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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2021
 
OR
 
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM              TO
 
COMMISSION FILE NUMBER 001-35498
 ____________________________________________________

https://cdn.kscope.io/2ea4b9f9362caa452b50b385cb2358bc-splk-20210731_g1.jpg
Splunk Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Delaware 86-1106510
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

270 Brannan Street
San Francisco, California 94107
(Address of principal executive offices)
(Zip Code)
 
(415) 848-8400
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareSPLKThe NASDAQ Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
 
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

There were 161,545,802 shares of the Registrant’s Common Stock issued and outstanding as of September 1, 2021.



Table of Contents
TABLE OF CONTENTS
 
  Page No.
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
 

1

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Splunk Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)July 31, 2021January 31, 2021
Assets  
Current assets  
Cash and cash equivalents$2,231,165 $1,771,064 
Investments, current267,035 87,847 
Accounts receivable, net882,436 1,114,199 
Prepaid expenses and other current assets171,261 162,939 
Deferred commissions, current100,774 136,331 
Total current assets3,652,671 3,272,380 
Investments, non-current36,889 13,728 
Accounts receivable, non-current194,630 347,202 
Operating lease right-of-use assets239,066 356,296 
Property and equipment, net132,841 182,780 
Intangible assets, net192,904 206,153 
Goodwill1,401,628 1,334,888 
Deferred commissions, non-current104,284 69,637 
Other assets91,411 85,422 
Total assets$6,046,324 $5,868,486 
Liabilities and Stockholders’ Equity  
Current liabilities 
Accounts payable$45,789 $9,319 
Accrued compensation302,156 281,986 
Accrued expenses and other liabilities240,994 202,959 
Deferred revenue, current954,070 1,030,484 
Total current liabilities1,543,009 1,524,748 
Convertible senior notes, net3,054,463 2,302,635 
Operating lease liabilities219,242 330,970 
Deferred revenue, non-current80,539 110,418 
Other liabilities, non-current14,406 5,710 
Total non-current liabilities3,368,650 2,749,733 
Total liabilities4,911,659 4,274,481 
Commitments and contingencies (Note 3 and 4)
Stockholders’ equity  
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 163,400,853 shares issued and outstanding at July 31, 2021, and 163,147,139 shares issued and outstanding at January 31, 2021
165 163 
Accumulated other comprehensive loss(864)(592)
Additional paid-in capital4,689,282 4,063,885 
Treasury stock, at cost: 1,652,247 shares at July 31, 2021, and 0 shares at January 31, 2021
(229,515) 
Accumulated deficit(3,324,403)(2,469,451)
Total stockholders’ equity1,134,665 1,594,005 
Total liabilities and stockholders’ equity$6,046,324 $5,868,486 

The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Table of Contents
Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended July 31,Six Months Ended July 31,
(In thousands, except per share amounts)2021202020212020
Revenues
Cloud services$217,422 $125,870 $411,380 $238,022 
License219,600 176,814 362,881 325,199 
Maintenance and services168,721 188,974 333,533 362,514 
Total revenues605,743 491,658 1,107,794 925,735 
Cost of revenues (1)
Cloud services98,016 59,728 186,101 113,218 
License2,459 5,474 6,749 11,540 
Maintenance and services 82,932 66,850 162,463 135,911 
Total cost of revenues183,407 132,052 355,313 260,669 
Gross profit422,336 359,606 752,481 665,066 
Operating expenses (1)
Research and development259,709 197,297 506,907 389,421 
Sales and marketing 382,129 323,687 738,237 642,911 
General and administrative124,928 78,081 287,114 160,805 
Total operating expenses766,766 599,065 1,532,258 1,193,137 
Operating loss(344,430)(239,459)(779,777)(528,071)
Interest and other income (expense), net
Interest income507 3,581 886 10,056 
Interest expense(39,013)(30,148)(72,603)(54,585)
Other income (expense), net1,146 5,917 (77)5,243 
Total interest and other income (expense), net(37,360)(20,650)(71,794)(39,286)
Loss before income taxes(381,790)(260,109)(851,571)(567,357)
Income tax provision (benefit)2,161 1,213 3,381 (456)
Net loss$(383,951)$(261,322)$(854,952)$(566,901)
Basic and diluted net loss per share$(2.34)$(1.64)$(5.23)$(3.58)
Weighted-average shares used in computing basic and diluted net loss per share164,018 158,952 163,615 158,241 
 _________________________
(1)    Amounts include stock-based compensation expense, as follows:
Cost of revenues$21,865 $13,992 $39,379 $27,194 
Research and development81,001 66,284 158,047 134,853 
Sales and marketing64,436 50,741 119,622 107,215 
General and administrative37,478 23,856 70,149 44,429 


The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Table of Contents
Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
 
 Three Months Ended July 31,Six Months Ended July 31,
(In thousands)2021202020212020
Net loss$(383,951)$(261,322)$(854,952)$(566,901)
Other comprehensive income (loss)
Net unrealized gain (loss) on investments (net of tax)(116)(1,999)(272)686 
Foreign currency translation adjustments (783) (104)
Total other comprehensive income (loss)(116)(2,782)(272)582 
Comprehensive loss$(384,067)$(264,104)$(855,224)$(566,319)

 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents
Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Six Months Ended July 31,
(In thousands)20212020
Cash flows from operating activities  
Net loss$(854,952)$(566,901)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization50,625 42,685 
Amortization of deferred commissions77,983 61,120 
Amortization of investment premiums (accretion of discounts), net432 (944)
Amortization of debt discount and issuance costs57,784 44,738 
Gain on extinguishment of convertible senior notes (6,952)
Repurchase of convertible senior notes attributable to the accreted interest related to debt discount
 (22,149)
Loss on lease termination52,524  
Non-cash operating lease costs571 15,759 
Stock-based compensation387,197 313,691 
Disposal of property and equipment33 981 
Deferred income taxes(294)(644)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net384,798 184,261 
Prepaid expenses and other assets (14,842)12,493 
Deferred commissions(77,073)(60,154)
Accounts payable 19,698 22,963 
Accrued compensation20,170 (61,378)
Accrued expenses and other liabilities17,817 (1,294)
Deferred revenue (107,731)(102,307)
Net cash provided by (used in) operating activities 14,740 (124,032)
Cash flows from investing activities
Purchases of investments(289,573)(87,135)
Maturities of investments87,766 497,725 
Acquisition, net of cash acquired(80,333) 
Purchases of property and equipment(4,363)(25,816)
Capitalized software development costs(5,148)(7,133)
Other investment activities(1,168)(2,886)
Net cash provided by (used in) investing activities (292,819)374,755 
Cash flows from financing activities
Proceeds from the exercise of stock options1,174 2,671 
Proceeds from employee stock purchase plan48,246 44,214 
Proceeds from the issuance of convertible senior notes, net of issuance costs982,749 1,246,544 
Purchase of capped calls (137,379)
Partial repurchase of convertible senior notes (668,929)
Repurchases of common stock(192,208) 
Taxes paid related to net share settlement of equity awards(101,781)(49,228)
Net cash provided by financing activities 738,180 437,893 
Effect of exchange rate changes on cash and cash equivalents 626 
Net increase in cash and cash equivalents 460,101 689,242 
Cash and cash equivalents at beginning of period 1,771,064 778,653 
Cash and cash equivalents at end of period $2,231,165 $1,467,895 
Supplemental disclosures
Cash paid for income taxes$4,488 $6,267 
Cash paid for interest7,116 8,557 
Non-cash investing and financing activities
Increase in accrued purchases of property and equipment3,247 5,169 
Equity consideration for acquisitions939  
Vesting of early exercised options63 117 
Costs related to issuance of convertible senior notes included in accrued expenses and other liabilities1,034 1,053 
Unsettled repurchases of common stock included in accrued expenses and other liabilities37,307  

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 
Three Months Ended July 31,Six Months Ended July 31,
(In thousands)2021202020212020
Common stock
Balance, beginning of period$164 $158 $163 $157 
Vesting of restricted and performance stock units1 1 2 2 
Issuance of common stock upon ESPP purchase 1  1 
Balance, end of period$165 $160 $165 $160 
Additional paid-in capital
Balance, beginning of period$4,187,267 $3,678,895 $4,063,885 $3,566,055 
Stock-based compensation204,780 154,873 387,197 313,691 
Capitalized software development costs679 2,074 1,890 3,850 
Issuance of common stock upon exercise of options636 1,252 1,174 2,670 
Fair value of replacement equity awards attributable to pre-acquisition service939  939  
Vesting of early exercised options31 61 63 117 
Taxes paid related to net share settlement of equity awards(40,967) (101,783)(49,228)
Issuance of common stock upon ESPP purchase48,246 44,214 48,246 44,214 
Equity component of convertible senior notes, net287,671 342,062 287,671 342,062 
Purchase of capped calls (137,379) (137,379)
Partial repurchase of convertible senior notes (283,629) (283,629)
Balance, end of period$4,689,282 $3,802,423 $4,689,282 $3,802,423 
Treasury stock
Balance, beginning of period$ $ $ $ 
Repurchases of common stock(229,515) (229,515) 
Balance, end of period$(229,515)$ $(229,515)$ 
Accumulated other comprehensive loss
Balance, beginning of period$(748)$(1,948)$(592)$(5,312)
Unrealized gain (loss) from investments (net of tax)(116)(1,999)(272)686 
Net change in cumulative translation adjustments (783) (104)
Balance, end of period$(864)$(4,730)$(864)$(4,730)
Accumulated deficit
Balance, beginning of period$(2,940,452)$(1,867,050)$(2,469,451)$(1,561,471)
Net loss(383,951)(261,322)(854,952)(566,901)
Balance, end of period$(3,324,403)$(2,128,372)$(3,324,403)$(2,128,372)
Total stockholders’ equity$1,134,665 $1,669,481 $1,134,665 $1,669,481 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
(1)    Description of the Business and Significant Accounting Policies

Business

Splunk Inc. (“we,” “us,” “our”) provides innovative cloud and software solutions that deliver and operationalize insights from the data generated by digital systems. 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. This data is growing significantly as a direct result of the prevalence and importance of digital systems used by today’s organizations. Our solutions help users remove barriers between insights derived from this data and actions organizations take to thrive in an era of unprecedented digital transformation. 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 2022, for example, refer to the fiscal year ending January 31, 2022.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet data as of January 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on March 31, 2021.
 
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2022.

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 the liability component of the convertible debt, 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 novel coronavirus (“COVID-19”) has created, and may continue to create, significant uncertainty in macroeconomic conditions. The full extent to which the COVID-19 pandemic will directly or indirectly impact the global economy, the lasting social effects, and impact on our business, results of operations, and financial condition will depend on future developments, such as the duration, spread, and severity and potential recurrence of the virus and its variants, COVID-19 vaccination rates and the availability of COVID-19 vaccines both globally and in the U.S., that are highly uncertain and cannot be accurately predicted. As of the date of issuance of these condensed consolidated financial statements, we are not aware of
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any specific event or circumstance that would require us to update our estimates, judgments or adjust the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our condensed consolidated 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 business insights 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.

Principles of Consolidation
 
The accompanying unaudited condensed 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.

Foreign Currency

The functional currency of our foreign subsidiaries is the U.S. dollar. Foreign currency transaction gains and losses are included in “Other income (expense), net” on our condensed consolidated statements of operations and were not material for the three and six months ended July 31, 2021 and 2020.

Revenue Recognition

We generate revenues in the form of cloud services fees, software license and related maintenance fees, and other service fees. Cloud services are provided on a subscription basis and give our customers access to our cloud solutions, which include related customer support. Licenses for on-premises software (“software”) are typically term 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. Other services include training and professional services that are not integral to the functionality of the licenses or cloud services.

Our contracts with customers often contain multiple performance obligations, which may include a combination of cloud services, software, related maintenance and support services, and professional services including training. We apply significant judgment in identifying and accounting for each performance obligation, as a result of evaluating the terms and conditions in contracts. For these contracts, we account for cloud services, software, maintenance and support, and other services as separate performance obligations as they are each distinct. Revenue is recognized when the performance obligations are satisfied. We satisfy our cloud service performance obligation over the associated contract term and recognize the associated revenue ratably over the term of the contract once access is provided to the customer, consistent with the pattern of benefit to the customer of such services. We satisfy our obligation and recognize revenue for software upon transfer of control of the software, which occurs at delivery of the license key to customers, or when the license term commences, if later. We satisfy our maintenance and support performance obligations and recognize revenue ratably over the maintenance and support term, consistent with the pattern of benefit to the customer of such services. Professional services and training are either provided on a time and material basis or over a contract term. We satisfy our professional services and training performance obligations and recognize the associated revenue as services are delivered. 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 tax, use, goods and services, value added, and excise taxes.

Customers can purchase our products under different pricing options. Regardless of the pricing option selected, the consideration for our cloud services and license contracts is fixed and does not result in variable consideration. 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.

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A receivable is recorded when we have an unconditional right to payment, either because we satisfied a performance obligation prior to receiving payment from the customer or we have a non-cancelable contract that has been invoiced in advance in accordance with our standard payment terms. Most of our multi-year cloud service and software contracts are invoiced annually. A receivable for multi-year cloud services is generally recorded upon invoicing. A receivable for multi-year software contracts is recorded upon delivery, whether or not invoiced, 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 from multi-year software contracts, is included in “Accounts receivable, non-current” on our condensed consolidated balance sheets.

Payment terms and conditions vary by contract type, although our standard payment terms generally require 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 do not generally 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.

Recently Adopted Accounting Standards
 
We did not adopt any new accounting standards in the period ended July 31, 2021.

Recently Issued Accounting Pronouncements
 
StandardDescriptionEffective DateEffect on the Condensed Consolidated Financial Statements
(or Other Significant Matters)
Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815 - 40)This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity, which reduces the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments will no longer have to be separated into debt and equity components. Convertible debt instruments will be reported as a single liability and convertible preferred stock will be reported as a single equity instrument. Similarly, the embedded conversion feature will no longer be amortized as interest expense over the life of the instrument. Instead, a convertible debt instrument will be accounted for wholly as debt unless 1) a convertible instrument contains features that require bifurcation as a derivative, or 2) a convertible debt instrument was issued at a substantive premium. Among other potential impacts, this ASU is expected to reduce reported interest expense, decrease reported net loss, and result in a reclassification of certain conversion feature balance sheet amounts from stockholder’s equity to liabilities as it relates to the convertible senior notes. This ASU also simplifies the diluted earnings per share calculations by requiring the use of the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations.First quarter of fiscal 2023.We are currently evaluating the impact of this standard on our condensed consolidated financial statements.

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(2)    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 condensed consolidated 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:
 
 July 31, 2021January 31, 2021
(In thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:        
Money market funds$1,401,221 $ $ $1,401,221 $933,058 $ $ $933,058 
U.S. treasury securities 20,129  20,129  75,068  75,068 
Corporate bonds 132,268  132,268  12,779  12,779 
Commercial paper 167,093  167,093     
Reported as:        
Assets:        
Cash and cash equivalents   $1,431,683    $933,058 
Investments, current267,035 87,847 
Investments, non-current 21,993  
Total   $1,720,711    $1,020,905 

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.

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The following table presents our investments in available-for-sale debt securities as of July 31, 2021:
 
(In thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash and cash equivalents:
Corporate bonds$5,766 $ $(1)$5,765 
Commercial paper24,698  (1)24,697 
Investments, current:
U.S. treasury securities20,134  (5)20,129 
Corporate bonds104,579  (69)104,510 
Commercial paper142,454  (58)142,396 
Investments, non-current:
Corporate bonds22,005  (12)21,993 
Total available-for-sale investments$319,636 $ $(146)$319,490 

The following table presents our investments in available-for-sale debt securities as of January 31, 2021:
 
(In thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Investments, current:
U.S. treasury securities$75,032 $36 $ $75,068 
Corporate bonds12,765 14  12,779 
Total available-for-sale investments$87,797 $50 $ $87,847 

The following table presents the fair values and unrealized losses related to our investments in available-for-sale debt securities classified by length of time that the securities have been in a continuous unrealized loss position as of July 31, 2021:
 
Less than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. treasury securities$20,130 $(5)$ $ $20,130 $(5)
Corporate bonds126,200 (82)  126,200 (82)
Commercial paper167,092 (59)  167,092 (59)
Total$313,422 $(146)$ $ $313,422 $(146)

As of January 31, 2021, we did not have any investments in available-for-sale debt securities in an unrealized loss position.

The contractual maturities of our investments as of July 31, 2021 are as follows (in thousands):
 
Due within one year$297,498 
Due within one to two years21,992 
Total$319,490 

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 non-current assets.

Convertible Senior Notes

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

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Equity Investments

Our equity investments are included in “Investments, non-current” on our condensed consolidated balance sheets. The following table provides a summary of our equity investments:
 
(In thousands)July 31, 2021January 31, 2021
Equity investments without readily determinable fair values$10,777 $10,244 
Equity investments under the equity method of accounting4,119 3,484 
Total$14,896 $13,728 

(3)    Commitments and Contingencies
 
Legal Proceedings
 
A putative class action lawsuit alleging violations of the federal securities laws was filed on December 4, 2020 in the U.S. District Court for the Northern District of California (the “Court”) against us, our CEO and our CFO. The initial complaint alleged violations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for allegedly making materially false and misleading statements regarding our financial guidance and asserted a putative class period of October 21, 2020 to December 2, 2020. On March 16, 2021, the Court appointed Louisiana Sheriffs’ Pension & Relief Fund as lead plaintiff and approved its selection of lead plaintiff counsel in the case. On June 7, 2021, the lead plaintiff filed an amended complaint which expands the putative class period to run from March 26, 2020 to December 2, 2020 and alleges that defendants made materially false and misleading statements regarding our marketing efforts, hiring practices, and retention of personnel. The lead plaintiff seeks unspecified monetary damages and other relief. On July 27, 2021, defendants filed a motion to dismiss the amended complaint, which is scheduled for hearing on November 18, 2021.

Several derivative lawsuits related to the securities class action were filed in February, March, and April 2021 in the U.S. District Court for the Northern District of California and California Superior Court, San Francisco County. The lawsuits name our CEO, our CFO, and many of our board members as defendants, and the company as a nominal defendant. The lawsuits allege claims for breach of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control, and gross mismanagement against the defendants, and claims for contribution under Sections 10(b) and 21D of the Exchange Act against only our CEO and CFO. The plaintiffs seek unspecified monetary damages and other relief on behalf of the company. The court has stayed the actions pursuant to stipulation of the parties until after a ruling on the pending motion to dismiss the federal securities case.

We are also 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 condensed 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.
 
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Claims and reimbursements under indemnification arrangements have not been material to our condensed consolidated financial statements; therefore, there is no accrual of such amounts as of July 31, 2021 and January 31, 2021. We are unable to estimate the maximum potential impact of these indemnifications on our future results of operations.

(4)    Leases
 
In April 2021, we entered into an agreement to terminate our lease of certain office space located in San Jose, CA and ceased use of the space as of April 30, 2021. As a result, the related right-of-use asset and leasehold improvements balances were written off and we have no remaining liability as of July 31, 2021. In total, a $55.2 million loss was recognized during the six months ended July 31, 2021, which includes certain termination-related fees. The loss is included in “General and administrative” expenses on our condensed consolidated statement of operations. As of January 31, 2021, we had $155.5 million in related operating lease commitments.

(5)    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:
 
(In thousands)July 31, 2021January 31, 2021
Computer equipment and software$75,564 $70,628 
Furniture and fixtures28,626 33,142 
Leasehold and building improvements (1)
135,990 180,956 
Capitalized software development costs (2)
30,833 23,795 
Property and equipment, gross271,013 308,521 
Less: accumulated depreciation and amortization(138,172)(125,741)
Property and equipment, net$132,841 $182,780 
_________________________
(1)    Includes costs related to assets not yet placed into service of $25.4 million as of January 31, 2021. All assets were placed into service as of July 31, 2021.
(2)    Includes costs related to projects still under development of $5.5 million and $16.7 million, as of July 31, 2021 and January 31, 2021, respectively.

Depreciation and amortization expense of Property and equipment, net was $10.0 million and $7.7 million for the three months ended July 31, 2021 and 2020, respectively, and $20.9 million and $13.5 million for the six months ended July 31, 2021 and 2020, 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:
 
(In thousands)July 31, 2021January 31, 2021
United States$312,907 $476,575 
United Kingdom47,598 50,460 
Other International11,402 12,041 
Total long-lived assets$371,907 $539,076 

Other than each of the United States and the United Kingdom, no other individual country represented 10% or more of our total long-lived assets as of July 31, 2021 or January 31, 2021.

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(6)    Acquisition, Goodwill and Intangible Assets

Fiscal 2022 Acquisition

TruSTAR

On May 28, 2021, we acquired 100% of the voting equity interest of TruSTAR Technology, Inc. (“TruSTAR”), a privately-held Delaware corporation that provides an intelligence platform for cybersecurity and threat data. This acquisition has been accounted for as a business combination. The total consideration transferred for this acquisition was $82.1 million, of which $81.2 million was in cash. The preliminary purchase price was allocated as follows: $16.5 million to identified intangible assets, $1.1 million to other net liabilities acquired, with the excess $66.7 million of the purchase price over the fair value of net assets acquired recorded as goodwill, allocated to our single 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 TruSTAR, which are not material, have been included in our condensed consolidated financial statements from the date of purchase.

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
(in months)
Developed technology$10,100 36
Customer relationships6,400 36
Total intangible assets acquired$16,500 

Goodwill
 
Goodwill balances are presented below:

(In thousands)Carrying Amount
Balance as of January 31, 2021$1,334,888 
Goodwill acquired66,740
Balance as of July 31, 2021$1,401,628 

There was no impairment of goodwill during the six months ended July 31, 2021 or 2020.

Intangible Assets
 
Intangible assets subject to amortization as of July 31, 2021 are as follows:
 
(In thousands, except useful life)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted-Average Remaining Useful Life
(in months)
Developed technology$283,400 $(146,915)$136,485 52
Customer relationships92,710 (37,884)54,826 35
Other acquired intangible assets7,394 (5,801)