ANAPLAN, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year endedJanuary 31, 2022 , filed with theSEC onMarch 23, 2022 . This discussion contains forward-looking statements that involve risks and uncertainties as discussed in "Cautionary Note Regarding Forward-Looking Statements" included in this Quarterly Report on Form 10-Q. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, impacts on our business and general economic conditions due to the current COVID-19 pandemic, those identified below and those discussed in "Risk Factors" under Part II, Item 1A in this Quarterly Report on Form 10-Q. Our fiscal year endsJanuary 31 . OverviewAnaplan is a market-leading cloud-native enterprise SaaS company, transforming how enterprises across industries see, plan, and drive their business. Powered by our proprietary calculation engine and Hyperblock® technology, our platform lets customers model what-if scenarios, contextualize current performance in real time, and forecast future outcomes for faster, more confident decisions. Embracing constant change, our customers useAnaplan to rapidly pivot strategies, redeploy resources, and optimize plans for growth, efficiency, demand, and profitability.Anaplan equips teams to overcome obstacles and seize opportunities ahead of competitors. Our customers often initially adopt our platform within a specific business function for one or more planning solutions, but also because our platform has the capacity to transform their enterprise-wide planning process through our integrated planning and forecasting tool and as part of a broader digital transformation initiative. We sell subscriptions to our cloud-based planning platform through our direct sales team and through our global partnership ecosystem that serves as an integral part of our go-to-market strategy and an extension of our direct sales force. Our strategic consulting and systems integration partners provide us with a significant source of lead generation and implementation leverage. These partners act as strategic advisors to senior executives in corporate, functional, and process transformation initiatives of organizations. They often promote our platform as their clients examine how to plan more effectively or seek organizational change through digital transformation or improved business processes. We also rely on partners with deep subject-matter expertise in the implementation of specific use cases who can facilitate implementations for our customers. Our partners also help to drive thought leadership in promoting connected planning and digital transformation. Once our customers see the benefits and wide applicability of our platform, we use a "land and expand" sales strategy to encourage our existing customers to increase the number of users, add new use cases, and expand to additional lines of business, divisions, and geographies. This expansion often generates a natural network effect in which the value of our platform to customers increases as more use cases are adopted, more users are connected, and greater amounts of data are incorporated in our platform delivering exponential value to our customers. We derive the substantial majority of our revenue from subscriptions for users on our platform. Our initial subscription term is typically two to three years, although some customers commit for shorter periods. We generally bill our customers annually in advance. We also offer professional services, including consulting, implementation, and training, but are increasingly leveraging our partners to provide these services. During the three months endedApril 30, 2022 and 2021, subscription revenue was$152.3 million and$118.3 million , respectively, representing a year-over-year subscription revenue growth rate of 29%. During the three months endedApril 30, 2022 and 2021, services revenue was$16.8 million and$11.5 million , respectively. Our subscription revenue as a percentage of total revenue was 90% and 91% in the three months endedApril 30, 2022 and 2021, respectively. During the three months endedApril 30, 2022 and 2021, our total revenue was$169.2 million and$129.8 million , respectively. Approximately 47% and 48% of our total revenue was generated from outside ofthe United States in the three months endedApril 30, 2022 and 2021, respectively. Our net loss was$57.9 million and$51.5 million in the three months endedApril 30, 2022 and 2021, respectively. We believe that our focus on customer success allows us to retain and expand the subscription revenue generated from our existing customers, and is an indicator of the long-term value of our customer relationships forAnaplan as a whole. We track our performance in this area by measuring our dollar-based net expansion rate, which compares our annual recurring revenue from the same set of customers across comparable periods. The dollar-based net expansion rate was 116% and 118% as ofApril 30, 2022 , andJanuary 31, 2022 , respectively. 21
--------------------------------------------------------------------------------
Table of Contents
Our dollar-based net expansion rate equals the annual recurring revenue at the end of a period for a base set of customers from which we generated annual recurring revenue in the year prior to the date of calculation, divided by the annual recurring revenue one year prior to the date of the calculation for that same set of customers. Annual recurring revenue is calculated as subscription revenue already booked and in backlog that will be recorded over the next 12 months, assuming any contract expiring in those 12 months is renewed and continues on its existing terms and at its prevailing rate of utilization. The number of customers with greater than$250,000 of annual recurring revenue was 569 and 555 as ofApril 30, 2022 , andJanuary 31, 2022 , respectively. We monitor this metric and believe it is a useful tool to investors, as an indicator of the scale of customer adoption and expansion of our platform. Our remaining performance obligations (RPO) represents all future revenue under contract that has not yet recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. Our current remaining performance obligations (cRPO) represents RPO that is expected to be recognized as revenue in the next 12 months. As ofApril 30, 2022 , our RPO was$1,111.5 million , of which 51% represented cRPO. cRPO increased by 27%, compared toApril 30, 2021 . Our RPO fluctuates due to a number of factors including the timing, duration and dollar amount of customer contracts. Merger OnMarch 20, 2022 , we entered into the Merger Agreement with Parent and Merger Sub, providing for the merger of Merger Sub with and into our Company, with our Company surviving the merger as a wholly owned subsidiary of Parent. Under the terms of the agreement, our stockholders will receive$66.00 in cash for each share of common stock they hold on the transaction closing date. The obligation of the parties to consummate the acquisition is subject to the satisfaction or waiver of customary closing conditions, including, without limitation, the absence of governmental orders resulting, directly or indirectly, in enjoining or otherwise prohibiting or making illegal the consummation of the Merger, the affirmative vote of the holders of a majority of the voting power of the outstanding shares of the Company's common stock entitled to vote on the adoption of the Merger Agreement. The 30-day waiting period under the HSR Act expired at11:59 p.m. Eastern Time onMonday, May 2, 2022 . We are subject to customary restrictions on our ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, with customary exceptions for superior proposals. We expect that the Merger will close inJune 2022 . For a summary of the transaction, see "Summary of Business and Significant Accounting Policies" in Note 1 of the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. COVID-19 Update The COVID-19 pandemic continues to persist. The broader implications of the COVID-19 pandemic on our business, results of operations, and overall financial performance remain uncertain. We have seen and may continue to see in certain geographies some of our customers and prospective customers defer or delay buying decisions and project implementations and prolonged sales cycles. As the impact of the COVID-19 pandemic continues to unfold around the world, we remain focused on supporting our employees, customers, and partners. In response to the COVID-19 pandemic, we modified the manner in which we operate and we required our employees to work remotely, maintained business-related travel restrictions, and virtualized, postponed or cancelled our sales and marketing, employee or industry events. We are slowly reversing certain of these modifications to our operations on a market-by-market basis in accordance with local guidelines, but currently employ a hybrid work approach in most regions. Our approach may vary among geographies depending on local guidelines, and may change at any time, including in response to new or reimposed precautionary measures as the COVID-19 pandemic evolves. We may incorporate into our ongoing business operations certain business practice modifications implemented in response to the COVID-19 pandemic. The impact, if any, of these and any additional operational changes we may implement is uncertain, but we currently believe the changes we have implemented have not materially affected, and are not expected to have a material and adverse effect on, our ability to maintain financial reporting systems, internal control over financial reporting and disclosure controls and procedures. 22
--------------------------------------------------------------------------------
Table of Contents
The extent to which the ongoing COVID-19 pandemic, and associated global
economic uncertainty, may impact our business will depend on future
developments, including the duration and spread of the pandemic and the
prevalence and virulence of variants of COVID-19; the scope and effectiveness of
precautionary measures designed to contain and prevent the spread of COVID-19;
the availability and effectiveness of vaccines; and the impact on our current
and prospective customers, employees, and partners; all of which are uncertain
and cannot be predicted at this time. We are continuing to monitor the actual
and potential effects of the COVID-19 pandemic on our business. See Part II,
Item 1A, "Risk Factors" for further discussion of the possible impact of the
COVID-19 pandemic on our business.
Factors Affecting Our Performance
We believe that our future performance will depend on many factors, including
those described below. While these areas present significant opportunity, they
also present risks that we must manage to achieve successful results. See Part
II, Item 1A, "Risk Factors". If we are unable to address these challenges, our
business and operating results could be adversely affected.
New customer acquisition. Our long-term success will depend on widespread adoption of connected planning by enterprises for numerous planning applications with broad use of those applications within their organizations.
Customer First strategy. We put the success of our customers at the center of our culture, strategy, and investments. We view our Customer First strategy as core to capturing our connected planning vision and driving the continued adoption and expansion in the use of our platform. By aligning our thought leadership, talent ecosystem, worldwide development and delivery capabilities, customer success management and local sales and service resources, we believe our Customer First strategy drives exceptional value throughout our customers' connected planning and digital transformation journeys. Our continued success depends in part on our ability to continue to put customers at the center of our strategy. Expansion of existing customers. We aim to drive integrated planning across the entire organization to help our customers benefit from the full value of our platform. We employ a "land and expand" approach, with many of our customers initially deploying our product for a specific planning use case. Once they realize the benefits and wide applicability of our platform, many of our customers subsequently renew their subscriptions, expand the number of users, add new use cases, and expand to additional lines of business, divisions, and geographies as they continue unlocking the agile enterprise planning and operating model across functional boundaries. As a result, we are able to generate a significant increase in revenue from the expanded use of our platform across the enterprise. Our future revenue growth and our ability to achieve and maintain profitability is dependent upon our ability to maintain existing customer relationships and to continue to expand our customers' use of our platform. Scaling our sales team. Our ability to achieve significant growth in revenue in the future will depend, in large part, upon the effectiveness of our sales leadership and sales efforts, both domestically and internationally. We have invested and intend to continue to invest in expanding and retaining our sales leadership and direct sales force, particularly in attracting and retaining sales personnel with experience selling to complex enterprises. Our ability to increase our revenue will depend on the new members of our sales force becoming fully productive and executing expeditiously and effective sales leadership. A customer's decision to use our platform may be an enterprise-wide decision. These types of sales require us to provide greater levels of education regarding the use and benefits of our platform, which involves substantial time, effort, and costs. International sales. Our total revenue generated outside ofthe United States during the three months endedApril 30, 2022 and 2021, was approximately 47% and 48%, respectively, of our total revenue. We have invested, and plan to invest, ahead of this potential demand in personnel, marketing, and access to data center capacity to support our international growth. Partner ecosystem. Our partner ecosystem extends our geographic coverage, accelerates the usage and adoption of our platform, promotes thought leadership, and enables more efficient delivery of service solutions. We intend to augment and deepen our partnerships with strategic and advisory consulting, systems integration, public cloud, and technology firms. 23
--------------------------------------------------------------------------------
Table of Contents
Product velocity. Our vision is to help customers swiftly and effectively plan,
analyze, and act on initiatives across the enterprise. We have invested and
intend to continue to invest significantly in research and development in an
effort to enhance and expand the functionality of our platform, to attract and
retain development personnel, and to protect our market-leading technology
advantage. We are also investing to further enhance the functionality,
intelligence, user experience, scale, extensibility and security of our
platform. We will need to continue to focus on bringing cutting-edge technology
to market in order to remain competitive.
Components of Results of OperationsRevenue
We offer subscriptions to our cloud-based planning platform. We derive our revenue primarily from subscription fees and, to a lesser degree, from professional services fees. Subscription revenue consists primarily of fees to provide our customers access to our cloud-based platform. Professional services revenue includes fees from assisting customers in implementing and optimizing the use of our cloud-based platform. These services include implementation, consulting, and training.
Subscription Revenue
Subscription revenue accounted for 90% and 91% of our total revenue for the
three months ended
Subscription fees are recognized ratably as revenue over the contract term beginning on the date the platform is made available to the customer. Our new business subscriptions typically have a term of two to three years. We generally invoice our customers in annual installments at the beginning of each year within the subscription period. Amounts that have been invoiced are initially recorded as deferred revenue and are recognized ratably over the subscription period. Most of our contracts are non-cancelable over the contract term. We had remaining performance obligations, or backlog, in the amount of$1,111.5 million and$1,092.5 million as ofApril 30, 2022 andJanuary 31, 2022 , respectively, consisting of both billed and unbilled consideration.
Professional Services Revenue
Professional services revenue is generally recognized as the services are rendered for time and material contracts, or on a proportional performance basis for fixed price contracts. The substantial majority of our professional service contracts are on a time and materials basis. Implementations generally take one to six months to complete depending upon the scope of engagement with the customer. Our professional services revenue fluctuates from quarter to quarter as a result of the requirements, complexity, and timing of our customers' implementation projects. Cost of Revenue Cost of Subscription Revenue Cost of subscription revenue primarily consists of costs related to providing cloud applications, compensation and other employee-related expenses for data center staff, including salaries and bonuses, benefits, and stock-based compensation, payments to outside service providers, customer service, data center and networking expenses, depreciation expenses, and amortization of capitalized software development costs.
Cost of Professional Services Revenue
Cost of professional services revenue primarily consists of costs related to
providing implementation and configuration services, optimization services and
training services, personnel-related costs directly associated with our
professional services and training departments, including salaries and bonuses,
benefits, and stock-based compensation, the costs of
contracted third-party vendors, and travel.
Professional services associated with the implementation and configuration of
our subscription platform are performed directly by our services team, as well
as by contracted third-party vendors. When third-party vendors invoice us for
services performed for our customers, those fees are recognized as expense as
incurred.
24--------------------------------------------------------------------------------
Table of Contents Operating Expenses Research and Development Research and development expenses consist primarily of personnel-related costs for our development team, including salaries and bonuses, benefits, stock-based compensation expense, and allocated overhead costs. We have invested, and intend to continue to invest, in developing technology to support our growth. We capitalize certain software development costs that are attributable to developing new features and adding incremental functionality to our platform, and amortize such costs as costs of subscription revenue over the estimated life of the new incremental functionality, which is generally two to three years. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related costs directly associated with our sales and marketing staff, including salaries and bonuses, benefits, commissions, and stock-based compensation. Other sales and marketing costs include promotional events to promote our brand, including our Anaplan Live! customer experiences, advertising, and allocated overhead costs.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs associated with our executive, finance, legal, and human resources personnel, including salaries and bonuses, benefits, and stock-based compensation expense, professional fees for external legal, accounting and other consulting services, and allocated overhead costs.
Interest Income (Expense), Net
Interest income (expense), net consists primarily of interest income earned on our cash and cash equivalents, net of interest expense from our finance leases.
Other Income (Expense), Net
Other income (expense), net consists primarily of foreign exchange gains and losses.
Provision for Income Taxes Provision for income taxes consists primarily of income taxes related to foreign and state jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal, state, andU.K. deferred tax assets as we have concluded that it is not more likely than not that the deferred assets will be utilized. 25
--------------------------------------------------------------------------------
Table of Contents
Results of OperationsThe following tables set forth selected condensed consolidated statements of operations data for each of the periods indicated:
Three Months Ended
April 30,
2022 2021
(In thousands)
Revenue:
Subscription revenue $ 152,343 $ 118,343
Professional services revenue 16,816 11,482
Total revenue 169,159 129,825
Cost of revenue:
Cost of subscription revenue (1) 28,635 21,329
Cost of professional services revenue (1) 17,928 11,492 Total cost of revenue
46,563 32,821
Gross profit 122,596 97,004
Operating expenses:
Research and development (1) 43,738 33,212
Sales and marketing (1) 98,387 88,470
General and administrative (1) 40,583 24,945
Total operating expenses 182,708 146,627
Loss from operations (60,112) (49,623)
Interest income (expense), net (31) (151)
Other income (expense), net 2,566 (459)
Loss before income taxes (57,577) (50,233)
Provision for income taxes (283) (1,258)
Net loss $ (57,860) $ (51,491) (1) Includes stock-based compensation expense as follows: Cost of subscription revenue
$ 2,000 $ 1,522 Cost of professional services revenue 1,347 831 Research and development 10,571 6,966 Sales and marketing 16,150 16,633 General and administrative 8,461 8,119
Total stock-based compensation expense
Comparison of the Three Months Ended April 30, 2022 and 2021
Revenue
Three Months Ended
April 30,
2022 2021 % Change
(In thousands, except percentage data)
Subscription revenue $ 152,343 $ 118,343 29 %
Professional services revenue 16,816 11,482 46
Total revenue $ 169,159 $ 129,825 30 %
26--------------------------------------------------------------------------------
Table of Contents
Total revenue was
Subscription revenue was$152.3 million , or 90% of total revenue, in the three months endedApril 30, 2022 , compared to$118.3 million , or 91% of total revenue, in the three months endedApril 30, 2021 , an increase of$34.0 million , or 29%. The increase in subscription revenue was primarily driven by existing customers expanding their use of our platform, which accounted for 73% of the increase, and acquisition of new customers, which accounted for approximately 27% of the increase. Professional services revenue was$16.8 million in the three months endedApril 30, 2022 , compared to$11.5 million in the three months endedApril 30, 2021 , an increase of$5.3 million , or 46%. The increase in professional services revenue was primarily driven by sales of our professional services resulting from the growth of our customer base. Cost of Revenue Three Months Ended April 30, 2022 2021 % Change (In thousands, except percentage data) Cost of subscription revenue$ 28,635 $ 21,329 34 % Cost of professional services revenue 17,928 11,492 56 Total cost of revenue$ 46,563 $ 32,821 42 %
Total cost of revenue was
Cost of subscription revenue was$28.6 million in the three months endedApril 30, 2022 , compared to$21.3 million in the three months endedApril 30, 2021 , an increase of$7.3 million , or 34%. The increase in cost of subscription revenue was primarily due to an increase in salaries and bonuses, and benefits costs of$2.6 million , including stock-based compensation, an increase in hosting costs of$1.0 million , an increase in software licenses of$2.1 million , and an increase in amortization of our equipment leases and capitalized software development costs of$1.0 million . Cost of professional services revenue was$17.9 million in the three months endedApril 30, 2022 , compared to$11.5 million in the three months endedApril 30, 2021 , an increase of$6.4 million , or 56%. The increase in cost of professional services revenue was primarily due to an increase in the partner implementation costs related to an increase in partner activity of$4.4 million , and an increase in salary and bonuses, and benefits costs of$1.9 million , including stock-based compensation. Gross Profit and Gross Margin Three Months Ended April 30, 2022 2021 % Change (In thousands, except percentage data) Subscription gross profit$ 123,708 $ 97,014 28 % Professional services gross profit (1,112) (10) 11,020 Total gross profit$ 122,596 $ 97,004 26 % Subscription gross margin 81 % 82 % Professional services gross margin (7) % - % Total gross margin 72 % 75 % Gross profit was$122.6 million in the three months endedApril 30, 2022 , compared to$97.0 million in the three months endedApril 30, 2021 , an increase of$25.6 million , or 26%. The increase in gross profit was the result of the increases in our subscription revenue primarily driven by existing customers expanding their use of our platform and acquisition of new customers in the three months endedApril 30, 2022 . 27
--------------------------------------------------------------------------------
Table of Contents
Gross margin was 72% in the three months endedApril 30, 2022 , compared to 75% in the three months endedApril 30, 2021 . The decrease in gross margin was primarily due to an increase in professional services revenue, which generates a significantly lower gross margin than our subscription revenue, as a percentage of total revenue, and higher hosting and partner implementation costs.
Our gross margins can fluctuate from quarter to quarter as a result of the requirements, complexity, and timing of our customers' implementation projects that can vary significantly.
Operating Expenses
Three Months Ended
April 30,
2022 2021 % Change
(In thousands, except percentage data)
Operating expense:
Research and development $ 43,738 $ 33,212 32 %
Sales and marketing 98,387 88,470 11
General and administrative 40,583 24,945 63
Total operating expenses $ 182,708 $ 146,627 25 %
Research and Development
Research and development expenses were $43.7 million in the three months ended
April 30, 2022 , compared to $33.2 million in the three months ended April 30,
2021 , an increase of $10.5 million , or 32%. The increase includes an increase in
salary and bonuses and benefits costs of $8.5 million (which included an
increase in stock-based compensation of $3.7 million ) primarily related to an
increase in headcount, an increase in consulting expenses of $0.9 million , and
an increase in hosting fees of $0.5 million , partially offset by a decrease in
capitalized software development costs of $0.5 million .
Sales and Marketing
Sales and marketing expenses were$98.4 million in the three months endedApril 30, 2022 , compared to$88.5 million in the three months endedApril 30, 2021 , an increase of$9.9 million , or 11%. The increase was primarily due to an increase in salary and bonuses and benefits costs related to an increase in headcount of$5.3 million (which included an increase in commission expenses of$2.9 million , partially offset by a decrease in stock-based compensation of$0.7 million ), an increase in partner-related fees of$1.1 million , an increase in consulting expenses of$1.0 million , an increase in travel related expenses of$0.8 million , and an increase in software licenses of$0.7 million .
General and Administrative
General and administrative expenses were$40.6 million in the three months endedApril 30, 2022 , compared to$24.9 million in the three months endedApril 30, 2021 , an increase of$15.7 million , or 63%. The increase was primarily due to an increase in merger related costs and other expenses of$12.5 million , and an increase in salary and bonuses and benefits costs related to an increase in headcount of$3.8 million , including stock-based compensation, partially offset by a decrease in professional services and contractor costs of$0.6 million . Other Income (Expense), Net Three Months Ended April 30, 2022 2021 % Change (In thousands, except percentage data) Interest income (expense), net$ (31) $ (151) (79) % Other income (expense), net 2,566 (459) (659) 28
--------------------------------------------------------------------------------
Table of Contents
Interest income (expense), net
There was no material fluctuation in Interest income (expense), net for the three months endedApril 30, 2022 . Interest income (expense), net decreased by$0.1 million in the three months endedApril 30, 2022 . The decrease in interest income (expense), net was primarily due to lower interest income from our cash and cash equivalents as a result of lower interest rates in the three months endedApril 30, 2022 compared to the three months endedApril 30, 2021 .
Other income (expense), net
Other income (expense), net was a gain of$2.6 million in the three months endedApril 30, 2022 , compared to a loss of$0.5 million in the three months endedApril 30, 2021 , an increase in income of$3.1 million , or 659%. The change was primarily due to currency fluctuations and the related remeasurements during the periods. Provision for Income Taxes Three Months Ended April 30, 2022 2021 % Change (In thousands, except percentage data) Provision for income taxes$ (283) $ (1,258) (78) % The provision for income taxes was$0.3 million in the three months endedApril 30, 2022 , compared to$1.3 million in the three months endedApril 30, 2021 , a decrease of$1.0 million or 78%. The decrease in provision for income taxes was primarily due to a decrease in taxable income generated from intercompany cost-plus arrangements in certain European and Asian countries. Liquidity and Capital Resources
As of
There were no material changes outside of the ordinary course of business in our contractual obligations and commitments during the three months endedApril 30, 2022 from the contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year endedJanuary 31, 2022 filed with theSEC onMarch 23, 2022 .
Cash from operations could be affected by various risks and uncertainties, including but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A, "Risk Factors".
Loan and Credit Facility Agreements
InApril 2020 , we entered into the Third Amendment to Credit Agreement and First Amendment to Collateral Agreement with Wells Fargo as administrative agent and a lender (the "Third Amendment"). Among other things, the Third Amendment further amends the Credit Agreement entered into with Wells Fargo inApril 2018 , as amended inSeptember 2018 andOctober 2019 (the "Credit Agreement") in order to (1) increase the aggregate revolving credit commitment amount by$20.0 million , so that we may borrow up to$60.0 million under a secured revolving credit facility, subject to the terms of the Credit Agreement including the accounts receivable borrowing base, for general corporate purposes, and (2) extend the maturity date of the revolving credit facility untilApril 23, 2022 . Also, pursuant to the Third Amendment, any loans drawn on the credit facility will incur interest at a rate equal to the highest of (A) the prime rate, (B) the federal funds rate plus 0.5%, and (C) the one-month LIBOR plus 1%. Interest is payable monthly in arrears with the principal and any accrued and unpaid interest due onApril 23, 2022 . 29
--------------------------------------------------------------------------------
Table of Contents
As part of the Credit Agreement, we granted Wells Fargo a first priority lien in our accounts receivable, all of the issued shares of capital stock and equity interests in certain of our subsidiaries, and other corporate assets and agreed not to pledge our intellectual property to other parties. The Credit Agreement, as amended by the Third Amendment, includes affirmative and negative covenants, including financial covenants requiring the maintenance of: (1) minimum tangible net worth (defined as assets, excluding intangible assets, less liabilities) as of the last day of any fiscal quarter of not less than$150.0 million for any fiscal quarter ending on or prior toJanuary 31, 2022 and$125.0 million for any fiscal quarter ending thereafter, and (2) minimum billings for the most recent twelve months ending as of the last day of any fiscal quarter of not less than$350.0 million .
This Credit Agreement expired on
Cash Flows
The following table summarizes our cash flows for the periods presented:
Three Months Ended
April 30,
2022 2021
(In thousands)
Net cash provided by operating activities $ 14,369 $ 13,809
Net cash used in investing activities (4,507)
(6,199)
Net cash provided by (used in) financing activities 2,005 (428)
Operating Activities Net cash provided by operating activities of$14.4 million for the three months endedApril 30, 2022 , reflecting a net loss of$57.9 million , adjusted by non-cash charges for stock-based compensation of$38.5 million , amortization of deferred commissions of$12.5 million , depreciation and amortization of$7.2 million , amortization of operating lease right-of-use assets and accretion of operating lease liabilities of$2.5 million , and non-cash foreign currency remeasurement gains of$2.4 million . Changes in working capital were favorable to cash flows from operations by$14.0 million primarily due to a decrease in accounts receivable of$61.3 million due to timing of customer billings and collections, and an increase in other noncurrent liabilities of$0.5 million , partially offset by an increase in deferred commissions of$17.3 million related to commissions capitalized on our sales, a decrease in accounts payable and accrued expenses of$7.2 million due to timing of payments, a decrease in deferred revenue balance of$18.3 million , net payments for operating lease liabilities of$2.7 million , and an increase in prepaid expenses and other current assets of$2.6 million . Net cash provided by operating activities of$13.8 million for the three months endedApril 30, 2021 , reflecting a net loss of$51.5 million , adjusted by non-cash charges for stock-based compensation of$34.1 million , amortization of deferred commissions of$9.7 million , depreciation and amortization of$7.0 million , amortization of operating lease right-of-use assets and accretion of operating lease liabilities of$2.4 million . Changes in working capital were favorable to cash flows from operations by$12.4 million primarily due to a decrease in accounts receivable of$43.9 million due to timing of customer billings and collections, and an increase in other noncurrent liabilities of$0.7 million , partially offset by an increase in deferred commissions of$12.5 million related to commissions capitalized on our sales, a decrease in accounts payable and accrued expenses of$11.1 million due to timing of payments, a decrease in deferred revenue balance of$4.8 million , net payments for operating lease liabilities of$2.3 million , and an increase in prepaid expenses and other current assets of$1.3 million .
Investing Activities
Net cash used in investing activities for the three months endedApril 30, 2022 of$4.5 million was related to the capitalization of internal-use software of$3.6 million as we expanded our platform and increased our development efforts, and purchases of property and equipment of$0.9 million related to our growth. Net cash used in investing activities for the three months endedApril 30, 2021 of$6.2 million was related to the capitalization of internal-use software of$3.1 million as we expanded our platform and increased our development efforts, and purchases of property and equipment of$3.1 million related to our growth. 30
--------------------------------------------------------------------------------
Table of Contents
Financing Activities
Net cash provided by financing activities for the three months endedApril 30, 2022 of$2.0 million consisted primarily of$4.2 million in proceeds from the exercise of stock options, offset by$2.2 million principal payment on finance lease obligations. Net cash used in financing activities for the three months endedApril 30, 2021 of$0.4 million consisted primarily of$2.5 million principal payment on finance lease obligations, offset by$2.1 million in proceeds from the exercise of stock options. Critical Accounting Policies and Estimates Our condensed consolidated financial statements have been prepared in accordance withU.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected. During the three months endedApril 30, 2022 , there were no significant changes to our critical accounting policies and estimates as described in the financial statements contained in the Annual Report on Form 10-K for the year endedJanuary 31, 2022 filed with theSEC onMarch 23, 2022 . Recent Accounting Pronouncements See "Summary of Business and Significant Accounting Policies" in Note 1 of the notes to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
© Edgar Online, source
