assets and contains restrictive covenants which could limit our operational flexibility and otherwise adversely affect our financial condition; and
Our executive officers, directors, and holders of 5% or more of our common stock continue to have substantial control over us, which will limit your ability to influence the outcome of important transactions, including a change in control.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Sumo Logic, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 30,
2022
January 31,
2022
Assets
Current assets:
Cash and cash equivalents$79,737 $79,986 
Marketable securities, current228,406 210,645 
Accounts receivable, net48,690 49,451 
Prepaid expenses9,823 9,792 
Deferred sales commissions, current17,524 17,110 
Other current assets2,837 2,865 
Total current assets387,017 369,849 
Marketable securities, noncurrent50,777 65,866 
Property and equipment, net4,944 4,960 
Operating lease right-of-use assets5,041 6,110 
Goodwill93,603 94,967 
Acquired intangible assets, net21,881 26,221 
Deferred sales commissions, noncurrent31,579 32,689 
Other assets1,106 1,469 
Total assets$595,948 $602,131 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$9,920 $7,755 
Accrued expenses and other current liabilities24,966 25,425 
Operating lease liabilities, current4,614 4,619 
Deferred revenue, current142,583 131,329 
Total current liabilities182,083 169,128 
Operating lease liabilities, noncurrent1,157 2,346 
Deferred revenue, noncurrent6,141 5,944 
Other liabilities5,570 5,744 
Total liabilities194,951 183,162 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock12 11 
Additional paid-in-capital964,761 944,447 
Accumulated other comprehensive loss(7,870)(4,333)
Accumulated deficit(555,906)(521,156)
Total stockholders’ equity400,997 418,969 
Total liabilities and stockholders’ equity$595,948 $602,131 
See Notes to Condensed Consolidated Financial Statements
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Sumo Logic, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except for per share data)
(unaudited)
Three Months Ended April 30,
20222021
Revenue$67,855 $54,219 
Cost of revenue24,145 15,395 
Gross profit43,710 38,824 
Operating expenses:
Research and development26,253 20,443 
Sales and marketing35,290 30,278 
General and administrative16,996 14,573 
Total operating expenses78,539 65,294 
Loss from operations(34,829)(26,470)
Interest and other income (expense), net631 (16)
Interest expense(29)(86)
Loss before provision for income taxes(34,227)(26,572)
Provision for income taxes523 342 
Net loss$(34,750)$(26,914)
Net loss per share, basic and diluted$(0.30)$(0.26)
Weighted-average shares used to compute net loss per share, basic and diluted114,324 104,033 
See Notes to Condensed Consolidated Financial Statements
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Sumo Logic, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended April 30,
20222021
Net loss$(34,750)$(26,914)
Other comprehensive (loss) income:
Foreign currency translation adjustments(2,322)3 
Unrealized loss on available-for-sale marketable securities(1,215)(48)
Total comprehensive loss$(38,287)$(26,959)
See Notes to Condensed Consolidated Financial Statements
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Sumo Logic, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance at January 31, 2022113,813 $11 $944,447 $(4,333)$(521,156)$418,969 
Issuance of common stock upon exercise of stock options 1,341 1 6,953 — — 6,954 
Vesting of restricted stock units492 — — — — — 
Vesting of early exercised stock options— — 33 — — 33 
Stock-based compensation — — 13,328 — — 13,328 
Other comprehensive loss— — — (3,537)— (3,537)
Net loss— — — — (34,750)(34,750)
Balance at April 30, 2022115,646 $12 $964,761 $(7,870)$(555,906)$400,997 
Balance at January 31, 2021102,484 $10 $829,238 $(45)$(397,791)$431,412 
Issuance of common stock upon exercise of stock options 2,848 1 8,018 — — 8,019 
Exercise of common stock warrants18 — — — — — 
Vesting of restricted stock units842 — — — — — 
Vesting of early exercised stock options — — 49 — — 49 
Stock-based compensation— — 12,133 — — 12,133 
Other comprehensive loss— — — (45)— (45)
Net loss — — — — (26,914)(26,914)
Balance at April 30, 2021106,192 $11 $849,438 $(90)$(424,705)$424,654 
See Notes to Condensed Consolidated Financial Statements
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Sumo Logic, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended April 30,
20222021
Cash flows from operating activities
Net loss$(34,750)$(26,914)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization4,283 2,044 
Amortization of deferred sales commissions4,631 3,401 
Amortization (accretion) of marketable securities purchased at a premium (discount)790 566 
Stock-based compensation, net of amounts capitalized13,277 12,133 
Non-cash operating lease cost1,055 1,062 
Other(162)23 
Changes in operating assets and liabilities
Accounts receivable757 837 
Prepaid expenses(37)592 
Other assets180 1,144 
Deferred sales commissions(3,934)(5,658)
Accounts payable2,181 1,383 
Accrued expenses and other current liabilities(164)(1,295)
Deferred revenue11,451 9,177 
Operating lease liabilities(1,156)(1,134)
Other liabilities166 (80)
Net cash used in operating activities(1,432)(2,719)
Cash flows from investing activities
Purchases of marketable securities(51,683)(267,548)
Maturities of marketable securities41,022 1,558 
Sales of marketable securities5,920  
Purchases of property and equipment(371)(247)
Capitalized internal-use software costs(187) 
Net cash used in investing activities(5,299)(266,237)
Cash flows from financing activities
Payments of deferred offering costs (93)
Proceeds from exercise of common stock options6,954 8,019 
Net cash provided by financing activities6,954 7,926 
Effect of exchange rate changes on cash and cash equivalents(472)(9)
Change in cash and cash equivalents and restricted cash(249)(261,039)
Cash and cash equivalents and restricted cash:
Beginning of period80,286 404,440 
End of period$80,037 $143,401 
Supplemental disclosures of cash flow information
Cash paid for income taxes$728 $272 
Cash paid for interest21 21 
Supplemental non-cash investing and financing information
Vesting of early exercised options31 49 
Unpaid cash consideration for acquisitions456  
Stock-based compensation capitalized as internal-use software costs51  
Property and equipment accrued but not yet paid 575 
Reconciliation of cash, cash equivalents, and restricted cash to consolidated balance sheets
Cash and cash equivalents$79,737 $143,101 
Restricted cash included in other current assets300 300 
Total cash, cash equivalents, and restricted cash$80,037 $143,401 
See Notes to Condensed Consolidated Financial Statements
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Sumo Logic, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)



1. Description of Business and Basis of Presentation
Organization and Nature of Operations
Sumo Logic, Inc. (the “Company”) was incorporated in Delaware in March 2010. The Company provides, on a cloud-native software-as-a-service (“SaaS”) delivery model, a software analytics platform for reliable and secure cloud-native applications to address the challenges and opportunities presented by digital transformation, modern applications, and cloud computing. The platform helps customers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructure.
Basis of Presentation and Principles of Consolidation
The Company’s condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, (“SEC”), regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of January 31, 2022, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all of the information required by GAAP for complete consolidated financial statements.
The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes contained in the Company’s Annual Report on Form 10-K for the year ended January 31, 2022, as filed with the SEC on March 14, 2022.
The Company’s condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for the year ending January 31, 2023 or for any other interim period or for any other future year.
Fiscal Year
The Company’s fiscal year ends on January 31. Unless otherwise stated, references to year in these condensed consolidated financial statements relate to the above described fiscal year rather than calendar year.
2. Summary of Significant Accounting Policies
Use of Estimates and Judgments
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements and may involve subjective or significant judgment by the Company; therefore, actual results could differ from the Company’s estimates. The Company’s accounting policies that involve judgment include revenue recognition, period of benefit for deferred sales commissions, useful lives of acquired intangible assets and property and equipment, stock-based compensation expense including the assumptions used for estimating the fair value of common stock (prior to the closing of the Company’s initial public offering (“IPO”)), capitalization of internal-use software costs, fair value of assets acquired and liabilities assumed from business combinations, incremental borrowing rate for operating leases, estimate of credit losses for accounts receivable and marketable securities, and valuation allowances associated with income taxes.
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COVID-19
While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the duration and spread of the outbreak, the emergence of variants of the virus, the extent and effectiveness of containment actions, and the effectiveness of vaccination efforts, it has already had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which the COVID-19 pandemic, including the emergence of variants of the virus, may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended January 31, 2022, that have had a material impact on its condensed consolidated financial statements and related notes.
Related Party Transactions
Certain members of the Company’s board of directors serve as directors of, or are executive officers of, and in some cases are investors in, companies that are customers or vendors of the Company. Related party transactions were not material as of April 30, 2022 or January 31, 2022, or for the three months ended April 30, 2022 or 2021.
Recently Adopted Accounting Pronouncements
The Company assesses the adoption impacts of recently issued accounting pronouncements by the Financial Accounting Standards Board (“FASB”) on its condensed consolidated financial statements. The section below describes the impact from newly adopted pronouncements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if it had originated the contracts. The adoption of the standard will impact future business combinations. The Company has elected to early adopt this guidance as of February 1, 2022. The adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements for the three months ended April 30, 2022 as no business combination activities occurred during this period.
3. Fair Value Measurements
The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:
Level 1    Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2    Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3    Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
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The carrying amounts of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity of those instruments.
The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis, based on the three-tier fair value hierarchy (in thousands):
As of April 30, 2022
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$69,842 $ $ $69,842 
Corporate debt securities 427  427 
Marketable securities:
U.S. Treasury securities 66,498  66,498 
Corporate debt securities 168,886  168,886 
Commercial paper 24,906  24,906 
Foreign government obligations 7,534  7,534 
Supranational securities 8,915  8,915 
Certificates of deposit 2,444  2,444 
Total financial assets$69,842 $279,610 $ $349,452 
As of January 31, 2022
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$70,742 $ $ $70,742 
Marketable securities:
U.S. Treasury securities 67,476  67,476 
Corporate debt securities 167,160  167,160 
Commercial paper 19,033  19,033 
Foreign government obligations 7,607  7,607 
Supranational securities 12,922  12,922 
Certificates of deposit 2,313  2,313 
Total financial assets$70,742 $276,511 $ $347,253 
The Company had $0.3 million of restricted cash invested in money market funds that is not included in the tables above as of April 30, 2022 and January 31, 2022, respectively.
In connection with the Loan and Security agreement, discussed in Note 6, the Company issued 32,276 warrants to purchase shares of the Company’s redeemable convertible preferred stock. The Company used a Black-Scholes option valuation model to value its redeemable convertible preferred stock warrant liability at inception and on subsequent valuation dates. Changes in the fair values of the redeemable convertible preferred stock warrant liability were recorded as interest and other income (expense), net in the Company’s condensed consolidated statements of operations. All 32,276 warrants to purchase shares of redeemable convertible preferred stock converted into warrants to purchase common stock upon the closing of the Company’s IPO and the related liability was reclassified to additional-paid in capital in the Company’s condensed consolidated balance sheet. During the three months ended April 30, 2022, no warrants were exercised. During the three months ended April 30, 2021, 21,746 warrants were exercised. There were no transfers between levels of the fair value hierarchy during the three months ended April 30, 2022 and 2021, respectively.
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The following is a summary of available-for sale marketable securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheet as of April 30, 2022 and January 31, 2022, respectively (in thousands):
As of April 30, 2022
Amortized CostUnrealized GainUnrealized LossFair Value
U.S. Treasury securities$67,108 $ $(610)$66,498 
Corporate debt securities170,192 3 (1,309)168,886 
Commercial paper25,002  (96)24,906 
Foreign government obligations7,607  (73)7,534 
Supranational securities8,915   8,915 
Certificates of deposit2,460  (16)2,444 
Total marketable securities$281,284 $3 $(2,104)$279,183 
As of January 31, 2022
Amortized CostUnrealized GainUnrealized LossFair Value
U.S. Treasury securities$67,770 $ $(294)$67,476 
Corporate debt securities167,693 3 (536)167,160 
Commercial paper19,052  (19)19,033 
Foreign government obligations7,640  (33)7,607 
Supranational securities12,923  (1)12,922 
Certificates of deposit2,319  (6)2,313 
Total marketable securities$277,397 $3 $(889)$276,511 
The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, and any adverse conditions specifically related to an issuer of a security or its industry. No impairment loss has been recorded on the securities included in the table above, as the Company believes that the decrease in fair value of these securities is temporary.
The following table presents the contractual maturities of the Company’s marketable securities (in thousands):
April 30,
2022
Due in one year or less$228,406 
Due after one year and within five years50,777 
Total marketable securities$279,183 
4. Acquisitions, Intangible Assets, and Goodwill
Sensu, Inc.
On June 10, 2021, the Company completed the acquisition of Sensu, Inc. (“Sensu”) a privately-held software company that is a leader in open source monitoring. The addition of Sensu is expected to accelerate the Company's observability strategy by providing customers with an affordable and scalable end-to-end solution for infrastructure and application monitoring.
The aggregate amount recorded as purchase consideration was $32.7 million, of which $8.6 million was paid or to be paid in cash, and $24.1 million was comprised of 1,123,697 shares of the Company’s common stock. The value of consideration assigned to such shares of common stock was based on the closing price of the Company’s common stock on the date of acquisition, or $21.49 per share.
Additionally, 71,644 shares of common stock were issued with a fair value of $21.49 per share at the time of grant and will be recorded as stock-based compensation expense. These shares are subject to risk of forfeiture which lapse in full 1.5 years after the acquisition date. The Company recorded stock-based compensation expense related to the vesting of the restricted common stock of
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$0.3 million during the three months ended April 30, 2022. As of April 30, 2022, the remaining unrecognized stock-based compensation expense was $0.6 million, and will be recognized over the remaining vesting period.
A portion of the consideration otherwise payable was held back by the Company as partial security for certain indemnification obligations. The consideration held back will be released 12 months after the acquisition date, subject to reduction for any indemnification claims.
Certain stock options held by Sensu employees were assumed by the Company with a total fair value of $0.6 million and will be recognized as stock-based compensation expense over the remaining service period. See Note 9 for more details on the Sensu options assumed.
The acquisition was accounted for as a business combination and the total purchase consideration was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the issuance date of these condensed consolidated financial statements and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of April 30, 2022, the primary area that remains preliminary relates to the valuation of certain tax-related items.
The following table presents the preliminary purchase consideration allocation recorded in the Company’s condensed consolidated balance sheet as of the acquisition date (in thousands):
Amount
Cash and cash equivalents
$2,270 
Accounts receivable
409 
Other current assets50 
Acquired intangible assets
11,800 
Goodwill
19,889 
Accounts payable
(49)
Deferred revenue, current
(658)
Accrued expenses and other current liabilities
(143)
Deferred revenue, noncurrent
(99)
Other liabilities
(747)
Total acquisition consideration
$32,722 
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):
TotalUseful Life
(in years)
Developed technology$8,800 3
Customer relationships3,000 5
Intangible assets$11,800 
Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce and synergies expected to be achieved from the integration of Sensu. In addition, goodwill represents the future benefits as a result of the acquisition that management expects to enhance the Company’s product available to both new and existing customers and increase the Company’s market position. Goodwill is not deductible for tax purposes.
The results of operations of Sensu from the date of acquisition have been included in the Company’s condensed consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of Sensu are not material to the Company’s condensed consolidated financial statements in any period presented.
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DF Labs S.p.A.
On May 24, 2021, the Company completed the acquisition of DF Labs S.p.A. (“DFLabs”), a privately-held Italian corporation and a leader in security orchestration, automation and response (“SOAR”) technology. The combination of the Company’s Cloud SIEM and DFLabs' solution will provide customers with comprehensive cloud-native security intelligence solutions.
The aggregate amount recorded as purchase consideration was $41.7 million, of which $35.3 million was paid in cash, and $6.4 million was comprised of 334,815 shares of the Company’s common stock. The value of consideration assigned to such shares of common stock was based on the closing price of the Company’s common stock on the date of acquisition, or $18.97 per share.
Additionally, 143,492 shares of common stock were issued with a fair value of $18.97 per share at the time of grant and will be recorded as stock-based compensation. These shares are subject to risk of forfeiture, which lapse in full 2.0 years after the acquisition date. The Company recorded stock-based compensation expense related to the vesting of the restricted common stock of $0.3 million during the three months ended April 30, 2022. As of April 30, 2022, the remaining unrecognized stock-based compensation expense was $1.5 million and will be recognized over the remaining vesting period.
A portion of the consideration otherwise payable was placed into escrow as partial security for certain indemnification obligations. The escrow fund will be released 12 months after the acquisition date, subject to reduction for any indemnification claims.
The acquisition was accounted for as a business combination and the total purchase consideration was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the issuance date of these condensed consolidated financial statements and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of April 30, 2022, the primary area that remains preliminary relates to the valuation of certain tax-related items.
The following table presents the preliminary purchase consideration allocation recorded in the Company’s condensed consolidated balance sheet as of the acquisition date (in thousands):
Amount
Cash and cash equivalents
$782 
Accounts receivable
430 
Other current assets
111 
Property and equipment
435 
Acquired intangible assets
17,200 
Goodwill
26,623 
Other assets
178 
Accounts payable
(262)
Deferred revenue, current
(340)
Accrued expenses and other current liabilities
(788)
Deferred revenue, noncurrent
(38)
Other liabilities
(2,654)
Total acquisition consideration
$41,677 
Acquired intangible assets consist of developed technology with an estimated useful life of 3 years.
Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce of DFLabs and synergies expected to be achieved from the integration of DFLabs. In addition, goodwill represents the future benefits as a result of the acquisition that management expects to enhance the Company’s product available to both new and existing customers and increase the Company’s market position. Goodwill is not deductible for tax purposes.
The results of operations of DFLabs from the date of acquisition have been included in the Company’s condensed consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of DFLabs are not material to the Company’s condensed consolidated financial statements in any period presented.
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Acquisition-Related Expenses
The Company incurred acquisition-related expenses primarily for professional services of $3.8 million during the year ended January 31, 2022, which were recorded as general and administrative expenses in the consolidated statement of operations.
Acquired Intangible Assets
Acquired intangible assets, net consisted of the following (in thousands):
April 30, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life
(in years)
Developed technology$42,769 $(23,355)$19,414 1.9
Customer relationships3,000 (533)2,467 4.2
Total$45,769 $(23,888)$21,881 
January 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful Life
(in years)
Developed technology$43,650 $(20,046)$23,604 2.1
Customer relationships3,000 (383)2,617 4.4
Total$46,650 $(20,429)$26,221 
The Company recorded amortization expense of $3.7 million and $1.5 million during the three months ended April 30, 2022 and 2021, respectively. There was no impairment of intangible assets recorded for the three months ended April 30, 2022 or 2021. There was no fully amortized intangible assets written off during the three months ended April 30, 2022. Fully amortized intangible assets were written off in the amount of $1.0 million during the year ended January 31, 2022.
As of April 30, 2022, future amortization expense related to acquired intangible assets was as follows (in thousands):
Amortization Expense
Remainder of fiscal 2023$9,344 
20248,495 
20253,225 
2026600 
2027217 
Total amortization expense$21,881 
As of January 31, 2022, future amortization expense related to acquired intangible assets was as follows (in thousands):
Amortization Expense
202313,298 
20248,789 
20253,317 
2026600 
2027217 
Total amortization expense$26,221 
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Goodwill
Changes in the carrying amount of goodwill for the three months ended April 30, 2022 was as follows (in thousands):
Amounts
Balance as of January 31, 2022
$94,967 
Foreign currency translation(1,364)
Balance as of April 30, 2022
$93,603 
There was no impairment of goodwill recorded for the three months ended April 30, 2022 or 2021.
5. Leases
The Company leases office space globally under non-cancelable operating lease agreements that expire at various dates through fiscal 2026. The leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases include (i) renewal options at the election of the Company to renew or extend the lease for an additional 5 years, and/or (ii) options to terminate the lease early, subject to certain termination penalties and fees. These optional renewal and terminations periods have not been considered in the determination of the right-of-use assets (“RoU”) and lease liabilities associated with these leases, as the Company did not consider it reasonably certain it would exercise the options.
The Company evaluated its contracts and determined each of its identified leases are classified as operating leases. The Company has no lease agreements that are classified as finance leases as of April 30, 2022.
The following table presents the components of operating lease expense (in thousands):
Three Months Ended April 30,
20222021
Operating lease expense$1,104 $1,144 
Variable lease expense135 149 
Short-term lease expense38 11 
Sublease income65 21 
As of April 30, 2022, the weighted average remaining lease term was 1.5 years and the weighted average discount rate used to determine the net present value of the lease liability was 3.1%.
Supplemental cash flow information and non-cash activity related to the Company’s operating leases were as follows (in thousands):
Three Months Ended April 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities$1,204 $1,200 
As of April 30, 2022, remaining maturities of lease liabilities are as follows (in thousands):
Amount
Remainder of fiscal 2023$3,543 
20241,969 
2025346 
202655 
Total lease payments$5,913 
Less: imputed interest(142)
Present value of lease liabilities$5,771 
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6. Debt
In February 2021, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (“SVB Agreement”) which provides for a revolving line of credit facility. The SVB Agreement amends and restates the Loan and Security Agreement dated January 31, 2016. Under the SVB Agreement, the Company can borrow up to $50 million. Interest on any drawdown accrues at the prime rate minus a spread rate ranging from 0.25% to 0.75%, as determined by the Company’s adjusted quick ratio, subject to either a 3.00% or 2.50% floor depending on the adjusted quick ratio. The SVB Agreement is secured by substantially all of the Company’s assets and includes restrictive covenants, in each case subject to certain exceptions, that limit the Company’s ability to, among other things: incur debt, grant liens, make acquisitions, undergo a change in control, make investments, make certain dividends or distributions, repurchase or redeem stock, dispose of or transfer assets, and enter into transactions with affiliates. Pursuant to the SVB Agreement, the Company is required to maintain a minimum adjusted quick ratio of 1.25 to 1.00. The SVB Agreement also contains customary events of default, upon which Silicon Valley Bank may declare all or a portion of the Company’s outstanding obligations payable to be immediately due and payable. As of April 30, 2022 and January 31, 2022, the Company did not have any debt balance outstanding. The Company was in compliance with the financial covenants associated with the amended Agreement as of April 30, 2022.
7. Commitments and Contingencies
Non-Cancellable Purchase Commitments
During the three months ended April 30, 2022, there were no material changes, outside the ordinary course of business, to the Company’s contractual obligations and commitments reported in the Company’s Annual Report on Form 10-K for the year ended January 31, 2022.
Other Obligations
Litigation and Other Matters
From time to time, the Company may be a party to various legal matters, threatened claims, or proceedings in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable.
Attorneys representing a purported class of current and former employees in various sales roles alleged potential claims of employee misclassification and related federal and state law claims, which the Company disputed. In response, the Company mediated the dispute, and in August 2020, the Company entered into a settlement agreement with the purported class counsel to resolve the dispute, which was handled in arbitration and resulted in the Company paying $4.5 million to resolve the class-wide claims during the three months ended April 30, 2021.
The Company is not always able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued. In management’s opinion, resolution of all current matters, including employment matters, is not expected to have a material adverse impact on the Company’s business, financial position, results of operations, or cash flows as of April 30, 2022 or January 31, 2022.
8. Revenue
Disaggregation of Revenue
The following table presents the Company’s revenue by geographic region, based on the billing address of the customer, for the periods indicated (in thousands):
Three Months Ended April 30,
20222021
United States$53,750 $45,396 
International14,105 8,823 
Total revenue$67,855 $54,219 
No individual foreign country contributed 10% or more of revenue for the three months ended April 30, 2022 and 2021.
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No customer individually accounted for 10% or more of the Company’s revenue for the three months ended April 30, 2022 or 2021.
Deferred Revenue and Remaining Performance Obligations
The Company recognized revenue of $55.5 million and $42.4 million during the three months ended April 30, 2022 and 2021, respectively, that was included in the deferred revenue balance at the beginning of the respective periods.
As of April 30, 2022, future estimated revenue related to performance obligations from non-cancelable contracts that were unsatisfied or partially unsatisfied was $349.9 million and the Company expects to recognize approximately 92% as revenue for these remaining performance obligations over the next twenty-four months, with the remaining balance recognized thereafter.
Accounts Receivable, Net and Contract Assets
Accounts receivable are recorded at the invoiced amount, net of allowance for credit losses. The allowance is based upon historical loss patterns, the age of each past due invoice, and expectations of forward-looking loss estimates to determine whether the allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. The Company performs ongoing credit evaluations of its customers. The allowance for credit losses was $0.3 million as of April 30, 2022 and January 31, 2022, respectively.
As of April 30, 2022, two customers accounted for 14% and 11% of total accounts receivable, respectively. As of January 31, 2022, no customer accounted for 10% or more of total accounts receivable.
Unbilled receivables are recorded when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is unconditional when only passage of time is required before payment of that consideration is due. Unbilled receivables totaled $1.5 million and $1.9 million as of April 30, 2022 and January 31, 2022, respectively, and were recorded within accounts receivable, net on the condensed consolidated balance sheets.
Contract assets are recorded when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is conditional. There are no contract assets on the condensed consolidated balance sheet as of April 30, 2022 and January 31, 2022, respectively.
Deferred Sales Commissions
The Company capitalized sales commission of $3.9 million and $5.7 million during the three months ended April 30, 2022 and 2021, respectively. Amortized costs were $4.6 million and $3.4 million for the three months ended April 30, 2022 and 2021, respectively. There was no impairment loss in relation to deferred sales commissions for the three months ended April 30, 2022 or 2021.
9. Stockholders’ Equity and Equity Incentive Plans
Common Stock
The Company’s Amended and Restated Certificate of Incorporation authorized the Company to issue 1.0 billion shares of common stock at a par value of $0.0001 as of April 30, 2022 and January 31, 2022. As of April 30, 2022 and January 31, 2022, approximately 115.6 million and 113.8 million shares of common stock were issued and outstanding, respectively.
Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. As of April 30, 2022 and January 31, 2022, no dividends had been declared.
Stock Plans
The Company has two equity incentive plans: the 2010 Stock Plan (the “2010 Plan”) and the 2020 Equity Incentive Plan (the “2020 Plan”). In connection with the Company’s IPO in September 2020, the 2010 Plan was terminated and replaced by the 2020 Plan and all shares that remained available for issuance under the 2010 Plan at that time were reserved for issuance under the 2020 Plan. The number of shares of common stock available for issuance under the 2020 Plan will be increased by any shares of common stock subject to awards outstanding under the 2010 Plan that expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest.
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The Company has issued stock options and restricted stock units (“RSUs”) to employees, directors, consultants, and advisors pursuant to both the 2010 Plan and 2020 Plan.
Employee stock options are granted with an exercise price no less than the fair value of the underlying common stock on the grant date, in general vest based on continuous service over four years, and expire 10 years from the date of grant. The value of RSUs is measured based on the grant date fair value of the awards and in general vest based on satisfying a service-based condition based on continuous service over four years.
As of April 30, 2022, there were 14.2 million shares available for grant under the 2020 Plan. The 2020 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2021, by an amount equal to the least of (i) 12,500,000 shares, (ii) 5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (iii) such other amount as the administrator of the 2020 Plan may determine.
Stock Options
The following table is a summary of option activity during the three months ended April 30, 2022:
Number of
Shares
Weighted Average
Exercise Price
Weighted Average Remaining Contractual TermAggregate
Intrinsic Value
(in thousands)(years)(in thousands)
Balance at January 31, 2022
15,928 $4.20 5.9$123,382 
Options granted $ 
Options exercised(1,326)$5.16 
Options cancelled(438)$7.89 
Balance at April 30, 2022
14,164 $4.00 5.5$79,254 
Options exercisable at April 30, 2022
12,541 $3.45 5.3$74,378 
No stock options were granted during the three months ended April 30, 2022 and 2021, respectively. The aggregate intrinsic value of options exercised during the three months ended April 30, 2022 and 2021 was $8.2 million and $51.4 million, respectively.
No income tax benefits have been recognized for stock-based compensation arrangements. As of April 30, 2022, there was $8.7 million of total unrecognized compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 1.3 years.
Early Exercise of Employee Options
As of April 30, 2022, early exercised options were fully vested. As of January 31, 2022, the Company had a liability of less than $0.1 million for 10,750 shares of common stock that were unvested and early exercised by employees.
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Restricted Stock Units
The following table is a summary of RSU activity for the three months ended April 30, 2022:
Number of
Shares
Weighted Average Grant Date Fair Value per Share
(in thousands)
Balance at January 31, 2022
9,502 $17.20 
Granted(a)
5,173 $10.10 
Released(492)$17.71 
Forfeited (1,150)$16.92 
Balance at April 30, 2022
13,033 $14.39 
RSUs expected to vest at April 30, 2022
13,033 $14.39 
______________
(a)During the three months ended April 30, 2022, of the 5.2 million RSUs granted, 0.8 million awards were subject to both service-based and performance-based vesting conditions based on a 100% attainment rate.
As of April 30, 2022, there was $163.5 million of total unrecognized compensation expense related to unvested employee and director RSUs, of which $8.2 million is for the RSUs subject to certain other performance metrics. Total unrecognized compensation expense related to unvested RSUs is expected to be recognized over a weighted-average period of 3.0 years.
Sensu Plans
In connection with the acquisition of Sensu, the Company assumed 33,267 options to purchase shares of common stock, granted under the Sensu, Inc. Amended and Restated 2017 Equity Incentive Plan, at a weighted-average exercise price of $4.88 per share and weighted-average fair value of $17.19 per share, of which 21,560 and 29,771 remained outstanding as of April 30, 2022 and January 31, 2022, respectively. As of April 30, 2022, 8,153 options were vested and exercisable with a weighted-average exercise price of $4.76, and the total unrecognized compensation expense related to these awards was $0.2 million. During the three months ended April 30, 2022, 8,211 options were exercised.
Jask Labs’ Plans
In connection with the acquisition of Jask Labs, the Company assumed 265,075 options to purchase shares of common stock, granted under the Jask Labs 2015 Stock Option and Grant Plan and the Jask Labs 2018 Equity Incentive Plan (together, the “Jask Plans”), at a weighted-average exercise price of $9.86 per share and weighted-average fair value of $6.39 per share, of which 51,535 and 64,622 remained outstanding as of April 30, 2022 and January 31, 2022, respectively. As of April 30, 2022, 45,176 options were vested and exercisable with a weighted-average exercise price of $9.68, and the total unrecognized compensation expense related to these awards was less than $0.1 million. During the three months ended April 30, 2022, 6,885 options were exercised.
Employee Stock Purchase Plan
In September 2020, the board of directors adopted and the stockholders of the Company approved the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective on September 17, 2020. The ESPP was amended in September 2021. The ESPP initially reserved and authorized the issuance of up to a total of 2,000,000 shares of common stock to participating employees. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2021, in an amount equal to the least of (i) 2,500,000 shares, (ii) 1% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (iii) such other amount as the administrator of the ESPP may determine. The ESPP generally provides for 24-month offering periods beginning June 15 and December 15 of each year, with each offering period consisting of four six-month purchase periods. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock as of the beginning of the offering period or (2) the fair market value of the Company’s common stock on the purchase date, as defined in the ESPP. Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering would automatically be enrolled in the new offering (“ESPP reset”), resulting in a modification charge to be recognized over the new offering period.
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The Company recognized stock-based compensation expense related to the ESPP of $0.4 million and $0.8 million during the three months ended April 30, 2022 and 2021, respectively. As of April 30, 2022 and January 31, 2022, $2.8 million and $1.3 million has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions, respectively. As of April 30, 2022, there was $6.1 million of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized over an average vesting period of 0.9 years.
Stock-Based Compensation Expense