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(In thousands, except useful life)

Fair Value

Useful Life (months)

Developed technology

Total intangible assets acquired

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Cover page - USD ($)	12 Months Ended
Cover page - USD ($)	Jan. 31, 2020	Mar. 19, 2020	Jul. 31, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Jan. 31, 2020
Document Transition Report	false
Entity File Number	001-35498
Entity Registrant Name	Splunk Inc.
Entity Central Index Key	0001353283
Current Fiscal Year End Date	--01-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	86-1106510
Entity Address, Address Line One	270 Brannan Street
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94107
City Area Code	415
Local Phone Number	848-8400
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	SPLK
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 14,923,423,792
Entity Common Stock, Shares Outstanding		158,619,718
Documents Incorporated by Reference	Portions of the registrant’s definitive Proxy Statement for the 2020 Annual Stockholders’ Meeting are incorporated by reference into Part III of this Annual Report on Form 10-K.

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jan. 31, 2020	Jan. 31, 2019
Current assets:
Cash and cash equivalents	$ 778,653	$ 1,876,165
Investments, current	976,508	881,220
Accounts receivable, net	838,743	469,658
Prepaid expenses and other current assets	129,839	73,197
Deferred commissions, current	99,072	78,223
Total current assets	2,822,815	3,378,463
Investments, non-current	35,370	110,588
Accounts receivable, non-current	468,934	155,471
Operating lease right-of-use assets	267,086	0
Property and equipment, net	156,928	158,276
Intangible assets, net	238,415	91,622
Goodwill	1,292,840	503,388
Deferred commissions, non-current	88,990	64,766
Other assets	68,093	37,669
Total assets	5,439,471	4,500,243
Current liabilities:
Accounts payable	18,938	20,418
Accrued compensation	286,159	226,061
Accrued expenses and other liabilities	177,822	125,641
Deferred revenue, current	829,377	673,018
Total current liabilities	1,312,296	1,045,138
Convertible senior notes, net	1,714,630	1,634,474
Operating lease liabilities	235,631	0
Deferred revenue, non-current	176,832	204,929
Other liabilities, non-current	653	95,245
Total non-current liabilities	2,127,746	1,934,648
Total liabilities	3,440,042	2,979,786
Commitments and contingencies (Notes 3 and 4)
Stockholders’ equity
Preferred stock: $0.001 par value; 20,000,000 shares authorized; no shares issued or outstanding at January 31, 2020 and January 31, 2019	0	0
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 157,787,548 shares issued and outstanding at January 31, 2020, and 149,167,298 shares issued and outstanding at January 31, 2019	157	149
Accumulated other comprehensive loss	(5,312)	(2,506)
Additional paid-in capital	3,566,055	2,754,858
Accumulated deficit	(1,561,471)	(1,232,044)
Total stockholders’ equity	1,999,429	1,520,457
Total liabilities and stockholders’ equity	$ 5,439,471	$ 4,500,243

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jan. 31, 2020	Jan. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	157,787,548	149,167,298
Common stock, shares outstanding	157,787,548	149,167,298

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Jan. 31, 2020

Jan. 31, 2019

Jan. 31, 2018

Revenues

$ 2,358,926

$ 1,803,010

$ 1,309,132

Cost of revenues

429,788

344,676

256,409

Gross profit

1,929,138

1,458,334

1,052,723

Operating expenses

Research and development

^[1]

619,800

441,969

301,114

Sales and marketing

^[1]

1,263,873

1,029,950

777,876

General and administrative

^[1]

332,602

237,588

159,143

Total operating expenses

^[1]

2,216,275

1,709,507

1,238,133

Operating loss

(287,137)

(251,173)

(185,410)

Interest and other income (expense), net

Interest income

54,142

31,458

8,943

Interest expense

(96,249)

(41,963)

(8,794)

Other income (expense), net

(2,407)

(1,513)

(3,600)

Total interest and other income (expense), net

(44,514)

(12,018)

(3,451)

Loss before income taxes

(331,651)

(263,191)

(188,861)

Provision for income taxes

5,017

12,386

1,357

Net loss

$ (336,668)

$ (275,577)

$ (190,218)

Basic and diluted net loss per share (in dollars per share)

$ (2.22)

$ (1.89)

$ (1.36)

Weighted-average shares used in computing basic and diluted net loss per share (in shares)

151,949

145,707

139,866

License

Revenues

$ 1,373,367

$ 1,030,277

$ 741,302

Cost of revenues

24,116

22,527

13,398

Maintenance and services

Revenues

985,559

772,733

567,830

Cost of revenues

$ 405,672

$ 322,149

$ 243,011

[1]

Amounts include stock-based compensation expense as follows: cost of revenues $44,399 thousand, $37,501 thousand, $33,605 thousand, research and development $185,262 thousand, $137,171 thousand, $106,690 thousand, sales and marketing $216,276 thousand, $190,422 thousand, 159,240 thousand, and general and administrative $99,487 thousand, $76,836 thousand, $58,928 thousand for the years ended January 31, 2020, 2019 and 2018 respectively.

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Jan. 31, 2020	Jan. 31, 2019	Jan. 31, 2018
Stock-based compensation expense	$ 545,424	$ 441,930	$ 358,463
Cost of revenues
Stock-based compensation expense	44,399	37,501	33,605
Research and development
Stock-based compensation expense	185,262	137,171	106,690
Sales and marketing
Stock-based compensation expense	216,276	190,422	159,240
General and administrative
Stock-based compensation expense	$ 99,487	$ 76,836	$ 58,928

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Jan. 31, 2020	Jan. 31, 2019	Jan. 31, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (336,668)	$ (275,577)	$ (190,218)
Other comprehensive income (loss):
Net unrealized gain (loss) on investments (net of tax)	1,114	1,279	(911)
Foreign currency translation adjustments	(3,920)	(3,941)	4,080
Total other comprehensive income (loss)	(2,806)	(2,662)	3,169
Comprehensive loss	$ (339,474)	$ (278,239)	$ (187,049)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Jan. 31, 2020	Jan. 31, 2019	Jan. 31, 2018
Cash flows from operating activities
Net loss	$ (336,668)	$ (275,577)	$ (190,218)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	67,661	52,430	40,941
Amortization of deferred commissions	104,353	77,867	46,653
Amortization of investment premiums, net (accretion of discounts)	(9,553)	(4,743)	259
Amortization of debt discount and issuance costs	80,156	28,019	0
Stock-based compensation	545,424	441,930	358,463
Disposal of property and equipment	1,974	0	0
Deferred income taxes	(6,120)	(4,064)	(4,822)
Non-cash facility exit adjustment	0	0	(5,191)
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	(679,891)	(220,940)	(150,953)
Prepaid expenses and other assets	(78,582)	6,970	(45,611)
Deferred commissions	(149,426)	(130,485)	(76,756)
Accounts payable	(5,441)	9,240	3,409
Accrued compensation	58,898	81,213	44,484
Accrued expenses and other liabilities	(187)	30,751	9,967
Deferred revenue	119,766	203,843	232,279
Net cash provided by (used in) operating activities	(287,636)	296,454	262,904
Cash flows from investing activities
Purchase of investments	(1,086,317)	(1,109,852)	(645,762)
Maturities of investments	1,080,812	754,138	687,485
Acquisitions, net of cash acquired	(594,870)	(394,910)	(59,350)
Purchases of property and equipment	(101,119)	(23,160)	(20,503)
Capitalized software development costs	(2,589)	0	0
Other investment activities	(3,898)	(5,494)	(375)
Net cash used in investing activities	(707,981)	(779,278)	(38,505)
Cash flows from financing activities
Proceeds from exercise of stock options	3,543	1,953	4,175
Proceeds from employee stock purchase plan	60,383	46,342	34,044
Proceeds from the issuance of convertible senior notes, net of issuance costs	0	2,105,296	0
Purchase of capped calls	0	(274,275)	0
Taxes paid related to net share settlement of equity awards	(164,160)	(63,369)	(137,830)
Repayment of financing lease obligation	0	(2,522)	(1,808)
Net cash provided by (used in) financing activities	(100,234)	1,813,425	(101,419)
Effect of exchange rate changes on cash and cash equivalents	(1,661)	(383)	1,621
Net increase (decrease) in cash and cash equivalents	(1,097,512)	1,330,218	124,601
Cash and cash equivalents
Beginning of period	1,876,165	545,947	421,346
End of period	778,653	1,876,165	545,947
Supplemental disclosures
Cash paid for income taxes	17,413	6,639	6,480
Cash paid for interest	15,761	8,183	8,150
Non-cash investing and financing activities
Increase in accrued purchases of property and equipment	1,329	666	132
Equity consideration for acquisitions	364,275	0	0
Vesting of early exercised options	$ 784	$ 0	$ 0

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balances at Jan. 31, 2017	$ 1,060,292	$ 137	$ 1,828,821	$ (3,013)	$ (765,653)
Balances (in shares) at Jan. 31, 2017		137,169,481
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	358,463		358,463
Issuance of common stock upon exercise of options	4,171	$ 1	4,170
Issuance of common stock upon exercise of options (in shares)		1,428,602
Vesting of restricted stock units	4	$ 4
Vesting of restricted stock units (in shares)		3,515,384
Vesting of early exercised options	0
Taxes paid related to net share settlement of equity awards	(138,604)		(138,604)
Issuance of common stock upon ESPP purchase	34,044	$ 1	34,043
Issuance of common stock upon ESPP purchase (in shares)		721,656
Unrealized gain (loss) from investments	(911)			(911)
Net change in cumulative translation adjustments	4,080			4,080
Net loss	(190,218)				(190,218)
Balances at Jan. 31, 2018	1,131,321	$ 143	2,086,893	156	(955,871)
Balances (in shares) at Jan. 31, 2018		142,835,123
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	441,930		441,930
Issuance of common stock upon exercise of options	1,951		1,951
Issuance of common stock upon exercise of options (in shares)		267,226
Vesting of restricted stock units	4	$ 4
Vesting of restricted stock units (in shares)		4,583,333
Issuance of restricted stock awards	1	$ 1
Issuance of restricted stock awards (in shares)		824,605
Fair value of replacement equity awards attributable to pre-acquisition service	15,776		15,776
Vesting of early exercised options	0
Taxes paid related to net share settlement of equity awards	(62,590)		(62,590)
Issuance of common stock upon ESPP purchase	46,340	$ 1	46,339
Issuance of common stock upon ESPP purchase (in shares)		657,011
Equity component of convertible senior notes, net	498,841		498,841
Purchase of capped calls	(274,275)		(274,275)
Unrealized gain (loss) from investments	1,279			1,279
Net change in cumulative translation adjustments	(3,941)			(3,941)
Net loss	(275,577)				(275,577)
Balances at Jan. 31, 2019	1,520,457	$ 149	2,754,858	(2,506)	(1,232,044)
Balances (in shares) at Jan. 31, 2019		149,167,298
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	545,424		545,424
Capitalized software development costs	951		951
Issuance of common stock upon exercise of options	$ 3,543		3,543
Issuance of common stock upon exercise of options (in shares)	329,155	329,155
Vesting of restricted stock units	$ 4	$ 4
Vesting of restricted stock units (in shares)		4,003,765
Issuance of restricted stock awards	1	$ 1
Issuance of restricted stock awards (in shares)		641,382
Issuance of common stock from acquisitions	344,572	$ 3	344,569
Issuance of common stock from acquisitions (in shares)		2,948,471
Fair value of replacement equity awards attributable to pre-acquisition service	19,703		19,703
Vesting of early exercised options	784		784
Taxes paid related to net share settlement of equity awards	(164,160)		164,160
Issuance of common stock upon ESPP purchase	60,383		60,383
Issuance of common stock upon ESPP purchase (in shares)		697,477
Unrealized gain (loss) from investments	1,114			1,114
Net change in cumulative translation adjustments	(3,920)			(3,920)
Net loss	(336,668)				(336,668)
Balances at Jan. 31, 2020	$ 1,999,429	$ 157	$ 3,566,055	$ (5,312)	$ (1,561,471)
Balances (in shares) at Jan. 31, 2020		157,787,548

Description of the Business and Significant Accounting Policies

12 Months Ended

Jan. 31, 2020

Accounting Policies [Abstract]

Description of the Business and Significant Accounting Policies

Business

Splunk Inc. (“we,” “us,” “our”) provides innovative software solutions that ingest data from different sources including systems, devices and interactions, and turn that data into meaningful business insights across the organization. Our Data-to-Everything platform enables users to investigate, monitor, analyze and act on data regardless of format or source. Data is produced by nearly every software application and electronic device across an organization and contains a real-time record of various activities, such as business transactions, customer and user behavior, and security threats. Our Data-to-Everything platform helps organizations gain the value contained in data by delivering real-time information to enable operational decision making. We were incorporated in California in October 2003 and reincorporated in Delaware in May 2006.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2020, for example, refer to the fiscal year ended January 31, 2020.

Basis of Presentation

We prepared our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Reclassifications

Certain reclassifications have been made to prior year balances in order to conform to the current period presentation. “Accounts receivable, non-current” have been reclassified from “Other assets” on our consolidated balance sheet and “Prepaid expenses and other assets” on our consolidated statements of cash flows. These reclassifications had no impact on the previously reported net loss or accumulated deficit.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods covered by the financial statements and accompanying notes. In particular, we make estimates with respect to the stand-alone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), the period of benefit for deferred commissions, stock-based compensation expense, the fair value of assets acquired and liabilities assumed for business combinations, income taxes, the discount rate used for operating leases, and contingencies. Actual results could differ from those estimates.

COVID-19

The worldwide spread of COVID-19 is expected to result in a global slowdown of economic activity which is likely to decrease demand for a broad variety of goods and services, while also disrupting sales channels and marketing activities for an unknown period of time until the disease is contained. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain, and as of the date of issuance of those financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

Segments

We operate our business as one operating segment: the development and marketing of software solutions that enable our customers to gain real-time operational intelligence by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

Foreign Currency

The functional currency of our foreign subsidiaries is their respective local currency, with the exception of our United Kingdom subsidiary, for which the functional currency is the U.S. dollar. Translation adjustments arising from the use of differing exchange rates from period to period are included in “Accumulated other comprehensive income (loss)” on our consolidated statements of stockholders’ equity. Foreign currency transaction gains and losses are included in “Other income (expense), net” and were not material for the three years ended January 31, 2020. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates.

Foreign Currency Contracts

We use foreign currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These contracts typically have maturities of one month. They are not designated as cash flow or fair value hedges under ASC Topic 815, Derivatives and Hedging. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on our consolidated balance sheets with changes in the fair value included in “Other income (expense), net” on our consolidated statements of operations.

Business Combinations

We use our best estimates and assumptions to allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. We apply significant judgment in determining the fair value of the intangible assets acquired, which involves the use of significant estimates and assumptions with respect to revenue growth rates, royalty rate and technology migration curve. While we use our best estimates and judgments, our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to our preliminary estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed during the measurement period, any subsequent adjustments are included in our consolidated statements of operations.

Equity Investments

Equity investments without readily determinable fair values are accounted for at cost, less impairment and adjusted for subsequent observable price changes obtained from transactions for identical or similar investments issued by the same issuer. Changes in the basis of the equity investment will be recognized in “Other income (expense), net.”

Investments in entities where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. Our results of operations will include, as a component of “Other income (expense), net,” our share of the net income or loss of the equity investments accounted for under the equity method of accounting.

Revenue Recognition

We generate revenues primarily in the form of software license and related maintenance fees, cloud services and other service fees. Licenses for on-premises software are either term or perpetual licenses and provide the customer with a right to use the software. When a term license is purchased, maintenance is bundled with the license for the term of the license period.

Typically, when purchasing a perpetual license, a customer also purchases one year of maintenance for which we charge a percentage of the license fee. Cloud services are provided on a subscription basis and give our customers access to our cloud solutions, which include related customer support. Other services include training and professional services that are not integral to the functionality of the licenses or cloud services.

Revenue from on-premises licenses is generally recognized upfront upon transfer of control of the software, which occurs at delivery, or when the license term commences, if later. We recognize revenue from maintenance contracts ratably over the service period. Cloud services revenue is recognized ratably over the cloud service term. Training and professional services are provided either on a time and material basis, in which revenues are recognized as services are delivered, or over a contractual term, in which revenues are recognized ratably. With respect to contracts that include customer acceptance provisions, we recognize revenue upon customer acceptance. Our policy is to record revenues net of any applicable sales, use or excise taxes.

Our contracts with customers often contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. We apply significant judgment in identifying and accounting for each performance obligation, as a result of evaluating the terms and conditions in contracts. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers, our discounting practices, and our overall pricing objectives, while maximizing observable inputs. In situations where pricing is highly variable, we estimate the SSP using the residual approach.

A receivable is recorded in the period we deliver products or provide services, or when we have an unconditional right to payment. Most of our multi-year on-premises term license contracts are invoiced annually. We record a receivable for multi-year on-premises licenses, whether or not billed, to the extent we have an unconditional right to receive payment in the future related to those licenses. The non-current portion of these receivables, primarily consisting of unbilled receivables, is included in “Accounts receivable, non-current” on our consolidated balance sheets.

Payment terms and conditions vary by contract type, although our terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of payment, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing.

Deferred revenue is recorded when we invoice a contract or deliver a license prior to recognizing revenue. It is comprised of balances related to maintenance, cloud services, training and professional services invoiced at the beginning of each service period, as well as licenses that we delivered prior to the license term commencing.

Deferred Sales Commissions

Sales commissions paid to our sales force and the related payroll taxes are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are capitalized and included in “Deferred commissions, current and non-current” on our consolidated balance sheets. We generally amortize these costs over the remaining contractual term of our customer contracts, consistent with the pattern of revenue recognition of each performance obligation, for contracts in which the commissions paid on the initial and renewal contracts are commensurate. For certain contracts in which the commissions paid on the initial and renewal contracts are not commensurate, we amortize the commissions paid on the initial contract over an expected period of benefit, which we have determined to be approximately five years. We have determined the period of benefit by taking into consideration our customer contracts, the duration of our relationships with our customers and our technology. In capitalizing and amortizing deferred commissions, we have elected to apply a portfolio approach. We include amortization of deferred commissions in “Sales and marketing expense” on our consolidated statements of operations. There were no impairments to deferred commissions for all periods presented. Commission expense was $208.9 million, $174.0 million and $116.3 million for fiscal 2020, 2019 and 2018, respectively.

Cash and Cash Equivalents

We consider all highly liquid instruments with original maturities of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. We do not hold or issue financial instruments for trading purposes.

Investments

We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date. Securities are classified as available-for-sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on our consolidated statements of comprehensive income (loss). Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, we evaluate, among other factors, the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available-for-sale is included in “Interest income” on our consolidated statements of operations.

Concentration of Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, investments and accounts receivable. We maintain the majority of our cash balance with two financial institutions that management believes are high-credit, quality financial institutions and invest our cash equivalents in highly rated money market funds.

Our accounts receivable is subject to collection risk. Our gross accounts receivable is reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of our customers to make required payments. It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors. We look at factors such as past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions. These factors are reviewed to determine whether an allowance for bad debts should be recorded to reduce the receivable balance to the amount believed to be collectible.

The following table presents the changes in the allowance for doubtful accounts:



	Fiscal Year Ended January 31,
(In thousands)	2020			2019			2018
Balance at beginning of period	$	445		$	467		$	475
Add: bad debt expense	1,062			—			—
Less: write-offs, net of recoveries	(504		)	(22		)	(8		)
Balance at end of period	$	1,003		$	445		$	467

Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments

Goodwill and indefinite-lived intangible assets are carried at cost and are evaluated annually for impairment, or more frequently if circumstances exist that indicate that impairment may exist. When conducting our annual goodwill impairment assessment, we perform a quantitative evaluation of whether goodwill is impaired by comparing the fair value of our reporting unit to its carrying value. We consider the enterprise to be the reporting unit for this analysis. If the carrying amount of our reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

In-process research and development is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When in-process research and development projects are completed, the corresponding amount is reclassified as an amortizable intangible asset and is amortized over the asset’s estimated useful life.

Finite-lived intangible assets are amortized over their useful lives. Each period we evaluate the estimated remaining useful life of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. In addition, we evaluate the recoverability of our long-lived assets including intangible and tangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value.

Property and Equipment

Property and equipment are stated at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from generally three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included on our consolidated statements of operations. Maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense in the period incurred.

The following table presents the estimated useful lives of our property and equipment:



Property and Equipment		Useful Life
Computer equipment and software		3 years
Furniture and fixtures		5 years
Leasehold improvements		Shorter of the useful life of the asset or the lease term

Capitalized Software Development Costs

Capitalization of software development costs for software to be sold, leased, or otherwise marketed begins upon the establishment of technological feasibility, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. We did not capitalize any software development costs for fiscal 2020 and 2019 because the cost incurred and the time between technological feasibility and product release was insignificant. We had no amortization expense from capitalized purchased technology during fiscal 2020, 2019 or 2018.

Costs related to software developed, acquired, or modified for internal use, are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during post implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. We define the design, configuration, and coding process as the application development stage. We capitalized $3.5 million of costs related to software developed for internal use in fiscal 2020. Costs related to software developed for internal use in fiscal 2019 were not material.

Leases

We determine if an arrangement contains a lease and the classification of that lease, if applicable, at the inception of a contract. We primarily lease our facilities under operating leases. Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. We calculate the operating lease right-of-use assets based on the corresponding lease liability adjusted for (i) payments made at or before the commencement date, (ii) initial direct costs we incur and (iii) tenant incentives under the lease. We do not account for renewals or early terminations unless we are reasonably certain to exercise these options at commencement. Operating lease right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. Operating lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for our operating leases. We do not include leases with terms of 12 months or less on our consolidated balance sheets.

As the implicit rate for our operating leases is generally not determinable, we use our incremental borrowing rate as our discount rate at the lease commencement date to determine the present value of lease payments. We determine the discount rate of our leases by considering various factors, such as our credit rating, interest rates of similar debt instruments of entities with comparable credit ratings, the lease term and the currency in which the lease is denominated. Our discount rate was determined using a portfolio approach.

Our operating lease assets are included in “Operating lease right-of-use assets” and the current and non-current portions of our operating lease liabilities are included in “Accrued expenses and other liabilities” and “Operating lease liabilities,” respectively, on our consolidated balance sheets. As of January 31, 2020, we had no finance leases. Refer to Note 4 “Leases” for details.

Advertising Expense

We expense advertising costs as incurred. We incurred $30.1 million, $17.3 million and $10.1 million in advertising expenses for fiscal 2020, 2019 and 2018, respectively. Advertising costs are included in “Sales and marketing” expenses on our consolidated statements of operations.

Stock-Based Compensation

We recognize compensation expense for all share-based payment awards, including stock options, restricted stock units (“RSUs”), performance units (“PSUs”) and restricted stock awards (“RSAs”), based on the estimated fair value of the award on the grant date over the related vesting periods. The expense recorded is based on awards ultimately expected to vest and therefore is reduced by estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We calculate the fair value of options using the Black-Scholes method and expense using the straight-line attribution approach.

We account for equity awards issued to non-employees, such as consultants, in accordance with the guidance relating to equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, using the Black-Scholes method to determine the fair value of such instruments.

The fair value of each option grant and stock purchase right granted under the Employee Stock Purchase Plan (“ESPP”) is estimated on the date of grant using the Black-Scholes option pricing model. We recognize stock-based compensation expense related to our ESPP on a straight-line basis over the offering period, which is twelve months. Stock-based compensation expense is recognized net of estimated forfeiture activity.

The determination of the grant date fair value of options using an option-pricing model is affected by assumptions regarding a number of other complex and subjective variables, which include our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends. The expected term of the options is based on the average period the stock options are expected to remain outstanding calculated as the midpoint of the options’ vesting terms and contractual expiration periods, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The expected stock price volatility for our stock was determined by examining the historical volatility of our common stock. The risk-free interest rate was calculated using the average of the published interest rates United States Treasury zero-coupon issues with maturities that approximate the expected term. The dividend yield assumption is zero as we do not have any history of, nor plans to make, dividend payments.

The number of PSUs earned and eligible to vest are determined based on achievement of certain performance conditions and/or market conditions and the recipients’ continued service with us. For awards subject to service and performance conditions, the number of shares of our stock issued pursuant to the award can range from 0% to 200% of the target amount. For awards subject to service and performance conditions that also include market conditions, the number of shares of our stock issued pursuant to the award can range from 0% to 300% of the target amount. Compensation expense for PSUs with performance conditions is measured using the fair value at the date of grant and recorded over the vesting period under the graded-vesting attribution method, and may be adjusted over the vesting period based on interim estimates of performance against the pre-set objectives. We use a Monte Carlo option-pricing model to determine the fair value of PSUs with market conditions.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with authoritative guidance for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The guidance on accounting for uncertainty in income taxes requires us to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. All of these judgments are subject to review by the taxing authorities.

Recently Adopted Accounting Standards



Standard	Description	Effective Date	Effect on the Consolidated Financial Statements (or Other Significant Matters)
Accounting Standards Update (“ASU”) No. 2018-15 (Subtopic 350-40), Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	The standard aligns the requirements for capitalizing implementation costs in a cloud computing arrangement with the requirements for capitalizing implementation costs incurred for an internal-use software license.	We early adopted this new standard as of May 1, 2019.	The adoption of this new standard did not have a material impact on our consolidated financial statements.
ASU No. 2018-13 (Topic 820), Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement	The new standard no longer requires disclosure of the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted-average used to develop significant unobservable inputs for Level 3 fair value measurements.	We adopted this new standard as of February 1, 2019.	The adoption of this new standard did not have a material impact on our consolidated financial statements.
ASU No. 2016-02 (Topic 842), Leases	The new standard supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for operating leases, initially measured at the present value of the lease payments on the consolidated balance sheets. The impact of such leases on the consolidated statements of operations and cash flows will continue to be treated in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. In July 2018, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, was issued which clarifies the codification or corrects unintended application of the guidance.	We adopted this new standard as of February 1, 2019, using the cumulative-effect transition method recognized as of the date of initial application, as amended by ASU No. 2018-11. Under this method, we are not required to restate or disclose the effects of applying Topic 842 for comparative periods.	As the result of our adoption, we recognized Operating lease right-of-use assets of $199.8 million and current and non-current Operating lease liabilities of $211.9 million on our consolidated balance sheets at February 1, 2019. Additionally, we recorded a decrease to our opening accumulated deficit of approximately $7.2 million related to the derecognition of build-to-suit lease assets and liabilities. We have updated our accounting policies, systems, processes and internal controls, and have allocated internal and external resources to assist us during our implementation efforts. We applied the following practical expedients as permitted under Topic 842: (i) we elected to account for lease and non-lease components as a single lease component, and (ii) we elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward (1) our historical lease classification, (2) our assessment on whether a contract was or contains a lease, and (3) our initial direct costs for leases that existed prior to January 31, 2019.

Recently Issued Accounting Pronouncements



Standard	Description	Effective Date	Effect on the Consolidated Financial Statements (or Other Significant Matters)
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	The amendments in this ASU simplify the accounting for incomes taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance to improve consistent application. Most amendments within this standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.	First quarter of fiscal 2022.	We are currently evaluating the impact of this standard on our consolidated financial statements.
ASU No. 2016-13 (Topic 326), Financial Instruments - Credit Losses	The amendments in this update require a financial asset (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans and held-to-maturity debt securities.	First quarter of fiscal 2021.	We do not expect a material impact on our consolidated financial statements upon adoption.

Investments and Fair Value Measurements

12 Months Ended

Jan. 31, 2020

Fair Value Disclosures [Abstract]

Investments and Fair Value Measurements

The carrying amounts of certain of our financial instruments including cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term maturities.

Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels that are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are 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.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The following table sets forth the fair value of our financial assets that were measured on a recurring basis:



	January 31,
	2020								2019
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	138,999	$	—	$	—	$	138,999	$	46,310	$	—	$	—	$	46,310
U.S. treasury securities	—		875,180		—		875,180		—		980,940		—		980,940
Corporate bonds	—		124,972		—		124,972		—		—		—		—
Commercial paper	—		4,994		—		4,994		—		—		—		—
Other	—		—		2,000		2,000		—		—		4,744		4,744
Reported as:
Assets:
Cash and cash equivalents							$	147,034							$	46,311
Investments, current							976,508								881,220
Investments, non-current							22,603								104,463
Total							$	1,146,145							$	1,031,994

Our investments in money market funds are measured at fair value on a recurring basis. These money market funds are actively traded and reported daily through a variety of sources. The fair value of the money market fund investments is classified as Level 1.

We invest in U.S. treasury securities, corporate bonds and commercial paper, which we have classified as available-for-sale investments. The following table presents our available-for-sale investments as of January 31, 2020:



(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash and cash equivalents:
U.S. treasury securities	$	8,035	$	—	$	—		$	8,035
Investments, current:
U.S. treasury securities	866,578		590		(23		)	867,145
Corporate bonds	103,848		521		—			104,369
Commercial paper	4,991		3		—			4,994
Investments, non-current:
Corporate bonds	20,444		159		—			20,603
Total available-for-sale investments	$	1,003,896	$	1,273	$	(23	)	$	1,005,146

The following table presents our available-for-sale investments as of January 31, 2019:



(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Investments, current:
U.S. treasury securities	$	881,206	$	131	$	(117	)	$	881,220
Investments, non-current:
U.S. treasury securities	99,597		134		(11		)	99,720
Total available-for-sale investments	$	980,803	$	265	$	(128	)	$	980,940

The following table presents the fair values and unrealized losses of our available-for-sale investments classified by length of time that the securities have been in a continuous unrealized loss position:



	Less than 12 Months					12 Months or Greater				Total
(In thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
January 31, 2020:
U.S. treasury securities	$	129,149	$	(23	)	$	—	$	—	$	129,149	$	(23	)
Corporate bonds	7,504		—			—		—		7,504		—
Total	$	136,653	$	(23	)	$	—	$	—	$	136,653	$	(23	)
January 31, 2019:
U.S. treasury securities	$	582,761	$	(128	)	$	—	$	—	$	582,761	$	(128	)
Total	$	582,761	$	(128	)	$	—	$	—	$	582,761	$	(128	)

As of January 31, 2020 and 2019, we did not consider any of our investments to be other-than-temporarily impaired.

The contractual maturities of our investments are as follows:



(In thousands)	January 31, 2020
Due within one year	$	984,543
Due within one to two years	20,603
Total	$	1,005,146

Investments with maturities of less than 12 months from the balance sheet date are classified as current assets, which are available for use to fund current operations. Investments with maturities greater than 12 months from the balance sheet date are classified as long-term assets.

Convertible Senior Notes

Refer to Note 7 “Convertible Senior Notes” for details regarding the fair value of our convertible senior notes.

Equity Investments

Our equity investments are included in “Investments, non-current” on our consolidated balance sheets. The following table provides a summary of our equity investments:



	January 31,
(In thousands)	2020		2019
Equity investments without readily determinable fair values	$	10,744	$	5,000
Equity investments under the equity method of accounting	2,023		1,125
Total	$	12,767	$	6,125

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Jan. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal Proceedings We are subject to certain routine legal and regulatory proceedings, as well as demands and claims that arise in the normal course of our business. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our consolidated results of operations, cash flows or financial position, nor is it possible to provide an estimated amount of any such loss. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect our future financial position, results of operations or cash flows, or all, in a particular period. Indemnification Arrangements During the ordinary course of business, we may indemnify, hold harmless and agree to reimburse for losses suffered or incurred, our customers, vendors, and each of their affiliates for certain intellectual property infringement and other claims by third parties with respect to our offerings, in connection with our commercial license arrangements or related to general business dealings with those parties. As permitted under Delaware law, we have entered into indemnification agreements with our officers, directors and certain employees, indemnifying them for certain events or occurrences while they serve as our officers or directors or those of our direct and indirect subsidiaries. To date, there have not been any costs incurred in connection with such indemnification obligations; therefore, there is no accrual of such amounts at January 31, 2020. We are unable to estimate the maximum potential impact of these indemnifications on our future results of operations.

Leases

12 Months Ended

Jan. 31, 2020

Leases [Abstract]

Leases

We have operating leases for office space, used for our business operations and sales support, and data centers, used primarily for product development.

Operating lease costs were $49.6 million, excluding short-term leases, variable lease costs and sublease income, which were immaterial, during fiscal 2020. Rent expense recognized prior to our adoption of Topic 842 was $26.2 million and $16.8 million during fiscal 2019 and 2018, respectively. Rent expense for fiscal 2018 includes a decrease of $5.2 million in connection with facility exit charge adjustments.

Our lease term and the discount rate related to our operating lease right-of-use assets and related lease liabilities are as follows:



	January 31, 2020
Weighted-average remaining lease term (in years)	8.00
Weighted-average discount rate	5.98	%

As of January 31, 2020, the maturity of lease liabilities under our non-cancelable operating leases were as follows:



Fiscal Period (In thousands)	Future Payments ⁽¹⁾
Fiscal 2021	$	37,799
Fiscal 2022	55,970
Fiscal 2023	49,044
Fiscal 2024	36,800
Fiscal 2025	29,648
Thereafter	153,302
Total lease payments	362,563
Less imputed interest	(82,136		)
Total current and non-current operating lease liabilities ⁽²⁾	$	280,427

_________________________


⁽¹⁾	Amounts based on Topic 842, Leases, which we adopted on February 1, 2019.


⁽²⁾	The current portion of our operating lease liabilities is included in “Accrued expenses and other liabilities” on our consolidated balance sheets.

As of January 31, 2020, we have entered into leases, primarily for office space that have not yet commenced, with future lease payments of $213.1 million that are not reflected in the above. These leases will commence between fiscal 2021 and 2022 with non-cancelable lease terms of 11 years to 12 years.

Prior to our adoption of Topic 842, we entered into a lease which was accounted for under build-to-suit lease accounting. As of January 31, 2019, $76.2 million of our build-to-suit lease asset was included in “Property and equipment, net” and the related $83.4 million financing lease obligation was included in “Other liabilities, non-current” on our consolidated balance sheets. Upon the adoption of Topic 842, we derecognized our build-to-suit asset and related liabilities and included the difference of $7.2 million as a decrease to “Accumulated deficit” on our consolidated balance sheet at February 1, 2019. Under Topic 842, this lease was classified as an operating lease and was included in “Operating lease right-of-use assets” and “Operating lease liabilities” on our consolidated balance sheets as of January 31, 2020.

As of January 31, 2019, prior to our adoption of Topic 842, future minimum rental payments under our non-cancelable operating leases obligation were as follows:



Fiscal Period (In thousands)	Future Payments ⁽¹⁾
Fiscal 2020	$	30,976
Fiscal 2021	48,195
Fiscal 2022	48,126
Fiscal 2023	44,018
Fiscal 2024	40,636
Thereafter	253,856
Total future minimum lease payments ⁽²⁾	$	465,807

_________________________


⁽¹⁾	Amounts based on Topic 840, Leases.


⁽²⁾	We entered into sublease agreements for portions of our office space and the future rental income of $2.3 million from these agreements were included as an offset to our future minimum rental payments.

Supplemental Disclosures



	Fiscal Year Ended
(In thousands)	January 31, 2020
Cash paid for operating lease liabilities	$	51,929
Operating lease liabilities arising from obtaining right-of-use assets	90,320

Property and Equipment

12 Months Ended

Jan. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. These assets are depreciated and amortized using the straight-line method over their estimated useful lives. Property and equipment consisted of the following:



	January 31,
(In thousands)	2020			2019
Computer equipment and software	$	109,892		$	79,887
Furniture and fixtures	28,568			18,872
Leasehold and building improvements⁽¹⁾	141,965			79,064
Building⁽²⁾	—			82,250
Property and equipment, gross	280,425			260,073
Less: accumulated depreciation and amortization	(123,497		)	(101,797		)
Property and equipment, net	$	156,928		$	158,276

_________________________


⁽¹⁾	Includes costs related to assets not yet placed into service of $46.5 million and $11.3 million, as of January 31, 2020 and 2019, respectively.

⁽²⁾

This relates to the capitalization of construction costs under ASC Topic 840, Leases, in connection with our financing lease obligation, where we were considered the owner of the asset, for accounting purposes only, during the period ended January 31, 2019. The corresponding long-term liability for this obligation was included in “Other liabilities, non-current" on our consolidated balance sheets. As part of our adoption of Topic 842, we derecognized the assets and liabilities related to the financing lease obligation at February 1, 2019. Refer to Note 4 “Leases” for details.

Depreciation and amortization expense of Property and Equipment, net was $29.0 million, $27.0 million and $26.1 million for the fiscal years ended January 31, 2020, 2019 and 2018, respectively.

Geographic information

The following table presents our long-lived assets, which consist of property and equipment, net of depreciation and amortization, and operating lease right-of-use assets by geographic region:



	January 31,
(In thousands)	2020 ⁽¹⁾		2019
United States	$	362,586	$	147,659
International	61,428		10,617
Total long-lived assets	$	424,014	$	158,276

_________________________


⁽¹⁾	Includes operating lease right-of-use assets under ASC Topic 842, Leases, which we adopted on February 1, 2019.

Other than the United States, no country represented 10% or more of our total long-lived assets as of January 31, 2020 or 2019.

Acquisitions, Goodwill and Other Intangible Assets

12 Months Ended

Jan. 31, 2020

Business Combinations [Abstract]

Acquisitions, Goodwill and Intangible Assets

Fiscal 2020 Acquisitions

SignalFx

On October 1, 2019, we acquired 100% of the voting equity interest of SignalFx, Inc. (“SignalFx”), a privately-held Delaware corporation that develops real-time monitoring solutions for cloud infrastructure, microservices and applications. This acquisition has been accounted for as a business combination. The total fair value of consideration transferred for this acquisition was $961.4 million, which consisted of $619.1 million in cash, $324.5 million for the fair value of 2,771,482 shares of our common stock issued and $17.8 million in fair value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated as follows: $173.7 million to identified intangible assets, $62.1 million to net assets acquired and $3.3 million to net deferred tax liabilities, with the excess $728.9 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products. This goodwill is not deductible for income tax purposes. The results of operations of SignalFx have been included on our consolidated financial statements from the date of purchase. Additionally, we recognized $7.0 million of acquisition-related costs in “General and administrative” expense on our consolidated statements of operations.

Per the terms of the merger agreement with SignalFx, certain unvested stock options, restricted stock units and restricted stock awards held by SignalFx employees were canceled and exchanged for replacement equity awards under our 2012 Equity Incentive Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards held by key employees of SignalFx were canceled and exchanged for replacement equity awards consisting of unregistered restricted shares of our common stock subject to vesting. The portion of the fair value of the replacement equity awards associated with pre-acquisition service of SignalFx’s employees represented a component of the total purchase consideration, as discussed above. The remaining fair value of $104.7 million of these issued awards, which are subject to the recipients’ continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period. We are still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available to us.

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, except useful life)	Fair Value		Useful Life (months)
Developed technology	$	108,800	84
Customer relationships	60,900		60
Other acquired intangible assets	4,000		36
Total intangible assets acquired	$	173,700

We applied significant judgment in determining the fair value of the intangible assets acquired, which involved the use of significant estimates and assumptions with respect to revenue growth rates, royalty rate and technology migration curve.

Omnition

On September 13, 2019, we acquired 100% of the voting equity interest of Cloud Native Labs, Inc. (“Omnition”), a privately-held Delaware corporation that develops a platform for distributed tracing and application monitoring. This acquisition has been accounted for as a business combination. The total fair value of consideration transferred for this acquisition was $52.5 million, which consisted of $31.6 million in cash, $20.2 million for the fair value of 176,989 shares of our common stock issued and $0.7 million in fair value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated to $8.0 million of identified intangible assets, with the excess $44.5 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products. This goodwill is not deductible for income tax purposes. The results of operations of Omnition which are not material, have been included on our consolidated financial statements from the date of purchase.

Per the terms of the merger agreement with Omnition, certain unvested stock options held by Omnition employees were canceled and exchanged for replacement stock options under our 2012 Equity Incentive Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards held by key employees of Omnition were canceled and exchanged for replacement equity awards subject to vesting. The portion of the fair value of the replacement equity awards associated with pre-acquisition service of Omnition’s employees represented a component of the total purchase consideration, as discussed above. The remaining fair value of $36.6 million of these issued awards, which are subject to the recipients’ continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period. We are still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available to us.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Streamlio

On November 1, 2019, we acquired 100% of the voting equity interest of Streamlio, Inc. (“Streamlio”), a privately-held Delaware corporation that specializes in designing and operating streaming data solutions. This acquisition has been accounted for as a business combination. The total fair value of consideration transferred for this acquisition was $19.8 million, which consisted of $18.7 million in cash and $1.1 million in fair value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated as follows: $3.6 million to identified intangible assets and $0.1 million to net assets acquired, with the excess $16.1 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products. This goodwill is not deductible for income tax purposes. The results of operations of Streamlio have been included on our consolidated financial statements from the date of purchase.

Per the terms of the merger agreement with Streamlio, certain unvested stock options held by Streamlio employees were canceled and exchanged for replacement stock options under our 2012 Equity Incentive Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards held by key employees of Streamlio were canceled and exchanged for replacement equity awards consisting of restricted shares of our common stock subject to vesting. The portion of the fair value of the replacement equity awards associated with pre-acquisition service of Streamlio’s employees represented a component of the total purchase consideration, as discussed above. The remaining fair value of $4.2 million of these issued awards, which are subject to the recipients’ continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period. We are still finalizing the allocation of the purchase price, which may be subject to change as additional information becomes available to us.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Fiscal 2019 Acquisitions

Phantom

On April 6, 2018, we acquired 100% of the voting equity interest of Phantom Cyber Corporation (“Phantom”), a privately-held Delaware corporation that develops solutions for security orchestration, automation and response. This acquisition has been accounted for as a business combination. The total fair value of consideration transferred for this acquisition was $303.8 million, which consisted of $291.5 million in cash and $12.3 million in fair value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated as follows: $44.1 million to identified intangible assets, $10.5 million to net assets acquired, $3.3 million to net deferred tax liability, with the excess $252.5 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products. This goodwill is not deductible for income tax purposes. The results of operations of Phantom, which are not material, have been included on our consolidated financial statements from the date of purchase. Additionally, we recognized $3.3 million of acquisition-related costs in “General and administrative” expense on our consolidated statements of operations.

Per the terms of the merger agreement with Phantom, certain shares of stock issued pursuant to share-based compensation awards held by key employees of Phantom were canceled and exchanged for replacement equity awards consisting of unregistered restricted shares of our common stock subject to vesting. The portion of the fair value of the replacement equity awards associated with pre-acquisition service of Phantom's key employees represented a component of the total purchase consideration, as discussed above. The remaining fair value of $62.2 million of these issued awards, which are subject to the recipients’ continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

VictorOps

On June 22, 2018, we acquired 100% of the voting equity interest of VictorOps, Inc. (“VictorOps”), a privately-held Delaware corporation that develops incident management solutions for the IT and DevOps markets. This acquisition has been accounted for as a business combination. The total fair value of consideration transferred for this acquisition

was $112.3 million, which consisted of $108.8 million in cash and $3.5 million in fair value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated as follows: $21.1 million to identified intangible assets, $1.7 million to net assets acquired, with the excess $89.5 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products. This goodwill is not deductible for income tax purposes. The results of operations of VictorOps, which are not material, have been included on our consolidated financial statements from the date of purchase. Additionally, we recognized $2.7 million of acquisition-related costs in “General and administrative” expense on our consolidated statements of operations.

Per the terms of the merger agreement with VictorOps, certain unvested stock options held by VictorOps employees were canceled and exchanged for replacement stock options to purchase shares of our common stock under our 2012 Equity Incentive Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards held by key employees of VictorOps were canceled and exchanged for unregistered restricted shares of our common stock subject to vesting. The portion of the fair value of the replacement equity awards associated with pre-acquisition service of VictorOps employees represented a component of the total purchase consideration, as discussed above. The remaining fair value of $7.6 million of these issued awards, which are subject to the recipients’ continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Unaudited Pro Forma Financial Information

The following unaudited pro forma information presents the combined results of operations as if the acquisitions of SignalFx, Omnition, VictorOps and Phantom had been completed in the beginning of the applicable comparable prior annual reporting period. The unaudited pro forma results include adjustments primarily related to the following: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of post-acquisition stock-based compensation; (iii) the effect of recording deferred revenue at fair value; (iv) elimination of historical interest expense related to debt extinguished in the acquisition of SignalFx; (v) the inclusion of acquisition costs as of the earliest period presented; and (iv) the associated tax impact of the acquisitions and these unaudited pro forma adjustments.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred from integrating these companies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future results of operations:



	Fiscal Year Ended January 31,
(In thousands, except per share amounts)	2020			2019
Revenue	$	2,376,181		$	1,822,576
Net loss	$	(434,998	)	$	(421,198	)

Fiscal 2018 Acquisitions

Rocana

On October 6, 2017, we acquired certain assets of Rocana, Inc. (“Rocana”), a privately-held Delaware corporation that develops analytics solutions for the IT market. This acquisition has been accounted for as a business combination. The purchase price of $30.2 million, paid in cash, was allocated as follows: $10.1 million to identifiable intangible assets, with the excess $20.1 million of the purchase price over the fair value of net assets acquired recorded as goodwill. This goodwill is primarily attributable to the value expected from the synergies of the combination, including advancing the analytics and machine

learning capabilities of our products, and is deductible for income tax purposes. The results of operations of the acquired entity, which are not material, have been included on our consolidated financial statements from the date of purchase. Pro forma and historical results of operations of the acquired entity have not been presented as we do not consider the results to have a material effect on any of the periods presented on our consolidated statements of operations.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Drastin

On May 15, 2017, we acquired 100% of the voting equity interest of Drastin, Inc. (“Drastin”) privately-held Delaware corporation that develops technology for search-driven analytics on enterprise data. This acquisition has been accounted for as a business combination. The purchase price of $17.3 million, paid in cash, was allocated as follows: $3.8 million to identifiable intangible assets and $0.5 million to net deferred tax liability, with the excess $14.0 million of the purchase price over the fair value of net assets acquired recorded as goodwill. This goodwill is primarily attributable to the value expected from the synergies of the combination, including developing a more intuitive search experience for our products, and is not deductible for income tax purposes. The results of operations of the acquired entity, which are not material, have been included on our consolidated financial statements from the date of purchase. Pro forma and historical results of operations of the acquired entity have not been presented as we do not consider the results to have a material effect on any of the periods presented on our consolidated statements of operations.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

SignalSense

On September 29, 2017, we acquired 100% of the voting equity interest of SignalSense Inc. (“SignalSense”), a privately held Washington corporation that develops cloud-based data collection and breach detection solutions that leverage machine learning. This acquisition has been accounted for as a business combination. The purchase price of $12.2 million, paid in cash, was allocated as follows: $11.3 million to identifiable intangible assets acquired, $0.2 million in net assets and $2.0 million to net deferred tax liabilities, with the excess $2.7 million of the purchase price over the fair value of net assets acquired recorded as goodwill. This goodwill is primarily attributable to the value expected from the synergies of the combination, including developing more advanced cloud and machine learning capabilities for our products, and is not deductible for income tax purposes. The results of operations of the acquired entity, which are not material, have been included on our consolidated financial statements from the date of purchase. Pro forma and historical results of operations of the acquired entity have not been presented as we do not consider the results to have a material effect on any of the periods presented on our consolidated statements of operations.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Goodwill

There were no impairments to goodwill during the fiscal year ended January 31, 2020 or during prior periods.

Goodwill balances are presented below:



	Fiscal Year Ended January 31,
(In thousands)	2020		2019
Beginning balance	$	503,388	$	161,382
Goodwill acquired	789,452		342,006
Ending balance	$	1,292,840	$	503,388

Intangible Assets

Intangible assets subject to amortization realized from acquisitions as of January 31, 2020 are as follows:



(In thousands, except useful life)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted-Average Remaining Useful Life (months)
Developed technology	$	252,530	$	(87,112	)	$	165,418	68
Customer relationships	81,810		(12,403		)	69,407		53
Other acquired intangible assets	7,270		(3,680		)	3,590		32
Total intangible assets subject to amortization	$	341,610	$	(103,195	)	$	238,415

Intangible assets subject to amortization realized from acquisitions as of January 31, 2019 are as follows:



(In thousands, except useful life)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted-Average Remaining Useful Life (months)
Developed technology	$	132,100	$	(57,596	)	$	74,504	52
Customer relationships	20,910		(4,523		)	16,387		52
Other acquired intangible assets	3,270		(2,539		)	731		9
Total intangible assets subject to amortization	$	156,280	$	(64,658	)	$	91,622

Amortization expense from acquired intangible assets was $38.5 million, $25.2 million and $13.5 million for the fiscal year ended January 31, 2020, 2019 and 2018, respectively.

The expected future amortization expense for acquired intangible assets as of January 31, 2020 is as follows:



Fiscal Period (In thousands)	Expected Amortization Expense
Fiscal 2021	$	55,706
Fiscal 2022	45,567
Fiscal 2023	41,525
Fiscal 2024	37,015
Fiscal 2025	31,182
Thereafter	27,420
Total amortization expense	$	238,415

Convertible Senior Notes

12 Months Ended

Jan. 31, 2020

Debt Disclosure [Abstract]

Convertible Senior Notes

In September 2018, we issued $1.27 billion aggregate principal amount of 0.50% Convertible Senior Notes due 2023 (the “2023 Notes”), including the exercise in full by the initial purchasers of the 2023 Notes of their option to purchase an

additional $165.0 million principal amount of 2023 Notes, and $862.5 million aggregate principal amount of 1.125% Convertible Senior Notes due 2025 (the “2025 Notes” and, together with the 2023 Notes, the “Notes”), including the exercise in full by the initial purchasers of the 2025 Notes of their option to purchase an additional $112.5 million principal amount of 2025 Notes. The Notes are general senior, unsecured obligations of Splunk. The total proceeds from the issuance of the Notes was $2.11 billion, net of initial purchaser discounts and issuance costs.

The 2023 Notes will mature on September 15, 2023, and the 2025 Notes will mature on September 15, 2025, in each case unless earlier redeemed, repurchased or converted. The 2023 Notes will bear interest from September 21, 2018 at a rate of 0.50% per year and the 2025 Notes will bear interest from September 21, 2018 at a rate of 1.125% per year, in each case payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019.

The initial conversion rate for each series of notes is 6.7433 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $148.30 per share of our common stock, subject to adjustment upon the occurrence of specified events. The initial conversion price of each series of Notes represents a premium of approximately 27.5% to the $116.31 per share closing price of our common stock on September 18, 2018, which was the date the pricing of the Notes was determined. The Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding June 15, 2023, in the case of the 2023 Notes, or June 15, 2025, in the case of the 2025 Notes, only under the following circumstances:

•

during any fiscal quarter commencing after the fiscal quarter ending on January 31, 2019 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price for the relevant series of Notes on each applicable trading day;

•

during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture governing the relevant series of notes) per $1,000 principal amount of the relevant series of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the relevant series of Notes on each such trading day;


•	if we call the relevant series of Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or


•	upon the occurrence of specified corporate events as set forth in the relevant indenture.

On or after June 15, 2023, in the case of the 2023 Notes, and on or after June 15, 2025, in the case of the 2025 Notes, until the close of business on the second scheduled trading day immediately preceding the relevant maturity date, holders of the relevant series of Notes may convert all or any portion of their Notes of such series, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

Upon conversion, we may satisfy our conversion obligation by paying and/or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the relevant indenture. It is our current intent to settle the conversions of principal amount of the Notes in cash and the remaining conversion value, if any, in shares of common stock. If we undergo a fundamental change (as defined in each indenture), holders may require us to repurchase for cash all or any portion of their Notes of the relevant series at a fundamental change repurchase price equal to 100% of the principal amount of the relevant series of Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the relevant maturity date of a series of Notes or if we deliver a notice of redemption in respect of a series of Notes, we will, in certain circumstances, increase the conversion rate of the relevant series of Notes for a holder who elects to convert its Notes of the applicable series in connection with such corporate event or notice of redemption, as the case may be. During the fiscal year ended January 31, 2020, the conditions allowing holders of the Notes to convert were not met. The Notes were therefore not convertible during the fiscal year ended January 31, 2020 and were classified as long-term debt on our consolidated balance sheets.

We may not redeem the 2023 Notes prior to September 20, 2021, and we may not redeem the 2025 Notes prior to September 20, 2022. We may redeem for cash all or any portion of the 2023 Notes, at our option, on or after September 20, 2021, and we may redeem for cash all or any portion of the 2025 Notes, at our option, on or after September 20, 2022, in each

case if the last reported sale price of our common stock has been at least 130% of the conversion price for the relevant series of Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the relevant series of Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the relevant redemption date.

In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amounts of the liability components of the Notes were calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amounts of the equity components, representing the conversion option, were determined by deducting the fair value of the liability components from the par value of the respective Notes. This difference represents the debt discount that is amortized to interest expense over the respective terms of the Notes using the effective interest rate method. The carrying amounts of the equity components representing the conversion options were $266.9 million and $237.2 million for the 2023 Notes and 2025 Notes, respectively, and are recorded in additional paid-in capital and are not remeasured as long as they continue to meet the conditions for equity classification.

In accounting for the issuance costs related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component of the 2023 Notes and 2025 Notes were $10.4 million and $6.5 million, respectively. The issuance costs allocated to the liability component are amortized to interest expense over the contractual terms of the 2023 Notes and 2025 Notes at an effective interest rate of 5.65% and 6.22%, respectively. Issuance costs attributable to the equity component of the 2023 Notes and 2025 Notes were $2.8 million and $2.5 million, respectively, and are netted against the equity components representing the conversion option in additional paid-in capital.

The net carrying amount of the liability and equity components for each of the Notes as of January 31, 2020 was as follows:



(In thousands)	2023 Notes			2025 Notes
Liability component:
Principal amount	$	1,265,000		$	862,500
Unamortized discount	(201,093		)	(198,468		)
Unamortized issuance costs	(7,848		)	(5,461		)
Net carrying amount	$	1,056,059		$	658,571

Equity component, net of purchase discounts and issuance costs	$	264,129		$	234,712

The following table sets forth the interest expense related to the Notes:



(In thousands)	Fiscal Year Ended January 31, 2020		Fiscal Year Ended January 31, 2019
2023 Notes:
Coupon interest expense	$	6,324	$	2,266
Amortization of debt discount (conversion option)	48,767		17,055
Amortization of debt issuance costs and purchase discounts	1,904		666
Total interest expense related to the 2023 Notes	$	56,995	$	19,987

2025 Notes:
Coupon interest expense	$	9,704	$	3,477
Amortization of debt discount (conversion option)	28,697		10,023
Amortization of debt issuance costs and purchase discounts	789		276
Total interest expense related to the 2025 Notes	$	39,190	$	13,776

As of January 31, 2020, the total estimated fair values of the 2023 Notes and the 2025 Notes were approximately $1.54 billion and $1.09 billion, respectively. The fair value was determined based on the closing trading price per $100 of the Notes as

of the last day of trading for the period. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. The fair value of the Notes is considered a Level 2 measurement as they are not actively traded.

Capped Calls

In connection with the issuance of the Notes, including the initial purchasers’ exercise of the option to purchase additional Notes, we entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls are expected to reduce potential dilution to our common stock upon conversion of the Notes and/or offset any cash payments that we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The Capped Calls have an initial strike price of $148.30 per share, subject to certain adjustments, which corresponds to the conversion option strike price in the Notes. The Capped Calls have a cap price equal to $232.62 per share, subject to certain adjustments. The Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting us, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The premium paid for the purchase of the Capped Calls in the amount of $274.3 million has been recorded as a reduction to additional paid-in capital and will not be remeasured.

Stock Compensation Plans

12 Months Ended

Jan. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Compensation Plans

Equity Incentive Plans

In November 2003, our board adopted the 2003 Equity Incentive Plan (the “2003 Plan”). The 2003 Plan authorizes the granting of common stock options and restricted stock awards to employees, directors and consultants.

In January 2012, our board approved the 2012 Equity Incentive Plan (the “2012 Plan”), which became effective on April 18, 2012. The 2012 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and any parent or subsidiary corporations’ employees and consultants. Upon the effectiveness of the 2012 plan, all shares that were reserved but not issued under the 2003 Plan became available for issuance under the 2012 Plan and no further shares will be granted pursuant to the 2003 Plan. Canceled or forfeited equity awards under the 2003 Plan will also become available for issuance under the 2012 Plan. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes or our outstanding stock, the term must not exceed 5 years. Options and RSUs generally vest over 4 years.

The 2012 plan provides for annual automatic increases on February 1 to the shares reserved for issuance. The automatic increase of the number of shares available for issuance under the 2012 Plan is equal to the lesser of 10 million shares, 5% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year or such other amount as our board may determine.

The following table summarizes the stock option, restricted stock unit (“RSU”), restricted stock award (“RSA”) and performance unit (“PSU”) award activity under our 2012 Equity Incentive Plan during the fiscal year ended January 31, 2020:



			Options Outstanding							RSUs and PSUs Outstanding
	Available for Grant		Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value⁽¹⁾		Shares
								(in thousands)
Balances as of January 31, 2019	17,082,136		409,039		$	10.69	3.36	$	46,693	13,098,607
Additional shares authorized	7,458,364
Options granted ⁽²⁾	(814,160	)	814,160		11.04
Options exercised			(329,155	)	10.82
Options forfeited and expired	70,503		(70,503	)	12.97