The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, and (2) our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the fiscal year endedJanuary 31, 2021 included in the Annual Report on Form 10-K filed with theU.S. Securities and Exchange Commission (SEC) onMarch 31, 2021 . This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Unless the context otherwise requires, all references in this report to
"Snowflake," the "Company", "we," "our," "us," or similar terms refer to
Overview
We believe in a data connected world where organizations have seamless access to explore, share, and unlock the value of data. To realize this vision, we deliver the Data Cloud, an ecosystem where Snowflake customers, partners, data providers, and data consumers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways. Our platform is the innovative technology that powers the Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. We provide our platform through a customer-centric, consumption-based business model, only charging customers for the resources they use. Our cloud-native architecture consists of three independently scalable layers across storage, compute, and cloud services. The storage layer ingests massive amounts and varieties of data to create a unified data record. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases without latency. The cloud services layer intelligently optimizes each use case's performance requirements with no administration. This architecture is built on three major public clouds across 28 regional deployments around the world. These deployments are interconnected to deliver the Data Cloud, enabling a consistent, global user experience. We generate the substantial majority of our revenue from fees charged to our customers based on the storage, compute, and data transfer resources consumed on our platform as a single, integrated offering. For storage resources, consumption fees are based on the average terabytes per month of all of the customer's data stored in our platform. For compute resources, consumption fees are based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For data transfer resources, consumption fees are based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed. Our customers typically enter into capacity arrangements with a term of one to four years, or consume our platform under on-demand arrangements in which we charge for use of our platform monthly in arrears. Consumption for most customers accelerates from the beginning of their usage to the end of their contract terms and often exceeds their initial capacity commitment amounts. When this occurs, our customers have the option to amend their existing agreement with us to purchase additional capacity or request early renewals. When a customer's consumption during the contract term does not exceed its capacity commitment amount, it may have the option to roll over any unused capacity to future periods, generally upon the purchase of additional capacity. For these reasons, we believe our deferred revenue is not a meaningful indicator of future revenue that will be recognized in any given time period. 30 -------------------------------------------------------------------------------- Table of Contents Our go-to-market strategy is focused on acquiring new customers and driving continued use of our platform for existing customers. We primarily focus our selling efforts on large organizations and primarily sell our platform through a direct sales force, which targets technical and business leaders who are adopting a cloud strategy and leveraging data to improve their business performance. Our sales force is comprised of sales development, inside sales, and field sales personnel and is segmented by the size, region, and industry of prospective customers. Once our platform has been adopted, we focus on increasing the migration of additional customer workloads to our platform to drive increased consumption, as evidenced by our net revenue retention rate of 173% and 168% as ofOctober 31, 2021 andJanuary 31, 2021 , respectively. Our platform is used globally by organizations of all sizes across a broad range of industries. As ofOctober 31, 2021 , we had 5,416 total customers, increasing from 4,139 customers as ofJanuary 31, 2021 . Our platform has been adopted by many of the world's largest organizations that view Snowflake as a key strategic partner in their cloud and data transformation initiatives. As ofOctober 31, 2021 , our customers included 223 of the Fortune 500, based on the 2021 Fortune 500 list, and those customers contributed approximately 27% of our revenue for the nine months endedOctober 31, 2021 . Our Fortune 500 customer count is subject to adjustments for annual updates to the Fortune 500 list by Fortune, as well as acquisitions, consolidations, spin-offs, and other market activity with respect to such customers.
Elimination of Dual-Class Common Stock Structure
OnMarch 1, 2021 , all shares of our then-outstanding Class B common stock were automatically converted into the same number of shares of Class A common stock pursuant to the terms of our amended and restated certificate of incorporation. See Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. Key Factors Affecting Our Performance Adoption of our Platform and Expansion of the Data Cloud Our future success depends in large part on the market adoption of our platform. While we see growing demand for our platform, particularly from large enterprises, many of these organizations have invested substantial technical, financial, and personnel resources in their legacy database products or big data offerings, despite their inherent limitations. While this makes it difficult to predict customer adoption rates and future demand, we believe that the benefits of our platform put us in a strong position to capture the significant market opportunity ahead. Our platform powers the Data Cloud, an ecosystem of data providers, data consumers, and data application developers that enables our customers to securely share, connect, monetize, and acquire live data sets. Our future growth will be increasingly dependent on our ability to increase consumption of our platform by building and expanding this ecosystem and the types and quality of data available on the Data Cloud. Expanding Within our Existing Customer Base Our large base of customers represents a significant opportunity for further consumption of our platform. While we have seen a rapid increase in the number of customers that have contributed more than$1 million in product revenue in the trailing 12 months, we believe that there is a substantial opportunity to continue growing these customers further, as well as continuing to expand the usage of our platform within our other existing customers. We plan to continue investing to encourage increased consumption and adoption of new use cases among our existing customers. 31 -------------------------------------------------------------------------------- Table of Contents Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they migrate more data to the public cloud, identify new use cases, and realize the benefits of our platform and the Data Cloud. However, because we generally recognize product revenue on consumption and not ratably over the term of the contract, we do not have visibility into the timing of revenue recognition from any particular customer. In any given period, there is a risk that customer consumption of our platform will be slower than we expect, which may cause fluctuations in our revenue and results of operations. New software releases or hardware improvements, like better storage compression, may make our platform more efficient, enabling customers to consume fewer compute, storage, and data transfer resources to accomplish the same workloads, potentially reducing revenue as a result. Our ability to increase usage of our platform by, and sell additional contracted capacity to, existing customers, and, in particular, large enterprise customers, will depend on a number of factors, including our customers' satisfaction with our platform, competition, pricing, overall changes in our customers' spending levels, the effectiveness of our and our partners' efforts to help our customers realize the benefits of our platform, and the extent to which customers migrate new workloads to our platform over time. Acquiring New Customers We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales and marketing and brand awareness. Our ability to attract new customers will depend on a number of factors, including our success in recruiting and scaling our sales and marketing organization, competitive dynamics in our target markets, and our ability to build and maintain partner relationships, including with global system integrators, resellers, and technology partners. We intend to expand our direct sales force, with a focus on increasing sales to large organizations. While our platform is built for organizations of all sizes and industries, we have only recently focused our selling efforts on large enterprise customers. We may not achieve anticipated revenue growth from expanding our sales force to focus on large enterprises if we are unable to hire, develop, integrate, and retain talented and effective sales personnel; if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time; or if our sales and marketing programs are not effective. Investing in Growth and Scaling our Business We are focused on our long-term revenue potential. We believe that our market opportunity is large, and we will continue to invest significantly in scaling across all organizational functions in order to grow our operations both domestically and internationally. We have a history of introducing successful new features and capabilities on our platform, and we intend to continue to invest heavily to grow our business to take advantage of our expansive market opportunity rather than optimize for profitability or cash flow in the near future. 32 -------------------------------------------------------------------------------- Table of Contents Key Business Metrics We monitor the key business metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. The calculation of the key business metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors. Product Revenue Product revenue is a key metric for us because we recognize revenue based on platform consumption, which is inherently variable at our customers' discretion, and not based on the amount and duration of contract terms. Product revenue is primarily derived from the consumption of compute, storage, and data transfer resources, which are consumed by customers on our platform as a single, integrated offering. Customers have the flexibility to consume more than their contracted capacity during the contract term and may have the ability to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. Our consumption-based business model distinguishes us from subscription-based software companies that generally recognize revenue ratably over the contract term and may not permit rollover. Because customers have flexibility in the timing of their consumption, which can exceed their contracted capacity or extend beyond the original contract term in many cases, the amount of product revenue recognized in a given period is an important indicator of customer satisfaction and the value derived from our platform. While customer use of our platform in any period is not necessarily indicative of future use, we estimate future revenue using predictive models based on customers' historical usage to plan and determine financial forecasts. Product revenue excludes our professional services and other revenue, which has been less than 10% of revenue for each of the periods presented. Remaining Performance Obligations Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. RPO excludes performance obligations from on-demand arrangements and certain time and materials contracts that are billed in arrears. RPO is not necessarily indicative of future product revenue growth because it does not account for the timing of customers' consumption or their consumption of more than their contracted capacity. Moreover, RPO is influenced by a number of factors, including the timing of renewals, the timing of purchases of additional capacity, average contract terms, seasonality, and the extent to which customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. Due to these factors, it is important to review RPO in conjunction with product revenue and other financial metrics disclosed elsewhere herein. Total Customers We count the total number of customers at the end of each period. For purposes of determining our customer count, we treat each customer account, including accounts for end-customers under a reseller arrangement, that has at least one corresponding capacity contract as a unique customer, and a single organization with multiple divisions, segments, or subsidiaries may be counted as multiple customers. For purposes of determining our customer count, we do not include customers that consume our platform only under on-demand arrangements. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. We believe that the number of customers is an important indicator of the growth of our business and future revenue trends. 33 -------------------------------------------------------------------------------- Table of Contents Net Revenue Retention Rate We believe the growth in use of our platform by our existing customers is an important measure of the health of our business and our future growth prospects. We monitor our dollar-based net revenue retention rate to measure this growth. To calculate this metric, we first specify a measurement period consisting of the trailing two years from our current period end. Next, we define as our measurement cohort the population of customers under capacity contracts that used our platform at any point in the first month of the first year of the measurement period. Starting with the fiscal quarter endedOctober 31, 2021 , the cohorts used to calculate net revenue retention rate include end-customers under a reseller arrangement. Although the impact is not material, we have adjusted all prior periods presented to reflect this inclusion. We then calculate our net revenue retention rate as the quotient obtained by dividing our product revenue from this cohort in the second year of the measurement period by our product revenue from this cohort in the first year of the measurement period. Any customer in the cohort that did not use our platform in the second year remains in the calculation and contributes zero product revenue in the second year. Our net revenue retention rate is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. Since we will continue to attribute the historical product revenue to the consolidated contract, consolidation of capacity contracts within a customer's organization typically will not impact our net revenue retention rate unless one of those customers was not a customer at any point in the first month of the first year of the measurement period. Although our net revenue retention rate has increased over the periods presented below, we expect our net revenue retention rate to decrease over the longer-term as customers that have consumed our platform for an extended period of time become a larger portion of both our overall customer base and our product revenue that we use to calculate net revenue retention rate, and as their consumption growth primarily relates to existing use cases rather than new use cases. Customers with Trailing 12-Month Product Revenue Greater than $1Million Large customer relationships lead to scale and operating leverage in our business model. Compared with smaller customers, large customers present a greater opportunity for us to sell additional capacity because they have larger budgets, a wider range of potential use cases, and greater potential for migrating new workloads to our platform over time. As a measure of our ability to scale with our customers and attract large enterprises to our platform, we count the number of customers under capacity arrangements that contributed more than$1 million in product revenue in the trailing 12 months. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. Three Months Ended October 31, 2021 July 31, 2021 April 30, 2021 January 31, 2021 October 31, 2020 Product revenue (in millions) $ 312.5 $ 254.6 $ 213.8 $ 178.3 $ 148.5 October 31, 2021 July 31, 2021 April 30, 2021 January 31, 2021 October 31, 2020 Remaining performance obligations (in millions)(1)$ 1,804.0 $ 1,528.7
5,416 4,990 4,532 4,139 3,554 Net revenue retention rate 173 % 170 % 168 % 168 % 162 % Customers with trailing 12-month product revenue greater than$1 million 148 116 104 77 65 ________________ (1)As ofOctober 31, 2021 , our RPO was approximately$1.8 billion , of which we expect approximately 55% to be recognized as revenue in the twelve months endingOctober 31, 2022 based on historical customer consumption patterns and revenue results. The weighted-average remaining life of our capacity contracts was 1.9 years as ofOctober 31, 2021 . However, the amount and timing of revenue recognition are generally driven by customers' consumption, which is inherently variable at our customers' discretion and can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. In addition, our historical customer consumption patterns and revenue results are not necessarily indicative of future results. 34 -------------------------------------------------------------------------------- Table of Contents Impact of COVID-19 The ongoing COVID-19 pandemic has caused general business disruption worldwide beginning inJanuary 2020 . The full extent to which the COVID-19 pandemic, including any new variants, may continue to directly or indirectly impact our business, results of operations, cash flows, and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted. Although our results of operations, cash flows, and financial condition were not adversely impacted in the three and nine months endedOctober 31, 2021 , we have experienced, and may continue to experience, an adverse impact on certain parts of our business as a result of governmental restrictions and other measures to mitigate the spread of COVID-19, including a lengthening of the sales cycle for some prospective customers and delays in the delivery of professional services and trainings to our customers. We have also experienced, and may continue to experience, a modest positive impact on other aspects of our business, including an increase in consumption of our platform by existing customers. Moreover, during the three and nine months endedOctober 31, 2021 , we continued to see slower growth in certain operating expenses due to reduced business travel and the virtualization or cancellation of customer, partner, and employee events. While slower growth in operating expenses had a short term benefit to our results of operations for the three and nine months endedOctober 31, 2021 , we do not yet have visibility into the full impact this will have on our business. We cannot predict how long we will continue to experience these impacts as regulations and other measures are expected to change over time, and the availability, efficacy, and acceptance of vaccines or other preventative measures remains unclear. However, if our customers or partners experience downturns or uncertainty in their own business operations or revenue resulting from the spread or resurgence of COVID-19, they may decrease or delay their spending, request pricing discounts, or seek renegotiations of their contracts, any of which may result in decreased revenue and cash receipts for us in future periods. In addition, we may experience customer losses, including due to bankruptcy or our customers ceasing operations, which may result in an inability to collect accounts receivable from these customers. In addition, in response to the spread of COVID-19, we required virtually all of our employees to work remotely to minimize the risk of the virus to our employees and the communities in which we operate, and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners. During the nine months endedOctober 31, 2021 , a number of employees returned to offices in certain locations, but re-opening of our offices remains limited and may change at any time. Although we expect most of our employees to return to physical offices in the future, the nature and extent of that return is uncertain. As our offices reopen, we expect to incur incremental expenses as we resume onsite services and related in-office costs. Given the uncertainty regarding the length, severity, and ability to combat the COVID-19 pandemic, we cannot reasonably estimate the long-term impact on our future results of operations, cash flows, or financial condition. For additional details, see the section titled "Risk Factors." Components of Results of Operations Revenue We deliver our platform over the internet as a service. Customers choose to consume our platform under either capacity arrangements, in which they commit to a certain amount of consumption at specified prices, or under on-demand arrangements, in which we charge for use of our platform monthly in arrears. Under capacity arrangements, from which a majority of our revenue is derived, we typically bill our customers annually in advance of their consumption. However, in future periods, we expect to see an increase in capacity contracts providing for quarterly upfront billings and monthly in arrears billings as our customers increasingly want to align consumption and timing of payments. Revenue from on-demand arrangements typically relates to initial consumption as part of customer onboarding and, to a lesser extent, overage consumption beyond a customer's contracted usage amount or following the expiration of a customer's contract. Revenue from on-demand arrangements represented 3% of our revenue for each of the three and nine months endedOctober 31, 2021 and 2020. We recognize revenue as customers consume compute, storage, and data transfer resources under either of these arrangements. In limited instances, customers pay an annual deployment fee to gain access to a dedicated instance of a virtual private deployment. We recognize the deployment fee ratably over the contract term. Such deployment revenue represented approximately 1% of our revenue for each of the three and nine months endedOctober 31, 2021 and 2020. 35 -------------------------------------------------------------------------------- Table of Contents Our customer contracts for capacity typically have a term of one to four years. The weighted-average term of capacity contracts entered into during the three and nine months endedOctober 31, 2021 is 2.4 years and 2.2 years, respectively. To the extent our customers enter into such contracts and either consume our platform in excess of their capacity commitments or continue to use our platform after expiration of the contract term, they are charged for their incremental consumption. In many cases, our customer contracts permit customers to roll over any unused capacity to a subsequent order, generally upon the purchase of additional capacity. For those customers who do not have a capacity arrangement, our on-demand arrangements generally have a monthly stated contract term and can be terminated at any time by either the customer or us. We generate the substantial majority of our revenue from fees charged to our customers based on the storage, compute, and data transfer resources consumed on our platform as a single, integrated offering. We do not make any one of these resources available for consumption without the others. Instead, each of compute, storage, and data transfer work together to drive consumption on our platform. For storage resources, consumption for a given customer is based on the average terabytes per month of all of such customer's data stored in our platform. For compute resources, consumption is based on the type of compute resource used and the duration of use or, for some features, the volume of data processed. For data transfer resources, consumption is based on terabytes of data transferred, the public cloud provider used, and the region to and from which the transfer is executed. Because customers have flexibility in their consumption, and we generally recognize revenue on consumption and not ratably over the term of the contract, we do not have the visibility into the timing of revenue recognition from any particular customer contract that typical subscription-based software companies may have. As our customer base grows, we expect our ability to forecast customer consumption in the aggregate will improve. However, in any given period, there is a risk that customers will consume our platform more slowly than we expect, which may cause fluctuations in our revenue and results of operations. Our revenue also includes professional services and other revenue, which consists of consulting, on-site technical solution services, and training related to our platform. Our professional services revenue is recognized over time based on input measures, including time and materials costs incurred relative to total costs, with consideration given to output measures, such as contract deliverables, when applicable. Other revenue consists of fees from customer training delivered on-site or through publicly available classes. Allocation of Overhead Costs Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Such costs include costs associated with office facilities, depreciation of property and equipment, and information technology (IT) related personnel and other expenses, such as software and subscription services. Cost of Revenue Cost of revenue consists of cost of product revenue and cost of professional services and other revenue. Cost of revenue also includes allocated overhead costs. Cost of product revenue. Cost of product revenue consists primarily of (i) third-party cloud infrastructure expenses incurred in connection with our customers' use of our platform and the deployment and maintenance of our platform on public clouds, including different regional deployments, and (ii) personnel-related costs associated with customer support and maintaining service availability and security of our platform, including salaries, benefits, bonuses, and stock-based compensation. We periodically receive credits from third-party cloud providers that are recorded as a reduction to the third-party cloud infrastructure expenses. Cost of product revenue also includes amortization of internal-use software development costs, amortization of acquired developed technology intangible assets, and expenses associated with software and subscription services dedicated for use by our customer support team and our engineering team responsible for maintaining our platform. Cost of professional services and other revenue. Cost of professional services and other revenue consists primarily of personnel-related costs associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation, and costs of contracted third-party partners and software tools. 36 -------------------------------------------------------------------------------- Table of Contents We intend to continue to invest additional resources in our platform infrastructure and our customer support and professional services organizations to support the growth of our business. Some of these investments, including certain support costs and costs of expanding our business internationally, are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period. Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and sales commissions. Operating expenses also include allocated overhead costs. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing staff, including salaries, benefits, bonuses, and stock-based compensation. Sales and marketing expenses also include draws and sales commissions paid to our sales force and referral fees paid to independent third parties, including amortization of deferred commissions. Sales commissions and referral fees earned upon the origination of the new customer or customer expansion contracts are deferred and then amortized over a period of benefit that we determined to be five years. A portion of the sales commissions paid to the sales force is earned based on the rate of the customers' consumption of our platform, and a portion of the commissions paid to the sales force is earned upon the origination of the customer contracts. Sales commissions tied to customers' consumption are expensed in the same period as they are earned. Sales and marketing expenses also include advertising costs and other expenses associated with our marketing and business development programs, including Summit, our user conference, offset by proceeds from such conferences and programs. In addition, sales and marketing expenses are comprised of travel-related expenses, software and subscription services dedicated for use by our sales and marketing organizations, and outside services contracted for sales and marketing purposes. We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business. However, we expect that our sales and marketing expenses will decrease as a percentage of our revenue over time. Research and Development Research and development expenses consist primarily of personnel-related expenses associated with our research and development staff, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include contractor or professional services fees, third-party cloud infrastructure expenses incurred in developing our platform, and computer equipment, software, and subscription services dedicated for use by our research and development organization. We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform. However, we expect that our research and development expenses will decrease as a percentage of our revenue over time. In addition, research and development expenses that qualify as internal-use software development costs are capitalized, the amount of which may fluctuate significantly from period to period. General and Administrative General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources, facilities, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation. General and administrative expenses also include external legal, accounting, and other professional services fees, software and subscription services dedicated for use by our general and administrative functions, insurance and other corporate expenses. As a result of our initial public offering (IPO), we have incurred and expect to continue to incur additional expenses to operate as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time. 37 -------------------------------------------------------------------------------- Table of Contents Interest Income Interest income consists primarily of interest income earned on our cash equivalents and short-term and long-term investments, net of associated fees. Other Income (Expense), Net Other income (expense), net consists primarily of unrealized gains on our strategic investments in equity securities and the effect of exchange rates on our foreign currency-denominated asset and liability balances. Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign andU.S. state jurisdictions in which we conduct business. We maintain a full valuation allowance against ourU.S. andU.K. deferred tax assets because we have concluded that it is more likely than not that the deferred tax assets will not be realized. 38 -------------------------------------------------------------------------------- Table of Contents Results of Operations The following table sets forth our condensed consolidated statements of operations data for the periods indicated (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Revenue$ 334,441 $ 159,624 $ 835,553 $ 401,584 Cost of revenue(1) 120,786 66,681 324,253 159,684 Gross profit 213,655 92,943 511,300 241,900 Operating expenses(1): Sales and marketing 190,971 134,727 540,678 325,267 Research and development 115,900 74,138 343,783 143,949 General and administrative 64,055 53,532 189,846 116,224 Total operating expenses 370,926 262,397 1,074,307 585,440 Operating loss (157,271) (169,454) (563,007) (343,540) Interest income 1,985 1,517 6,787 5,654 Other income (expense), net 1,609 (519) 9,867 (1,561) Loss before income taxes (153,677) (168,456) (546,353) (339,447) Provision for income taxes 1,179 433 1,442 720 Net loss$ (154,856) $ (168,889) $ (547,795) $ (340,167) ________________
(1)Includes stock-based compensation as follows (in thousands):
Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Cost of revenue $ 21,163$ 13,226 $ 66,380 $ 15,507 Sales and marketing 43,074 39,481 141,463 49,714 Research and development 56,142 39,368 174,788 49,186 General and administrative 24,008 27,066 76,761 43,383
Total stock-based compensation
Prior toSeptember 2020 , all stock-based compensation associated with our restricted stock units (RSUs) granted prior to our IPO remained unrecognized as the performance-based vesting condition applicable to such RSUs was not deemed probable until consummated. Upon the effectiveness of our IPO inSeptember 2020 , we began recognizing, using an accelerated attribution method, stock-based compensation associated with our RSUs granted prior to our IPO as the performance-based vesting condition applicable to such RSUs was satisfied. We recognized stock-based compensation of$49.3 million and$191.3 million associated with such RSUs for the three and nine months endedOctober 31, 2021 , respectively, compared to$97.0 million for each of the three and nine months endedOctober 31, 2020 , of which$55.5 million related to cumulative stock-based compensation was recognized upon the effectiveness of the IPO, for the portion of the RSUs for which the service-based vesting condition had been fully or partially satisfied. The overall increase in stock-based compensation for the three and nine months endedOctober 31, 2021 compared to the three and nine months endedOctober 31, 2020 was also attributable to additional RSUs granted after our IPO with an increased weighted-average grant date fair value. We recognized stock-based compensation of$79.9 million and$210.2 million associated with these RSUs granted after our IPO for the three and nine months endedOctober 31, 2021 , respectively. The remaining increase was related to our 2020 Employee Stock Purchase Plan (2020 ESPP), which became effective in connection with our IPO, offset by an increase in capitalized internal-use software development costs.
As of
See Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.
39
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Table of Contents The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Revenue 100 % 100 % 100 % 100 % Cost of revenue(1) 36 42 39 40 Gross profit 64 58 61 60 Operating expenses(1): Sales and marketing 57 84 65 81 Research and development 35 46 40 36 General and administrative 19 34 23 29 Total operating expenses 111 164 128 146 Operating loss (47) (106) (67) (86) Interest income 1 - 1 1 Other income (expense), net - - 1 - Loss before income taxes (46) (106) (65) (85) Provision for income taxes - - 1 - Net loss (46%) (106%) (66%) (85%) ________________
(1)Stock-based compensation included in the table above as a percentage of revenue as follows:
Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Cost of revenue 6 % 8 % 8 % 4 % Sales and marketing 13 25 17 12 Research and development 17 25 21 12 General and administrative 7 17 9 11 Total stock-based compensation 43% 75% 55% 39% 40
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Table of Contents Comparison of the Three and Nine Months EndedOctober 31, 2021 and 2020 Revenue Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Revenue: Product$ 312,458 $ 148,473 110%$ 780,911 $ 375,506 108% Professional services and other 21,983 11,151 97% 54,642 26,078 110% Total$ 334,441 $ 159,624 110%$ 835,553 $ 401,584 108% Percentage of revenue: Product 93% 93% 93% 94% Professional services and other 7% 7% 7% 6% Total 100% 100% 100% 100% Product revenue increased$164.0 million and$405.4 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to increased consumption of our platform by existing customers, as evidenced by our net revenue retention rate of 173% as ofOctober 31, 2021 . The increase in product revenue was also driven by an increase in capacity sales prices of approximately 4% and 5% for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to increased sales of higher editions of our offerings. We had 148 customers with product revenue of greater than$1 million for the trailing 12 months endedOctober 31, 2021 , an increase from 65 customers as ofOctober 31, 2020 . Such customers represented approximately 53% and 46% of our product revenue for each of the trailing 12 months endedOctober 31, 2021 and 2020, respectively. Approximately 97% and 95% of our revenue for the three and nine months endedOctober 31, 2021 , respectively, was derived from existing customers under capacity arrangements, compared to 95% and 92% for the same periods in the prior year, respectively. Revenue derived from new customers under capacity arrangements represented less than 1% and approximately 3% of our revenue for the three and nine months endedOctober 31, 2021 , respectively, compared to 2% and 5% for the same periods in the prior year, respectively. The remainder was driven by on-demand arrangements. As described in the section titled "Impact of COVID-19," we have experienced impacts from the ongoing COVID-19 pandemic, including the elongation of sales cycles, that may impact new customer acquisition, the timing of future revenue recognition, and our future growth rates. We continue to carefully monitor the impact of COVID-19 on product revenue, customer acquisitions, and net revenue retention rates. Professional services and other revenue increased$10.8 million and$28.6 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year as we expanded our professional services organization to help our customers further realize the benefits of our platform. 41 -------------------------------------------------------------------------------- Table of Contents Cost of Revenue, Gross Profit (Loss), and Gross Margin Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Cost of revenue: Product$ 92,292 $ 51,816 78%$ 245,420 $ 130,065 89% Professional services and other 28,494 14,865 92% 78,833 29,619 166%
Total cost of revenue
81%$ 324,253 $ 159,684 103% Gross profit (loss): Product$ 220,166 $ 96,657 128%$ 535,491 $ 245,441 118% Professional services and other (6,511) (3,714) 75% (24,191) (3,541) 583% Total gross profit$ 213,655 $ 92,943 130%$ 511,300 $ 241,900 111% Gross margin: Product 70% 65% 69% 65% Professional services and other (30%) (33%) (44%) (14%)
Total gross margin 64% 58% 61% 60% Headcount (at period end) Product 226 139 226 139 Professional services and other 297 143 297 143 Total headcount 523 282 523 282 Cost of product revenue increased$40.5 million and$115.4 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase of$30.3 million and$68.0 million in third-party cloud infrastructure expenses as a result of increased customer consumption. Personnel-related costs and allocated overhead costs also increased$9.7 million and$43.7 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, as a result of increased stock-based compensation related to our RSUs, increased headcount, and increased overall costs to support the growth in our business. Our product gross margin was 70% and 69% for the three and nine months endedOctober 31, 2021 , respectively, compared to 65% for each of the three and nine months endedOctober 31, 2020 , primarily due to (i) higher volume-based discounts for our purchases of third-party cloud infrastructure, (ii) an increased percentage of revenue from consumption of computing resources due to better storage compression and from consumption of higher editions of our offerings, and (iii) increased scale across our cloud infrastructure regions, partially offset by the increase in stock-based compensation. While we expect our product gross margin to increase for the fiscal year endingJanuary 31, 2022 , compared to the fiscal year endedJanuary 31, 2021 , fluctuations in the mix and timing of customers' consumption, which is inherently variable at our customers' discretion, whether or not a customer contracts with us through our marketplace listings, our discounting practices, including as a result of changes to the competitive environment, and the extent of our investments in our operations, including performance improvements that may make our platform more efficient, could hinder any improvement in our product gross margin. Cost of professional services and other revenue increased$13.6 million and$49.2 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase of$13.0 million and$48.2 million in personnel-related costs and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business and increased stock-based compensation primarily related to our RSUs. 42 -------------------------------------------------------------------------------- Table of Contents Professional services and other gross margins improved for the three months endedOctober 31, 2021 , compared to the same period in the prior year, largely due to cumulative stock-based compensation recognized during the three months endedOctober 31, 2020 upon the effectiveness of our IPO. See Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. Professional services and other gross margins declined significantly for the nine months endedOctober 31, 2021 , compared to the same period in the prior year, primarily due to the overall increase in stock-based compensation. We do not believe the year-over-year changes in professional services and other gross margins are meaningful given that we are continuing to scale our professional services organization and our professional services and other revenue represents a small percentage of our revenue. Sales and Marketing Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Sales and marketing$ 190,971 $ 134,727 42%$ 540,678 $ 325,267 66% Percentage of revenue 57% 84% 65% 81% Headcount (at period end) 1,672 1,177 1,672 1,177 Sales and marketing expenses increased$56.2 million and$215.4 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase of$37.4 million and$180.0 million in personnel-related costs (excluding commission expenses) and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business and increased stock-based compensation primarily related to our RSUs and the 2020 ESPP. Expenses associated with sales commissions and draws paid to our sales force, including amortization of deferred commissions, and third-party referral fees increased$10.3 million and$23.0 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase in customers' consumption of our platform. The remainder was driven by an increase of$4.4 million and$10.3 million in advertising costs and other expenses associated with our marketing programs for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year. The overall increase in sales and marketing expenses for the nine months endedOctober 31, 2021 was partially offset by lower travel and event expenses as we continue to impose certain travel restrictions and replace in-person events with digital events in response to the COVID-19 pandemic. These changes resulted in a$2.0 million reduction in travel-related expenses and a$1.8 million reduction in expenses relating to our user conferences and events, for the nine months endedOctober 31, 2021 compared to the same period in the prior year. Research and Development Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Research and development$ 115,900 $ 74,138 56%$ 343,783 $ 143,949 139% Percentage of revenue 35% 46% 40% 36% Headcount (at period end) 705 440 705 440 Research and development expenses increased$41.8 million and$199.8 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase of$34.4 million and$179.3 million in personnel-related costs and allocated overhead costs, as a result of increased headcount and overall costs to support the growth in our business and increased stock-based compensation related to our RSUs, partially offset by increased capitalized internal-use software development costs. Additionally, third-party cloud infrastructure expenses incurred in developing our platform increased$4.7 million and$14.8 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year. 43 --------------------------------------------------------------------------------
Table of Contents General and Administrative Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) General and administrative$ 64,055 $ 53,532 20%$ 189,846 $ 116,224 63% Percentage of revenue 19% 34% 23% 29% Headcount (at period end) 657 354 657 354 General and administrative expenses increased$10.5 million and$73.6 million for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, primarily due to an increase of$10.1 million and$28.6 million in personnel-related costs (excluding stock-based compensation) and allocated overhead costs as a result of increased headcount and overall costs to support the growth in our business. Stock-based compensation increased$33.4 million for the nine months endedOctober 31, 2021 , compared to the same period in the prior year, primarily attributable to additional RSUs granted as a result of increased headcount. Stock-based compensation decreased$3.1 million for the three months endedOctober 31, 2021 , compared to the same period in the prior year, primarily driven by the cumulative stock-based compensation of$11.6 million recognized during the three months endedOctober 31, 2020 upon the effectiveness of our IPO. See Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. The overall decrease in stock-based compensation was partially offset by an increase of$6.2 million related to additional RSUs granted after our IPO with an increased weighted-average grant date fair value. The remaining increase of$3.5 million and$11.6 million in general and administrative expenses for the three and nine months endedOctober 31, 2021 , respectively, compared to the same periods in the prior year, was attributable to increased insurance expenses, other corporate expenses, and outside services primarily related to external legal, accounting, and other professional services fees, to support the normal course of operating as a public company and our continued growth. Other Income (Expense), Net Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Unrealized gains on strategic investments in equity securities $ 455 $ - NM$ 8,515 $ - NM Other 1,154 (519) (322%) 1,352 (1,561) (187%)
Other income (expense), net
(410%)$ 9,867 $ (1,561) (732%) NM - Not meaningful. Other income (expense), net increased$2.1 million for the three months endedOctober 31, 2021 compared to the same period in the prior year, as we had net gains on foreign currency transactions for the three months endedOctober 31, 2021 and net losses on foreign currency transactions for the three months endedOctober 31, 2020 . Other income (expense), net increased$11.4 million for the nine months endedOctober 31, 2021 compared to the same period in the prior year, primarily due to unrealized gains on our strategic investments in equity securities recorded during the nine months endedOctober 31, 2021 . 44 --------------------------------------------------------------------------------
Table of Contents Provision for Income Taxes Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Loss before income taxes$ (153,677) $ (168,456) (9%)$ (546,353) $ (339,447) 61% Provision for income taxes 1,179 433 172% 1,442 720 100% Effective tax rate (0.8%) (0.3%) (0.3%) (0.2%) We maintain a full valuation allowance on ourU.S. andU.K. deferred tax assets, and the significant components of our recorded tax expense are current cash taxes in various jurisdictions. The cash tax expenses are impacted by each jurisdiction's individual tax rates, laws on the timing of recognition of income and deductions, and availability of net operating losses and tax credits. Our effective tax rate might fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than forecasted in countries that have lower statutory rates and higher than forecasted in countries that have higher statutory rates. Liquidity and Capital Resources Since inception, we have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers as further detailed below. Our IPO resulted in aggregate net proceeds of$3.7 billion , after underwriting discounts of$121.7 million . We also received aggregate proceeds of$500.0 million related to certain concurrent private placements, and did not pay any underwriting discounts or commissions with respect to the shares that were sold in these private placements. As ofOctober 31, 2021 , our principal sources of liquidity were cash, cash equivalents, and short-term and long-term investments totaling$5.1 billion . Our investments primarily consist of corporate notes and bonds, commercial paper, money market funds,U.S. government and agency securities, and certificates of deposit. We believe that our existing cash, cash equivalents, and short-term and long-term investments will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate, expenditures related to our headcount growth, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase public cloud capacity, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform. We may continue to enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may, as a result of those arrangements or the general expansion of our business, be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition. The following table shows a summary of our cash flows for the periods presented (in thousands): Nine Months Ended October 31, 2021 2020
Net cash provided by (used in) operating activities
$ (65,031) Net cash used in investing activities$ (56,967) $ (875,038) Net cash provided by financing activities$ 142,671
Operating Activities Our largest source of operating cash is payments received from our customers. Our primary uses of cash from operating activities are for personnel-related expenses, sales and marketing expenses, third-party cloud infrastructure expenses, and overhead costs. We have supplemented working capital through net proceeds from the sale of equity securities. 45
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Net cash provided by (used in) operating activities mainly consists of our net loss adjusted for certain non-cash items, primarily consisting of (i) stock-based compensation, net of amounts capitalized, (ii) net amortization of premiums on investments, (iii) amortization of deferred commissions, (iv) amortization of operating lease right-of-use assets, and (v) depreciation of property and equipment and amortization of acquired intangible assets, and changes in operating assets and liabilities during each period. For the nine months endedOctober 31, 2021 , net cash provided by operating activities was$31.3 million , primarily consisting of our net loss of$547.8 million , adjusted for non-cash charges of$558.7 million , and net cash inflows of$20.4 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities during the nine months endedOctober 31, 2021 were (i) a$124.0 million increase in deferred revenue due to invoicing for prepaid capacity agreements outpacing revenue recognition, (ii) a$43.1 million increase in accrued expenses and other liabilities primarily due to increased headcount and growth in our business, and (iii) a$39.1 million decrease in accounts receivable primarily due to timing of billings, as we have received a higher volume of orders from new and existing customers in the fourth fiscal quarter of each year as a result of industry buying patterns, partially offset by (i) a$112.8 million increase in prepaid expenses and other assets primarily driven by increased prepaid third-party cloud infrastructure expenses, (ii) a$52.9 million increase in deferred commissions earned on bookings, and (iii) a$24.8 million decrease in operating lease liabilities due to payments related to our operating lease obligations. For the nine months endedOctober 31, 2020 , net cash used in operating activities was$65.0 million , primarily consisting of our net loss of$340.2 million , adjusted for non-cash charges of$215.7 million and net cash inflows of$59.5 million provided by changes in our operating assets and liabilities, net of the effect of business combinations. The main drivers of the changes in operating assets and liabilities, net of the effect of business combinations, during the nine months endedOctober 31, 2020 were (i) a$111.7 million increase in deferred revenue, resulting primarily from increased prepaid capacity arrangements, (ii) a$22.5 million increase in accrued expenses and other liabilities due to increased headcount, growth in our business, and employee contributions under the 2020 ESPP which became effective in connection with our IPO, and (iii) a$9.2 million decrease in accounts receivable due to timing of collections, partially offset by (i) a$29.5 million increase in prepaid expenses and other assets, primarily driven by prepaid insurance as a result of becoming a public company, (ii) a$27.3 million increase in deferred commissions earned on bookings, and (iii) a$23.4 million decrease in operating lease liabilities due to payments related to our operating lease obligations. Net cash provided by operating activities was$31.3 million for the nine months endedOctober 31, 2021 , compared to the net cash used in operating activities of$65.0 million for the nine months endedOctober 31, 2020 , primarily due to an increase of$485.9 million in cash collected from customers resulting from increased sales. This was partially offset by increased expenditures due to an increase in headcount and growth in our business. We expect net cash used in operating activities to decrease for the fiscal year endingJanuary 31, 2022 compared to the fiscal year endedJanuary 31, 2021 . Investing Activities Net cash used in investing activities for the nine months endedOctober 31, 2021 was$57.0 million , primarily as a result of net purchases of investments, and, to a lesser extent, purchases of property and equipment to support our office facilities, purchases of intangible assets, and capitalized internal-use software development costs. Net cash used in investing activities for the nine months endedOctober 31, 2020 was$875.0 million , primarily as a result$834.8 million of net purchases of investments, and, to a lesser extent, purchases of property and equipment to support additional office facilities, purchases of intangible assets, cash paid for a business combination, and capitalized internal-use software development costs. Financing Activities Net cash provided by financing activities for the nine months endedOctober 31, 2021 was$142.7 million , primarily as a result of proceeds from the issuance of equity securities under our equity incentive plans. Net cash provided by financing activities for the nine months endedOctober 31, 2020 was$4.8 billion , primarily as a result of$4.2 billion of aggregate net proceeds from our IPO and the concurrent private placements completed inSeptember 2020 , net of underwriting discounts, as well as$509.8 million in proceeds from the issuance of equity securities. 46
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Contractual Obligations and Commitments There were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the nine months endedOctober 31, 2021 from the commitments and contractual obligations disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," set forth in our Annual Report on Form 10-K for the fiscal year endedJanuary 31, 2021 , which was filed with theSEC onMarch 31, 2021 . Off-Balance Sheet Arrangements We did not have, during any of the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Critical Accounting Policies and Estimates Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance withU.S. generally accepted accounting principles (GAAP). The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. There have been no material changes to our critical accounting policies and estimates as compared to those described in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K for the fiscal year endedJanuary 31, 2021 , which was filed with theSEC onMarch 31, 2021 . Recent Accounting Pronouncements See Note 2 to our condensed consolidated financial statements included elsewhere on this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. JOBS Act Accounting Election We are an emerging growth company, as defined in the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Based on the market value of our Class A common stock held by non-affiliates as of the last business day of our fiscal second quarter endedJuly 31, 2021 , we will cease to be an emerging growth company as ofJanuary 31, 2022 . 47
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