PURE STORAGE, INC., 10-K filed on 3/25/2021
Annual Report
v3.21.1
Cover - USD ($)
$ in Billions
12 Months Ended
Jan. 31, 2021
Mar. 18, 2021
Aug. 02, 2020
Document And Entity Information [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Jan. 31, 2021    
Current Fiscal Year End Date --01-31    
Document Transition Report false    
Entity File Number 001-37570    
Entity Registrant Name Pure Storage, Inc.    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 27-1069557    
Entity Address, Address Line One 650 Castro Street    
Entity Address, Address Line Two Suite 400    
Entity Address, City or Town Mountain View    
Entity Address, State or Province CA    
Entity Address, Postal Zip Code 94041    
City Area Code 800    
Local Phone Number 379-7873    
Title of 12(b) Security Class A Common Stock, par value $0.0001 per share    
Trading Symbol PSTG    
Security Exchange Name NYSE    
Entity Well-Known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 4.4
Entity Common Stock, Shares Outstanding (in shares)   280,335,794  
Documents Incorporated by Reference Portions of the registrant’s proxy statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended January 31, 2021.    
Amendment Flag false    
Document Fiscal Year Focus 2021    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001474432    
v3.21.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jan. 31, 2021
Feb. 02, 2020
Current assets:    
Cash and cash equivalents $ 337,147 $ 362,635
Marketable securities 916,388 936,518
Accounts receivable, net of allowance of $542 and $1,033 460,879 458,643
Inventory 46,733 38,518
Deferred commissions, current 57,183 37,148
Prepaid expenses and other current assets 89,836 56,930
Total current assets 1,908,166 1,890,392
Property and equipment, net 163,041 122,740
Operating lease right-of-use assets 134,668 112,854
Deferred commissions, non-current 130,741 102,056
Intangible assets, net 76,648 58,257
Goodwill 358,736 37,584
Restricted cash 10,544 15,287
Other assets, non-current 36,896 25,034
Total assets 2,819,440 2,364,204
Current liabilities:    
Accounts payable 67,530 77,651
Accrued compensation and benefits 160,817 106,592
Accrued expenses and other liabilities 61,754 47,223
Operating lease liabilities, current 32,231 27,264
Deferred revenue, current 438,321 356,011
Total current liabilities 760,653 614,741
Long-term debt 755,814 477,007
Operating lease liabilities, non-current 120,361 92,977
Deferred revenue, non-current 405,376 341,277
Other liabilities, non-current 27,230 8,084
Total liabilities 2,069,434 1,534,086
Commitments and contingencies (Note 8)
Stockholders’ equity:    
Preferred stock, par value of $0.0001 per share— 20,000 shares authorized; no shares issued and outstanding 0 0
Class A and Class B common stock, par value of $0.0001 per share— 2,250,000 (Class A 2,000,000, Class B 250,000) shares authorized; 264,008 and 278,363 Class A shares issued and outstanding 28 26
Additional paid-in capital 2,307,580 2,107,579
Accumulated other comprehensive income 7,410 5,449
Accumulated deficit (1,565,012) (1,282,936)
Total stockholders’ equity 750,006 830,118
Total liabilities and stockholders’ equity $ 2,819,440 $ 2,364,204
v3.21.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jan. 31, 2021
Feb. 02, 2020
Accounts receivable, allowance $ 1,033 $ 542
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized (in shares) 20,000,000 20,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, shares authorized (in shares) 2,250,000,000 2,250,000,000
Class A common stock    
Common stock, shares authorized (in shares) 2,000,000,000 2,000,000,000
Common stock, par value per share (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares issued (in shares) 278,362,598 264,008,000
Common stock, shares outstanding (in shares) 278,362,598 264,008,000
Class B common stock    
Common stock, shares authorized (in shares) 250,000,000 250,000,000
Common stock, par value per share (in dollars per share) $ 0.0001 $ 0.0001
v3.21.1
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Jan. 31, 2021
Feb. 02, 2020
Jan. 31, 2019
Revenue:      
Revenue: $ 1,684,179 $ 1,643,440 $ 1,359,824 [1]
Cost of revenue:      
Total cost of revenue 535,255 509,886 457,528 [1]
Gross profit 1,148,924 1,133,554 902,296 [1]
Operating expenses:      
Research and development 480,467 433,662 349,936
Sales and marketing 716,014 728,022 584,111
General and administrative 182,477 163,153 137,506
Restructuring and other 30,999 0 0
Total operating expenses 1,409,957 1,324,837 [1] 1,071,553 [1]
Loss from operations (261,033) (191,283) (169,257) [1]
Other income (expense), net (9,127) (3,383) (8,016)
Loss before provision for income taxes (270,160) (194,666) (177,273) [1]
Provision for income taxes 11,916 6,321 1,089
Net loss $ (282,076) $ (200,987) $ (178,362) [1],[2]
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) $ (1.05) $ (0.79) [1] $ (0.77) [1]
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) 267,824 252,820 [1] 232,042 [1]
Subscription services      
Revenue:      
Revenue: $ 540,081 $ 404,786 $ 284,238
Cost of revenue:      
Total cost of revenue 182,268 146,916 105,474
Product      
Revenue:      
Revenue: 1,144,098 1,238,654 1,075,586
Cost of revenue:      
Total cost of revenue $ 352,987 $ 362,970 $ 352,054
[1]  
[2]  
v3.21.1
Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2021
Feb. 02, 2020
Jan. 31, 2019
Statement of Comprehensive Income [Abstract]      
Net loss $ (282,076) $ (200,987) $ (178,362) [1],[2]
Other comprehensive income, net of tax:      
Unrealized net gains on available-for-sale securities 3,213 6,510 1,562
Reclassification adjustment for net (gains) losses on available-for-sale securities included in net loss (1,252) (723) 17
Change in unrealized net gains on available-for-sale securities 1,961 5,787 [1] 1,579 [1]
Comprehensive loss $ (280,115) $ (195,200) [1] $ (176,783) [1]
[1]  
[2]  
v3.21.1
Consolidated Statements of Stockholders’ Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Restricted Stock
Common Stock
Restricted Stock Units
Restricted Stock Units
Common Stock
Restricted Stock Units
Additional Paid-In Capital
Beginning balance (in shares) at Jan. 31, 2018   220,979              
Beginning balance at Jan. 31, 2018 $ 574,401 $ 22 $ 1,479,883 $ (1,917) $ (903,587)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Issuance of common stock upon exercise of stock options (in shares)   9,397              
Issuance of common stock upon exercise of stock options 47,750 $ 1 47,749            
Stock-based compensation expense 210,645   210,645            
Vesting of early exercised stock options 320   320            
Vesting of restricted stock units (in shares)               8,378  
Vesting of restricted stock units             $ 0 $ 1 $ (1)
Net issuance of restricted stock units ( in shares)           2,398      
Tax withholding on vesting of restricted stock (632)   (632)            
Common stock issued under employee stock purchase plan (in shares)   3,381              
Common stock issued under employee stock purchase plan 33,444   33,444            
Repurchase of common stock (in shares)   (1,009)              
Repurchase of common stock (20,000)   (20,000)            
Purchase of capped calls (64,630)   (64,630)            
Equity component of convertible senior notes, net 133,265   133,265            
Other comprehensive income (loss) 1,579     1,579          
Net loss (178,362) [1],[2]       (178,362)        
Ending balance (in shares) at Jan. 31, 2019   243,524              
Ending balance at Jan. 31, 2019 737,780 $ 24 1,820,043 (338) (1,081,949)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Issuance of common stock upon exercise of stock options (in shares)   7,770              
Issuance of common stock upon exercise of stock options 42,931 $ 1 42,930            
Stock-based compensation expense 226,705   226,705            
Vesting of restricted stock units (in shares)               9,215  
Vesting of restricted stock units             0 $ 1 (1)
Net issuance of restricted stock units ( in shares)           624      
Tax withholding on vesting of restricted stock (10,379)   (10,379)            
Common stock issued under employee stock purchase plan (in shares)   3,743              
Common stock issued under employee stock purchase plan 43,298   43,298            
Repurchase of common stock (in shares)   (868)              
Repurchase of common stock (15,017)   (15,017)            
Other comprehensive income (loss) 5,787     5,787          
Net loss (200,987)       (200,987)        
Ending balance (in shares) at Feb. 02, 2020   264,008              
Ending balance at Feb. 02, 2020 830,118 $ 26 2,107,579 5,449 (1,282,936)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Issuance of common stock upon exercise of stock options (in shares)   9,734              
Issuance of common stock upon exercise of stock options 59,510 $ 1 59,509            
Stock-based compensation expense 242,685   242,685            
Vesting of restricted stock units (in shares)               11,241  
Vesting of restricted stock units             $ 0 $ 1 $ (1)
Cancellation and forfeiture of restricted stock (in shares)           (317)      
Tax withholding on vesting of restricted stock (in shares)   (490)              
Tax withholding on vesting of restricted stock (8,258)   (8,258)            
Common stock issued under employee stock purchase plan (in shares)   3,714              
Common stock issued under employee stock purchase plan 32,439   32,439            
Repurchase of common stock (in shares)   (9,527)              
Repurchase of common stock (135,175)   (135,175)            
Equity awards assumed in an acquisition 8,802   8,802            
Other comprehensive income (loss) 1,961     1,961          
Net loss (282,076)       (282,076)        
Ending balance (in shares) at Jan. 31, 2021   278,363              
Ending balance at Jan. 31, 2021 $ 750,006 $ 28 $ 2,307,580 $ 7,410 $ (1,565,012)        
[1]  
[2]  
v3.21.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Jan. 31, 2021
Feb. 02, 2020
Jan. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $ (282,076) $ (200,987) $ (178,362) [1],[2]
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 70,042 89,710 70,878
Amortization of debt discount and debt issuance costs 29,070 27,179 21,031
Stock-based compensation expense 242,344 226,705 210,645
Impairment of long-lived assets 7,505 0 0
Other 7,340 1,336 (5,039)
Changes in operating assets and liabilities, net of effects of acquisitions:      
Accounts receivable, net 410 (79,442) (135,649)
Inventory (8,690) 2,393 (12,289)
Deferred commissions (48,721) (24,231) (27,660)
Prepaid expenses and other assets (33,982) (16,734) (6,972)
Operating lease right-of-use assets 28,804 26,511 0
Accounts payable (14,364) (18,856) 14,293
Accrued compensation and other liabilities 76,972 20,296 51,810
Operating lease liabilities (27,318) (25,377) 0
Deferred revenue 140,305 161,071 161,737
Net cash provided by operating activities 187,641 189,574 164,423
CASH FLOWS FROM INVESTING ACTIVITIES      
Purchases of property and equipment (94,975) (87,847) (100,246)
Acquisitions, net of cash acquired (339,641) (51,594) (13,899)
Purchase of intangible assets 0 (9,000) 0
Purchases of marketable securities (573,959) (795,580) (665,357)
Sales of marketable securities 171,530 200,251 19,878
Maturities of marketable securities 423,936 419,059 253,280
Other (5,000) 0 (5,000)
Net cash used in investing activities (418,109) (324,711) (511,344)
CASH FLOWS FROM FINANCING ACTIVITIES      
Net proceeds from exercise of stock options 59,339 42,899 47,771
Proceeds from issuance of common stock under employee stock purchase plan 32,439 43,298 33,444
Proceeds from issuance of convertible senior notes, net of issuance costs 0 0 562,062
Payment for purchase of capped calls 0 0 (64,630)
Proceeds from borrowings, net of issuance costs 251,892 0 0
Repayment of debt assumed from acquisition 0 (11,555) (6,101)
Tax withholding on vesting of equity awards (8,258) (10,379) (632)
Repurchases of common stock (135,175) (15,017) (20,000)
Net cash provided by financing activities 200,237 49,246 551,914
Net increase (decrease) in cash, cash equivalents and restricted cash (30,231) (85,891) 204,993
Cash, cash equivalents and restricted cash, beginning of year 377,922 463,813 258,820
Cash, cash equivalents and restricted cash, end of year 347,691 377,922 463,813
Cash and cash equivalents 362,635 447,990  
Cash, cash equivalents and restricted cash, end of year 347,691 463,813 463,813
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION      
Cash paid for interest 2,279 718 371
Cash paid for income taxes 10,522 4,824 4,696
Cash paid for amounts included in the measurement of lease liabilities 36,980 32,785 0
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION      
Property and equipment purchased but not yet paid 10,979 6,814 13,873
Operating lease right-of-use assets 57,471 14,937 0
Acquisition consideration held back to satisfy potential indemnification claims 0 0 3,725
Vesting of early exercised stock options 0 0 320
Fair value of equity awards assumed in an acquisition $ 8,802 $ 0 $ 0
[1]  
[2]  
v3.21.1
Business Overview
12 Months Ended
Jan. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Overview Business Overview
Organization and Description of Business
Pure Storage, Inc. (the Company, we, us, or other similar pronouns) was originally incorporated in the state of Delaware in October 2009 under the name OS76, Inc. In January 2010, we changed our name to Pure Storage, Inc. We are headquartered in Mountain View, California and have wholly owned subsidiaries throughout the world.
Data is foundational to our customers' digital transformation and we deliver innovative and disruptive technology and data storage solutions that enable customers to maximize the value of their data.
v3.21.1
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Jan. 31, 2021
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP). All intercompany balances and transactions have been eliminated in consolidation.
Change in Fiscal Year End
In September 2019, we adopted a 52/53 week fiscal year consisting of four 13-week quarters ending on the first Sunday after January 30 which for fiscal 2020 was February 2, 2020 and for fiscal 2021 was January 31, 2021. The updated calendar will occasionally include a 14-week fourth quarter, which will first occur in fiscal 2022, starting on November 1, 2021 and ending on February 6, 2022. Unless otherwise stated, all dates refer to our fiscal years.
Foreign Currency
The functional currency of our foreign subsidiaries is the U.S. dollar. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the average exchange rate in effect during the period. At the end of each reporting period, monetary assets and liabilities are remeasured using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Foreign currency transaction gains and losses are recorded in other income (expense), net in the consolidated statements of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment from the ongoing COVID-19 pandemic. Such estimates include, but are not limited to, the determination of standalone selling price for revenue arrangements with multiple performance obligations, useful lives of intangible assets and property and equipment, the period of benefit for deferred contract costs for commissions, stock-based compensation, provision for income taxes including related reserves, fair value of equity assumed, intangible and tangible assets acquired and liabilities assumed for business combinations. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Concentration Risk
Financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. At the end of fiscal 2020 and 2021, the majority of our cash and cash equivalents have been invested with three financial institutions and such deposits exceed federally insured limits. Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk. We define a customer as an entity that purchases our products and services from one of our channel partners or from us directly. The majority of our revenue and accounts receivable are derived from the United States across a multitude of industries. We perform ongoing evaluations to determine customer credit. At the end of fiscal 2020 and 2021, no channel partner represented 10% or more of total accounts receivable, net. At the end of fiscal 2020 and 2021, we had one customer that represented 12% and 10% of accounts receivable, net. One channel partner represented 11% of revenue for fiscal 2019. No channel partner represented more than 10% of revenue for fiscal 2020 and 2021. No customer represented 10% or more of revenue for fiscal 2019, 2020 or 2021. We rely on a limited number of contract manufacturers and suppliers of components for our products. In instances where contract manufacturers and suppliers fail to perform their obligations, we may be unable to find alternative contract manufacturers and suppliers or satisfactorily deliver our products to our customers on time.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and highly liquid investments, primarily money market accounts, purchased with an original maturity of three months or less.
Marketable Securities
We classify our marketable securities as available-for-sale (AFS) at the time of purchase and reevaluate such classification at each balance sheet date. We may sell these securities at any time for use in current operations even if they have not yet reached maturity. As a result, we classify our securities, including those with maturities beyond twelve months, as current assets in the consolidated balance sheets. We carry these securities at estimated fair value and record unrealized gains and losses in accumulated other comprehensive income (loss), which is reflected as a component of stockholders' equity. We evaluate our AFS debt securities with an unamortized cost basis in excess of estimated fair value to determine what amount of that difference, if any, is caused by expected credit losses. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses with changes in the allowance for credit losses recognized as a charge to other income (expense), net, in the consolidated statements of operations. Any remaining impairment is included in accumulated other comprehensive income (loss) as a component of stockholders' equity. Realized gains and losses from the sale of marketable securities are determined based on the specific identification method. Realized gains and losses are reported in other income (expense), net in the consolidated statements of operations.
Fair Value of Financial Instruments
The carrying value of our financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximates fair value.
Accounts Receivable and Allowance
Accounts receivable are recorded at the invoiced amount, and stated at realizable value, net of an allowance for doubtful accounts. Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for doubtful accounts.
We assess the collectability of the accounts by taking into consideration the aging of our trade receivables, historical experience, and management judgment. We write off trade receivables against the allowance when management determines a balance is uncollectible and no longer actively pursues collection of the receivable.
The following table presents the changes in the allowance for doubtful accounts:
 
 Fiscal Year Ended
 201920202021
 (in thousands) 
Allowance for doubtful accounts, beginning balance$1,062 $660 $542 
Provision, net of cash received(79)(80)496 
Write-offs(323)(38)(5)
Allowance for doubtful accounts, ending balance$660 $542 $1,033 
Restricted Cash
Restricted cash is comprised of cash collateral for letters of credit related to our leases and for a vendor credit card program. At the end of fiscal 2020 and 2021, we had restricted cash of $15.3 million and $10.5 million.
Inventory
Inventory consists of finished goods and component parts, which are purchased from contract manufacturers. Product demonstration units, which we regularly sell, are the primary component of our inventories. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the specific identification method for finished goods and weighted-average method for component parts. We account for excess and obsolete inventory by reducing the carrying value to the estimated net realizable value of the inventory based upon management’s assumptions about future demand and market conditions. In addition, we record a liability for firm, non-cancelable and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of future demand forecasts consistent with excess and obsolete inventory valuations. At the end of fiscal 2021, we did not record any liability related to the above. Inventory write-offs were insignificant for fiscal 2019, 2020 and 2021.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets (test equipment—4 years, computer equipment and software—4 years, furniture and fixtures—7 years). Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining lease term. Depreciation commences once the asset is placed in service.
In accordance with our accounting practices, we review the estimated useful lives of our property and equipment on an ongoing basis. In the first quarter of fiscal 2021, management determined that the estimated useful lives of its test equipment and certain computer equipment and software required revision. The estimated useful lives of test equipment and certain computer equipment and software were revised to 4 years. Previously, the estimated useful lives of these assets ranged from 2 to 3 years. The change in estimated useful lives was accounted for as a change in estimate and recognized on a prospective basis effective February 3, 2020. The effect of this change in estimate resulted in a reduction to depreciation expense of $23.6 million during fiscal 2021.
Business Combinations
We allocate the purchase price to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the estimated fair value of the assets acquired and liabilities assumed, with the corresponding offset to goodwill. The results of operations of an acquired business is included in our consolidated financial statements from the date of acquisition. Acquisition-related expenses are expensed as incurred.
Goodwill
Goodwill represents the excess of the purchase price consideration over the estimated fair value of the tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill is evaluated for impairment annually in the fourth quarter of our fiscal year as a single reporting unit, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. We may elect to qualitatively assess whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. If we opt not to qualitatively assess, a quantitative goodwill impairment test is performed. The quantitative test compares our reporting unit's carrying amount, including goodwill, to its fair value calculated based on our enterprise value. If the carrying amount exceeds its fair value, an impairment loss is recognized for the excess. We did not recognize any impairment of goodwill in any of the periods presented in the consolidated financial statements.
Purchased Intangible Assets
Purchased intangible assets with finite lives are stated at cost, net of accumulated amortization. We amortize our intangible assets on a straight-line basis over an estimated useful life of three to seven years.
Impairment of Long-Lived Assets
We review our long-lived assets, including property and equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. We measure the recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If the total of the future undiscounted cash flows is less than the carrying amount of an asset, we record an impairment charge for the amount by which the carrying amount of the asset exceeds its fair market value.
Convertible Senior Notes
In accounting for the issuance of our convertible senior notes (the Notes), we separated the Notes into liability and equity components. The carrying amount of the liability component was determined by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was calculated by deducting the fair value of the liability component from the principal amount of the Notes as a whole. The difference between the principal amount of the Notes and the liability component (the debt discount) is amortized to interest expense in the consolidated statements of operations using the effective interest method over the term of the Notes. The equity component of the Notes is included in additional paid-in capital in the consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the Notes, we allocated the total amount incurred to the liability and equity components using the same proportions as the initial carrying value of the Notes. Transaction costs attributable to the liability component were netted with the principal amount of the Notes in the consolidated balance sheets and are being amortized to interest expense in the consolidated statements of operations using the effective interest method over the term of the Notes. Transaction costs attributable to the equity component were netted with the equity component of the Notes in additional paid-in capital in the consolidated balance sheets.
Deferred Commissions
Deferred commissions consist of incremental costs paid to our sales force to obtain customer contracts. Deferred commissions related to product revenue are recognized upon transfer of control to customers and deferred commissions related to subscription services revenue are amortized over an expected useful life of six years. We determine the expected useful life based on an estimated benefit period by evaluating our technology development life cycle, expected customer relationship period and other factors. We classify deferred commissions as current and non-current on our consolidated balance sheets based on the timing of when we expect to recognize the expense. Amortization of deferred commissions is included in sales and marketing expense in the consolidated statements of operations.
Operating Leases
We determine if an arrangement contains a lease at inception. Lease liabilities are recognized at the present value of the future lease payments at commencement date. The interest rate implicit in our operating leases is not readily determinable, and therefore an incremental borrowing rate is estimated to determine the present value of future payments. The estimated incremental borrowing rate factors in a hypothetical interest rate on a collateralized basis with similar terms, payments, and economic environments. The operating lease right-of-use (ROU) asset is determined based on the lease liability initially established and reduced for any prepaid lease payments and any lease incentives. We account for the lease and non-lease components of operating lease contract consideration as a single lease component.
Certain of the operating lease agreements contain rent concession, rent escalation, and option to renew provisions. Rent concession and rent escalation provisions are considered in determining the lease cost. Lease cost is recognized on a straight-line basis over the lease term commencing on the date we have the right to use the leased property. We generally use the base, non-cancelable, lease term when recognizing the lease assets and liabilities, unless it is reasonably certain that an extension or termination option will be exercised.
In addition, certain of our operating lease agreements contain tenant improvement allowances from our landlords. These allowances are accounted for as lease incentives and reduce our ROU asset and lease cost over the lease term.
For short-term leases with lease term no longer than twelve months, and do not include an option to purchase the underlying asset that we are reasonably certain to exercise, we recognize rent expense in our consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred.
Deferred Revenue
Deferred revenue primarily consists of amounts that have been invoiced but have not yet been recognized as revenue and performance obligations pertaining to subscription services. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the consolidated balance sheet dates.
Revenue Recognition
We generate revenue from two sources: (1) product revenue which includes hardware and embedded software and (2) subscription services revenue which includes Evergreen Storage subscriptions, and our unified subscription that includes Pure as-a-Service and Cloud Block Store.
Our product revenue is derived from the sale of integrated storage hardware and operating system software. We typically recognize product revenue upon transfer of control to our customers. Products are typically shipped directly by us to customers.
Our subscription services revenue is derived from the services we perform in connection with the sale of Evergreen Storage and Pure as-a-Service subscriptions and is recognized ratably over the contractual term, which generally ranges from one to six years. The majority of our product solutions are sold with an Evergreen Storage subscription service agreement, which typically commences upon transfer of control of the corresponding products to our customers. Costs for subscription services are expensed when incurred. In addition, our Evergreen Storage subscription provides our customers with a new controller based upon certain contractual terms. The controller refresh represents a separate performance obligation that is included within the Evergreen Storage subscription service agreement and the allocated revenue is recognized upon shipment of the controller.
Our Evergreen Storage subscription services also include the right to receive unspecified software updates and upgrades on a when-and-if-available basis, software bug fixes, replacement parts and other services related to the underlying infrastructure, as well as access to our cloud-based management and support platform. We also sell professional services such as installation and implementation consulting services and the related revenue is recognized as services are performed.
We recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services. This is achieved through applying the following five-step approach:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when, or as, we satisfy a performance obligation
When applying this five-step approach, we apply judgment in determining the customer's ability and intention to pay, which is based on a variety of factors including the customer's historical payment experience and/or published credit and financial information pertaining to the customer. To the extent a customer contract includes multiple promised goods or services, we determine whether promised goods or services should be accounted for as a separate performance obligation. The transaction price is determined based on the consideration which we will be entitled to in exchange for transferring goods or services to the customer. For contracts that contain multiple performance obligations, we allocate the transaction price to each performance obligation based on a relative standalone selling price. The standalone selling price is determined based on the price at which the performance obligation is sold separately, or if not observable through past transactions, is estimated taking into account available information such as market conditions and internally approved pricing guidelines related to performance obligations.
Warranty
We generally provide a three-year warranty on hardware and a 90-day warranty on our software embedded in the hardware. Our hardware warranty provides for parts replacement for defective components and our software warranty provides for bug fixes. Our Evergreen Storage subscription agreement provides for the same parts replacement that customers are entitled to under our warranty program, except that replacement parts are delivered according to targeted response times to minimize disruption to our customers’ critical business applications. Substantially all customers purchase Evergreen Storage subscription agreements. As such, the warranty reserve at the end of fiscal 2021 was not material.
Research and Development
Research and development costs are expensed as incurred. Research and development costs consist primarily of employee compensation and related expenses, prototype expenses, to the extent there is no alternative use for that equipment, depreciation of equipment used in research and development, third-party engineering and contractor support costs, as well as allocated overhead costs.
Capitalized Internal-Use Software Costs
We expense costs to develop software that is externally marketed before technological feasibility is reached. We have determined that technological feasibility is reached shortly before the release of our products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products have not been significant and accordingly, all related software development costs have been expensed as incurred.
We capitalize (i) costs incurred to develop or modify software solely for our internal use, including hosted applications used to deliver our support services, and (ii) certain implementation costs incurred in a hosting arrangement that is a service contract when the preliminary project stage is complete, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable the project will be completed and used to perform the intended function. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Software development costs are capitalized to property, plant and equipment and amortized using the straight-line method over an estimated useful life of four years. Software implementation costs are capitalized to either prepaid and other current assets or other assets, non-current on our consolidated balance sheet and amortized over the terms of the associated hosting arrangements. No amount of software development and implementation costs were capitalized during fiscal 2019 and 2020 and the amount of software development and implementation costs capitalized and the related amortization expense were not material during fiscal 2021.
Advertising Expenses
Advertising costs are expensed as incurred. Advertising expenses were $10.7 million, $13.3 million and $8.1 million for fiscal 2019, 2020 and 2021.
Stock-Based Compensation
Stock-based compensation includes expenses related to restricted stock units (RSUs), restricted stock, stock options and purchase rights issued to employees under our employee stock purchase plan (ESPP). RSUs and restricted stock are measured at the fair market value of the underlying stock at the grant date. We determine the fair value of purchase rights issued to employees under our ESPP and our stock options under our equity plans on the date of grant utilizing the Black-Scholes option pricing model, which is impacted by the fair value of our common stock, as well as changes in assumptions regarding a number of subjective variables. These variables include the expected common stock price volatility over the term of the awards, the expected term of the awards, risk-free interest rates and expected dividend yield. 
We recognize stock-based compensation expense for stock-based awards on a straight-line basis over the period during which an employee is required to provide services in exchange for the award (generally the vesting period of the award). We account for forfeitures as they occur. For stock-based awards granted to employees with a performance condition, we recognize stock-based compensation expense for these awards under the accelerated attribution method over the requisite service period when management determines it is probable that the performance condition will be satisfied.
Income Taxes
We account for income taxes using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance to amounts that are more likely than not to be realized.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
New Accounting Pronouncements Adopted in Fiscal 2021
We adopted the following Accounting Standards Updates (ASUs) effective February 3, 2020, none of which had a material impact on our financial position or results of operation:
ASUDescription
ASU 2016-13Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
ASU 2017-04Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
ASU 2018-13Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
ASU 2018-15Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
ASU 2019-12Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)
Recent Accounting Pronouncements Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share (EPS) calculations as a result of these changes. The standard will be effective for us beginning February 7, 2022 and can be applied on either a fully retrospective or modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2020. We are currently evaluating the impact of this standard on our consolidated financial statements.
v3.21.1
Financial Instruments
12 Months Ended
Jan. 31, 2021
Fair Value Disclosures [Abstract]  
Financial Instruments Financial Instruments
Fair Value Measurements
We define fair value as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Three levels of inputs may be used to measure fair value:
Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.
Cash Equivalents, Marketable Securities and Restricted Cash
We measure our cash equivalents, marketable securities and restricted cash at fair value on a recurring basis. We classify our cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments.
The following tables summarize our cash equivalents, marketable securities and restricted cash by significant investment categories and their classification within the fair value hierarchy at the end of fiscal 2020 and 2021 (in thousands):
 At the End of Fiscal 2020
 Amortized Cost Gross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable SecuritiesRestricted Cash
Level 1    
Money market accounts$— $— $— $26,355 $11,068 $— $15,287 
Level 2    
U.S. government treasury notes323,751 2,146 — 325,897 — 325,897 — 
U.S. government agencies53,930 317 (3)54,244 — 54,244 — 
Corporate debt securities452,318 3,954 (1)456,271 3,001 453,270 — 
Foreign government bonds14,994 147 — 15,141 — 15,141 — 
Asset-backed securities87,267 699 — 87,966 — 87,966 — 
       Total $932,260 $7,263 $(4)$965,874 $14,069 $936,518 $15,287 
 
 At the End of Fiscal 2021
 Amortized Cost Gross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsMarketable SecuritiesRestricted Cash
Level 1    
Money market accounts$— $— $— $49,984 $39,440 $— $10,544 
Level 2
U.S. government treasury notes339,253 3,241 (1)342,493 15,340 327,153 — 
U.S. government agencies56,729 516 — 57,245 — 57,245 — 
Corporate debt securities425,115 4,176 (33)429,258 — 429,258 — 
Foreign government bonds21,486 307 — 21,793 — 21,793 — 
Asset-backed securities79,924 1,015 — 80,939 — 80,939 — 
Total$922,507 $9,255 $(34)$981,712 $54,780 $916,388 $10,544 

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):
At the End of Fiscal 2021
 Amortized CostFair Value
Due within one year$316,339 $318,019 
Due in one to five years590,828 598,369 
  Total$907,167 $916,388 

Unrealized losses on our debt securities have not been recorded into income because we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The decline in fair value of our debt securities is largely due to changes in credit spreads as a result of market conditions. The credit ratings associated with our debt securities are mostly unchanged, are highly rated and the issuers continue to make timely principal and interest payments. As a result, there was no impairment charge for any unrealized losses in fiscal 2019 and 2020, and we had no credit losses recorded for fiscal 2021. The following table presents gross unrealized losses and fair values for those investments that were in a continuous unrealized loss position at the end of fiscal 2020 and 2021, aggregated by investment category (in thousands):
At the End of Fiscal 2020
Less than 12 monthsGreater than 12 monthsTotal
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
U.S. government treasury notes$— $— $1,000 $— $1,000 $— 
U.S. government agencies4,998 (3)— — 4,998 (3)
Corporate debt securities9,691 (1)— — 9,691 (1)
Total$14,689 $(4)$1,000 $— $15,689 $(4)
At the End of Fiscal 2021
Less than 12 monthsGreater than 12 monthsTotal
 Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
U.S. government treasury notes$8,301 $(1)$— $— $8,301 $(1)
Corporate debt securities 32,996 (33)— — 32,996 (33)
     Total$41,297 $(34)$— $— $41,297 $(34)

Realized gains or losses on sale of marketable securities were not significant for all periods presented.
Other Financial Instruments
We measure the fair value of our Notes on a quarterly basis and we determined the fair value of the Notes at the end of fiscal 2020 and 2021 to be a Level 2 measurement due to its limited trading activity. Refer to Note 7 for the net carrying amounts and estimated fair value of the Notes at the end of fiscal 2020 and 2021.
v3.21.1
Business Combinations
12 Months Ended
Jan. 31, 2021
Business Combinations [Abstract]  
Business Combinations Business Combinations
Fiscal 2021 - Acquisition of Portworx Inc.
In October 2020, we acquired all outstanding stock of Portworx Inc. (Portworx), a privately-held container storage company that provides a Kubernetes data services platform for cloud native application. The transaction costs associated with the acquisition were not material and expensed as incurred. The total purchase consideration for the acquisition of Portworx was $352.9 million, which consisted of the following (in thousands):
Cash$344,049 
Fair value of options assumed8,802 
Total$352,851 
We assumed certain unvested and outstanding stock options for Portworx's common stock. These stock options were converted into stock options for shares of our common stock. The fair value of the exchanged options determined using the Black-Scholes option pricing model was $26.8 million, of which $8.8 million attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value of $18.0 million was allocated to future services and is being expensed over the remaining service periods as stock-based compensation expense. In addition, we assumed RSUs outstanding under the 2020 Portworx Equity Incentive Plan with a fair value of $31.8 million that is being recognized as stock-based compensation expense over a four year vesting period.
The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of the acquisition (in thousands):
AmountEstimated Useful Life
Goodwill$321,152 
Identified intangible assets:
Developed technology21,273 5 years
Customer relationships6,459 7 years
Trade name3,623 3 years
Cash4,407 
Net liabilities assumed(4,063)
Total$352,851 
Goodwill generated from this acquisition is primarily attributable to the assembled workforce and expected post-acquisition synergies from combining Portworx container data services with our data services platform to expand our capabilities to support Kubernetes and containers. Goodwill is not deductible for tax purposes. The fair values of developed technology, customer relationships and trade name were derived by applying the excess earnings method, with-and-without method, and the relief-from-royalty method, respectively, all of which are under the income approach whose underlying inputs are considered Level 3. The fair values assigned to assets acquired and liabilities assumed are based on management's estimates and assumptions.
In connection with the Portworx acquisition, we recorded a net deferred tax asset of $14.7 million. However, this amount was offset by a valuation allowance, thus, resulting in a net zero deferred tax asset during fiscal 2021. We continue to maintain a valuation allowance for our U.S. federal and state deferred tax assets.
In addition, cash payments to certain former shareholders of Portworx totaling $32.2 million are being made over three years subject to continuous employment and are recognized as an operating expense.
The results of Portworx have been included in our consolidated statements of operations since the acquisition date and are not material. Pro forma results of operations have not been presented because the acquisition is not material to our results of operations.
Fiscal 2020 - Acquisition of Compuverde AB
In April 2019, we acquired Compuverde AB (Compuverde), a privately-held developer of file software solutions for enterprises and cloud providers based in Sweden. Acquisition-related costs were not material and expensed as incurred.
The purchase consideration was $47.9 million in cash (net of cash acquired) after repayment of $11.6 million of debt assumed. The purchase price was allocated as follows: $38.4 million in developed technology which is being amortized over seven years, $26.6 million of goodwill, $11.7 million in net liabilities assumed, and $5.4 million in deferred tax liability. The deferred tax liability was primarily a result of the difference in the book basis and tax basis related to the developed technology. Goodwill is primarily attributable to the assembled workforce and synergies from integrating Compuverde's technology with our data platform to expand our file capabilities and is not deductible for tax purposes.
In addition, cash payments to former shareholders of Compuverde totaling $15.9 million are being made over a two-year period and recognized as operating expense.
Restricted stock units in the amount of $3.0 million were issued to Compuverde employees in June 2019, subject to continuous employment and are being recognized as stock-based compensation over the related vesting period.
The results of Compuverde have been included in our consolidated statements of operations since the acquisition date and are not material. Pro forma results of operations have not been presented because the acquisition is not material to our results of operations.
Fiscal 2019 - Acquisition of StorReduce, Inc.
In August 2018, we completed the acquisition of StorReduce, Inc. (StorReduce), a privately-held, cloud-first software-defined storage solution for managing large-scale unstructured data. Acquisition-related costs were immaterial and were expensed as incurred.
The purchase consideration was $20.5 million in cash (net of cash acquired) after repayment of $6.1 million of debt assumed and payment of $1.1 million in transaction fees on behalf of StorReduce.
The purchase price was allocated as follows: $17.7 million in developed technology which is being amortized over seven years, $11.0 million of goodwill, $4.5 million in net liabilities assumed, and $3.7 million in deferred tax liabilities. The deferred tax liability was primarily a result of the difference in the book basis and tax basis related to the developed technology. Goodwill is primarily attributable to the assembled workforce and synergies from integrating StorReduce's technology with our storage portfolio and is not deductible for income tax purposes. We held back approximately $3.7 million in cash to satisfy potential indemnification claims which was paid in August 2019.
In addition, we granted 622,482 RSUs to former StorReduce employees with a total grant date fair value of $13.6 million, subject to continuous employment. These awards are being recognized as stock-based compensation over the related vesting period.
The results of StorReduce have been included in our consolidated statements of operations since the acquisition date, including revenue and net loss, and are not material. Pro forma results of operations have not been presented because the acquisition is not material to our results of operations.
v3.21.1
Balance Sheet Components
12 Months Ended
Jan. 31, 2021
Balance Sheet Components Disclosure [Abstract]  
Balance Sheet Components Balance Sheet Components
Inventory
Inventory consists of the following (in thousands):
At the End of Fiscal
20202021
Raw materials$2,974 $4,991 
Finished goods35,544 41,742 
Inventory$38,518 $46,733 
Property and Equipment, Net
Property and equipment, net consists of the following (in thousands):
 At the End of Fiscal
 20202021
Test equipment$205,555 $238,069 
Computer equipment and software141,387 184,518 
Furniture and fixtures8,324 8,484 
Leasehold improvements40,356 44,444 
Total property and equipment395,622 475,515 
Less: accumulated depreciation and amortization(272,882)(312,474)
Property and equipment, net$122,740 $163,041 
Depreciation and amortization expense related to property and equipment was $68.3 million, $80.4 million and $57.1 million for fiscal 2019, 2020 and 2021, respectively.
Intangible Assets, Net
Intangible assets, net consist of the following (in thousands):
 
At the End of Fiscal
 20202021
 Gross Carrying ValueAccumulated AmortizationNet Carrying AmountGross Carrying ValueAccumulated AmortizationNet Carrying Amount
Technology patents$19,125 $(8,933)$10,192 $19,125 $(11,722)$7,403 
Developed technology56,100 (8,035)48,065 77,373 (17,499)59,874 
Customer relationships— — — 6,459 (308)6,151 
Trade name— — — 3,623 (403)3,220 
Intangible assets, net$75,225 $(16,968)$58,257 $106,580 $(29,932)$76,648 
Intangible assets amortization expense was $2.6 million, $9.3 million and $13.0 million for fiscal 2019, 2020 and 2021, respectively. At the end of fiscal 2021, the weighted-average remaining amortization period was 2.7 years for technology patents, 4.9 years for developed technology, 6.7 years for customer relationships, and 2.7 years for trade name. We recorded amortization of technology patents in general and administrative expenses due to their defensive nature, developed technology in cost of product revenue, and customer relationships and trade name in sales and marketing expenses in the consolidated statements of operations.
At the end of fiscal 2021, future expected amortization expense for intangible assets is as follows (in thousands):
Fiscal Years Ending Future Expected 
Amortization
Expense
2022$16,231 
202315,685 
202415,282 
202514,477 
202611,924 
Thereafter3,049 
Total$76,648 
Goodwill
The change in the carrying amount of goodwill is as follows (in thousands):
Amount
Balance as of the end of fiscal 2020
$37,584 
Goodwill acquired321,152 
Balance as of the end of fiscal 2021
$358,736 

Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following (in thousands):
 
 At the End of Fiscal
 20202021
Taxes payable $9,012 $4,097 
Accrued marketing7,679 15,638 
Accrued travel and entertainment expenses3,829 866 
Acquisition consideration6,149 9,600 
Other accrued liabilities20,554 31,553 
Total accrued expenses and other liabilities$47,223 $61,754 
v3.21.1
Deferred Revenue and Commissions
12 Months Ended
Jan. 31, 2021
Revenue from Contract with Customer [Abstract]  
Deferred Revenue and Commissions Deferred Revenue and Commissions
Deferred Commissions
Changes in total deferred commissions during the periods presented are as follows (in thousands):
Fiscal Year Ended
20202021
Beginning balance$114,973 $139,204 
Additions141,147 183,151 
Recognition of deferred commissions(116,916)(134,431)
Ending balance$139,204 $187,924 
During fiscal 2019, 2020 and 2021, we recognized sales commission expenses of $118.4 million, $142.5 million, and $150.2 million, respectively. Of the $187.9 million total deferred commissions balance at the end of fiscal 2021, we expect to recognize approximately 30% as sales commission expense over the next 12 months and the remainder thereafter.
There was no impairment related to capitalized commissions for fiscal 2019, 2020 or 2021.
Deferred Revenue
Changes in total deferred revenue during the periods presented are as follows (in thousands):
Fiscal Year Ended
20202021
Beginning balance$535,920 $697,288 
Additions569,816 703,800 
Recognition of deferred revenue(408,448)(557,391)
Ending balance $697,288 $843,697 
During fiscal 2020 and 2021, we recognized approximately $267.0 million and $353.1 million, respectively, in revenue pertaining to deferred revenue as of the beginning of each period.
Remaining Performance Obligations
Total contracted but not recognized revenue was $1,093.5 million at the end of fiscal 2021. Contracted but not recognized revenue consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. The value of orders that are contracted but have not been fulfilled and that can be canceled by customers, are excluded from remaining performance obligations. Of the $1,093.5 million contracted but not recognized revenue at the end of fiscal 2021, we expect to recognize approximately 43% over the next 12 months, and the remainder thereafter.
v3.21.1
Debt
12 Months Ended
Jan. 31, 2021
Debt Disclosure [Abstract]  
Debt Debt
Convertible Senior Notes
In April 2018, we issued $575.0 million in principal amount of 0.125% convertible senior notes due 2023, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act and received proceeds of $562.1 million, after deducting the underwriters’ discounts and commissions. The Notes are governed by an indenture (the Indenture) between us, as the issuer, and U.S. Bank National Association, as trustee. The Notes are our senior unsecured obligations. The Indenture does not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries. The Notes mature on April 15, 2023 unless repurchased or redeemed by us or converted in accordance with their terms prior to the maturity date. Interest is payable semi-annually in arrears on April 15 and October 15 of each year.
The Notes are convertible for up to 21,884,155 shares of our common stock at an initial conversion rate of approximately 38.0594 shares of common stock per $1,000 principal amount, which is equal to an initial conversion price of approximately $26.27 per share of common stock, subject to adjustment. Holders of the Notes may surrender their Notes for conversion at their option at any time prior to the close of business on the business day immediately preceding October 15, 2022, only under the following circumstances:
during any fiscal quarter commencing after the fiscal quarter ended on July 31, 2018 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price for the Notes on each applicable trading day;
during the five business day period after any five consecutive trading day period (the measurement period), in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the Notes on each such trading day;
if we call any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
upon the occurrence of specified corporate events.
On or after October 15, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time regardless of the foregoing circumstances. Upon conversion, holders will receive cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. We intend to settle the principal of the Notes in cash.
The conversion price will be subject to adjustment in some events. Following certain corporate events that occur prior to the maturity date or following our issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or during the related redemption period in certain circumstances. Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” per the Indenture, holders of the Notes may require us to repurchase for cash all or a portion of the Notes at a purchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid contingent interest.
We may not redeem the Notes prior to April 20, 2021. We may redeem for cash all or any portion of the Notes, at our option, on or after April 20, 2021 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than two trading days immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.
Upon the issuance of the Notes, we recorded total debt issuance costs of $12.9 million, of which $9.8 million was allocated to the Notes and $3.1 million was allocated to additional paid-in capital.

The Notes consisted of the following (in thousands):

At the End of Fiscal
20202021
Liability:
Principal$575,000 $575,000 
Less: debt discount, net of amortization(91,378)(64,515)
Less: debt issuance costs, net of amortization(6,615)(4,671)
Net carrying amount of the Notes$477,007 $505,814 
Stockholders' equity recorded at issuance:
Allocated value of the conversion feature$136,333 
Less: debt issuance costs(3,068)
Additional paid-in capital$133,265 
The total estimated fair values of the Notes at the end of fiscal 2020 and 2021 were $582.6 million and $649.0 million. The fair values were determined based on the closing trading price per $100 of the Notes as of the last day of trading of fiscal 2020 and 2021. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Based on the closing price of our common stock of $23.13 on the last day of fiscal 2021, the if-converted value of the Notes of $506.2 million was less than its principal amount. At the end of fiscal 2021, the remaining term of the Notes is 26 months.
The following table sets forth total interest expense recognized related to the Notes (in thousands):

Fiscal Year Ended
20202021
Amortization of debt discount$25,344 $26,863 
Amortization of debt issuance costs1,835 1,944 
Total amortization of debt discount and debt issuance costs27,179 28,807 
Contractual interest expense718 718 
Total interest expense related to the Notes$27,897 $29,525 
Effective interest rate of the liability component5.6 %5.6 %
In connection with the offering of the Notes, we paid $64.6 million to enter into capped call transactions with certain of the underwriters and their affiliates (the Capped Calls), whereby we have the option to purchase a total of 21,884,155 shares of our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Notes, as the case may be, with such reduction or offset subject to a cap initially equal to $39.66 per share (which represents a premium of 100% over the last reported sales price of our common stock on April 4, 2018), subject to certain adjustments (the Cap Price). The cost of the Capped Calls was accounted for as a reduction to additional paid-in capital on the consolidated balance sheet. The Capped Calls are intended to reduce or offset potential dilution of our common stock upon any conversion of the Notes, subject to a cap based on the Cap Price.
Impact on Earnings Per Share
The Notes will not impact our diluted earnings per share until the average market price of our common stock exceeds the conversion price of $26.27 per share, as we intend to settle the principal amount of the Notes in cash upon conversion. We are required under the treasury stock method to compute the potentially dilutive shares of common stock related to the Notes for periods we report net income. However, upon conversion, there will be no economic dilution from the Notes until the average market price of our common stock exceeds the Cap Price of $39.66 per share, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the Cap Price. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be anti-dilutive under the treasury stock method.
Revolving Credit Facility
In August 2020, we entered into a Credit Agreement with a consortium of financial institutions and lenders that provides for a five-year, senior secured revolving credit facility of $300.0 million (Credit Facility). Proceeds from the Credit Facility may be used for general corporate purposes and working capital. The Credit Facility expires, absent default or early termination by us, on the earlier of (i) August 24, 2025 or (ii) 91 days prior to the stated maturity of the Notes unless, on such date and each subsequent day until the Notes are paid in full, the sum of our cash, cash equivalents and marketable securities and the aggregate unused commitments then available to us exceed $625.0 million.
The annual interest rates applicable to loans under the Credit Facility are, at our option, equal to either a base rate plus a margin ranging from 0.50% to 1.25% or LIBOR (based on one, three or six-month interest periods), subject to a floor of 0%, plus a margin ranging from 1.50% to 2.25%. Interest on revolving loans is payable quarterly in arrears with respect to loans based on the base rate and at the end of an interest period in the case of loans based on LIBOR (or at each three-month interval if the interest period is longer than three months). We are also required to pay a commitment fee on the unused portion of the commitments ranging from 0.25% to 0.40% per annum, payable quarterly in arrears that commenced on September 30, 2020.
In September 2020, we drew down $250.0 million under the Credit Facility which remained outstanding at the end of fiscal 2021. The outstanding loan bore weighted-average interest at the one-month LIBOR of approximately 1.65% resulting in interest expense of $1.4 million during fiscal 2021.
Loans under the Credit Facility are collateralized by substantially all of our assets and subject to certain restrictions and two financial ratios measured as of the last day of each fiscal quarter, commencing with the fiscal quarter ended January 31, 2021: a Consolidated Leverage Ratio not to exceed 4.5:1 and an Interest Coverage Ratio not to be less than 3:1. We were in compliance with all covenants under the Credit Facility at the end of fiscal 2021.
v3.21.1
Commitments and Contingencies
12 Months Ended
Jan. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Operating Leases
At the end of fiscal 2021, we had various non-cancelable operating lease commitments for office facilities. Refer to Note 9—Leases for additional information regarding lease commitments.
Contractual Purchase Obligations
At the end of fiscal 2021, we had $251.8 million of non-cancelable contractual purchase obligations primarily related to inventory purchase commitments, software service and sponsorship contracts, and hosting arrangements. We have various manufacturing contracts with vendors in the conduct of the normal course of business. In order to manage future demand for its products, we enter into agreements with manufacturers and suppliers to procure inventory based upon certain criteria and timing.
Letters of Credit
At the end of fiscal 2020 and 2021, we had outstanding letters of credit in the aggregate amount of $11.5 million and $6.7 million, in connection with our facility leases. The letters of credit are collateralized by restricted cash and mature on various dates through August 2029.
Legal Matters
From time to time, we have become involved in claims and other legal matters arising in the normal course of business. We investigate these claims as they arise. Although claims are inherently unpredictable, we currently are not aware of any matters that we expect to have a material adverse effect on our business, financial position, results of operations or cash flows. Accordingly, we have not recorded any loss contingency on our consolidated balance sheet as of the end of fiscal 2021.
Indemnification
Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. Other guarantees or indemnification arrangements include guarantees of product and service performance and standby letters of credit for lease facilities. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any liabilities related to such obligations in the consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.
v3.21.1
Leases
12 Months Ended
Jan. 31, 2021
Leases [Abstract]  
Leases Leases
We lease office facilities under non-cancelable operating lease agreements expiring through July 2032. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. During fiscal 2021, we ceased use of certain leased facilities that resulted in the recognition of certain exit costs - see Note 10 for further information. In addition, we executed an early renewal that modified an existing data center lease with additional lease payments of $27.3 million.
The components of lease costs were as follows (in thousands):

Fiscal Year Ended
20202021
Fixed operating lease cost$33,800 $37,411 
Variable lease cost (1)
8,097 9,168 
Short-term lease cost (12 months or less)5,537 5,734 
Total lease cost$47,434 $52,313 
(1) Variable lease cost predominantly included common area maintenance charges.
Rent expense recognized under our operating leases prior to adoption of ASC 842 was $25.6 million during fiscal 2019.
At the end of fiscal 2020, the weighted-average remaining lease term was 5.6 years, and the weighted-average discount rate was 6.5%. At the end of fiscal 2021, the weighted-average remaining lease term is 5.2 years, and the weighted-average discount rate is 5.8%. Future lease payments under our non-cancelable operating leases at the end of fiscal 2021 are as follows (in thousands):
Fiscal Years EndingOperating Leases
2022$40,110 
202336,971 
202431,340 
202527,059 
202619,231 
Thereafter24,371 
Total future lease payments$179,082 
Less: imputed interest(26,490)
Present value of lease liabilities$152,592 
v3.21.1
Restructuring and Other
12 Months Ended
Jan. 31, 2021
Restructuring and Related Activities [Abstract]  
Restructuring and Other Restructuring and Other
During fiscal 2021, we ceased use of certain leased facilities and recorded an impairment charge of $7.5 million for operating lease right-of-use assets and leasehold improvements for these leases. In addition, we recognized a liability of $2.4 million for the remaining lease costs that will continue to be incurred without benefit to us.
During fiscal 2021, we effected workforce realignment plans to streamline our operations and recognized $12.2 million of restructuring costs related to one-time involuntary termination benefit costs. The restructuring charges are included in restructuring and other expenses in our consolidated statement of operations. The liability for unpaid amounts at the end of fiscal 2021 was $4.3 million.
During fiscal 2021, we incurred incremental costs of $9.8 million directly related to the COVID-19 pandemic. These costs primarily included the write-off of marketing commitments no longer deemed to have value for the remainder of fiscal 2021, estimated non-recoverable costs for internal events that could not be held, and hazard related premiums to support manufacturing operations. Of these costs, $8.9 million is included in restructuring and other expenses and $0.9 million is included in cost of revenue in our consolidated statements of operations for fiscal 2021.
v3.21.1
Stockholders' Equity
12 Months Ended
Jan. 31, 2021
Equity [Abstract]  
Stockholders’ Equity Stockholders’ Equity
Preferred Stock
We have 20,000,000 authorized shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our board of directors. At the end of fiscal 2021, there were no shares of preferred stock issued or outstanding.
Class A and Class B Common Stock
We have two classes of authorized common stock, Class A common stock, which we refer to as our "common stock", and Class B common stock. We have 2,000,000,000 authorized shares of Class A common stock and 250,000,000 authorized shares of Class B common stock, with each class having a par value of $0.0001 per share. At the end of fiscal 2021, 278,362,598 shares of Class A common stock were issued and outstanding.
Common Stock Reserved for Issuance
At the end of fiscal 2021, we had reserved shares of common stock for future issuance as follows:
Shares underlying outstanding stock options18,558,974 
Shares underlying outstanding restricted stock units30,830,082 
Shares reserved for future equity awards14,040,926 
Shares reserved for future employee stock purchase plan awards3,938,930 
Total67,368,912 
Share Repurchase Program
In August 2019, our board of directors approved a stock repurchase program to repurchase up to $150.0 million of our common stock, which was substantially completed in the fourth quarter of fiscal 2021. In February 2021, our board of directors authorized the repurchase of up to an additional $200.0 million of our common stock. The authorization allows us to repurchase shares of our common stock opportunistically and will be funded from available working capital. Repurchases may be made at management’s discretion from time to time on the open market through privately negotiated transactions, transactions structured through investment banking institutions, block purchase techniques, 10b5-1 trading plans, or a combination of the foregoing. The share repurchase program does not obligate us to acquire any of our common stock, has no end date, and may be suspended or discontinued by us at any time without prior notice.
We record the difference between cash paid for stock repurchases and underlying par value as a reduction to additional paid-in capital, to the extent the repurchases does not cause this balance to be reduced below zero, at which point the difference would be recorded as a reduction to accumulated deficit. During fiscal 2020, we repurchased and retired 867,657 shares of common stock at an average purchase price of $17.29 per share for an aggregate repurchase price of $15.0 million. During fiscal 2021, we repurchased and retired 9,526,556 shares of common stock at an average purchase price of $14.17 per share for an aggregate repurchase price of $135.0 million.
Repurchase of Common Stock in connection with the Notes
Concurrent with the issuance of the Notes (see Note 7), we repurchased and retired 1,008,573 shares, or $20.0 million, of our common stock at $19.83 per share, which was equal to the closing price per share of our common stock on April 4, 2018, the date of the pricing of the offering of the Notes.
v3.21.1
Equity Incentive Plans
12 Months Ended
Jan. 31, 2021
Share-based Payment Arrangement [Abstract]  
Equity Incentive Plans Equity Incentive Plans
Equity Incentive Plans
We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 2015 Plan). The 2015 Plan serves as the successor to our 2009 Plan and provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock awards, performance cash awards, and other forms of stock awards to our employees, directors and consultants. Outstanding awards granted under our 2009 Plan will remain subject to the terms of our 2009 Plan and applicable award agreements, until such outstanding awards that are stock options are exercised, terminated or expired by their terms. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant.
We initially reserved 27,000,000 shares of our common stock for issuance under our 2015 Plan. The number of shares reserved for issuance under our 2015 Plan increases automatically on the first day of each fiscal year through 2025, in an amount equal to 5% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31.
We net-share settle equity awards held by certain employees by withholding shares upon vesting to satisfy tax withholding obligations. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our consolidated statements of cash flows.
In conjunction with the Portworx acquisition, we assumed (i) certain options to purchase common stock outstanding under Portworx's 2014 Stock Incentive Plan and (ii) RSUs outstanding under the 2020 Portworx Equity Incentive Plan (collectively, the "Assumed Equity Awards"). The Assumed Equity Awards were converted into corresponding awards for shares of our common stock and retained substantially all of the terms and conditions under which they were granted. Approximately 3.9 million shares are reserved for issuance in connection with the Assumed Equity Awards. Refer to Note 4 for further information on the equity awards assumed resulting from the Portworx acquisition.
2015 Amended and Restated Employee Stock Purchase Plan
Our 2015 Employee Stock Purchase Plan was amended and restated in fiscal 2020 (2015 ESPP). A total of 3,500,000 shares of common stock was initially reserved for issuance under the 2015 ESPP and an additional 5,000,000 shares of common stock were added in connection with the amendment and restatement. The number of shares reserved for issuance under our 2015 ESPP increases automatically on the first day of February of each of 2016 through 2025, in an amount equal to the lesser of (i) 1% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31, and (ii) 3,500,000 shares of common stock.
Our board of directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date, a dollar cap of $7,500 per purchase period (instituted in February 2019), or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6 month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.
Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification charge to be recognized over the new offering period. During fiscal 2020 and 2021, multiple ESPP resets resulted in total modification charges of $13.6 million and $23.8 million to be recognized over the new offering periods. There was no ESPP reset during fiscal 2019.
During fiscal 2019, 2020 and 2021, we recognized $35.4 million, $24.5 million and $25.8 million, of stock-based compensation expense related to our 2015 ESPP. At the end of fiscal 2021, total unrecognized stock-based compensation cost related to our 2015 ESPP was $32.8 million, which is expected to be recognized over a weighted-average period of approximately 1.2 years.
Stock Options
A summary of the stock option activity under our equity incentive plans and related information is as follows:
 
 Options Outstanding
 Number of
Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
(in thousands)
Balance at the end of fiscal 202026,822,243 $8.97 3.9$237,803 
Options assumed in an acquisition1,891,349 1.75   
Options exercised(9,734,153)6.11   
Options forfeited/canceled(420,465)14.77   
Balance at the end of fiscal 202118,558,974 $9.60 4.3$251,503 
Vested and exercisable at the end of fiscal 202116,016,719 $9.92 3.8$211,566 
The aggregate intrinsic value of options vested and exercisable at the end of fiscal 2021 is calculated based on the difference between the exercise price and the closing price of $23.13 of our common stock on the last day of fiscal 2021. The aggregate intrinsic value of options exercised during fiscal 2019, 2020 and 2021 was $165.0 million, $106.6 million and $118.8 million.
The weighted-average grant date fair value of options assumed was $14.16 per share for fiscal 2021. The total grant date fair value of options vested during fiscal 2019, 2020 and 2021 was $45.6 million, $34.2 million and $20.1 million.
During fiscal 2019, 2020 and 2021, we recognized $32.0 million, $15.8 million and $8.6 million, of stock-based compensation expense related to stock options. At the end of fiscal 2021, total unrecognized employee stock-based compensation cost related to outstanding options was $17.5 million, which is expected to be recognized over a weighted-average period of 2.2 years.
Determination of Fair Value
The fair value of stock options granted to employees and to be purchased under ESPP is estimated on the grant date using the Black-Scholes option pricing model. This valuation model for stock-based compensation expense requires us to make assumptions and judgments about the variables used in the calculation including the fair value of the underlying common stock, expected term, the expected volatility of the common stock, a risk-free interest rate and expected dividend yield. The assumptions used for the periods presented are as follows:
 
 Fiscal Year Ended
 201920202021
Employee Stock Options   
Expected term (in years)n/an/a5.65
Expected volatilityn/an/a52.07%
Risk-free interest raten/an/a0.3%
Dividend raten/an/a
Fair value of common stockn/an/a$15.79
Employee Stock Purchase Plan   
Expected term (in years)
0.5 - 2.0
0.5 - 2.0
0.5 - 2.0
Expected volatility
44% - 47%
42% - 47%
52% - 113%
Risk-free interest rate
2.0% - 2.8%
1.7% - 2.5%
0.1% - 0.4%
Dividend rate
Fair value of common stock
$20.62 - $27.66
$17.76 - $20.87
$9.07 - $15.26
 
The assumptions used in the Black-Scholes option pricing model were determined as follows.
Fair Value of Common Stock—We use the market closing price of our common stock as reported on the New York Stock Exchange to determine the fair value of our common stock at each grant date.
Expected Term—The expected term represents the period that our stock-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options and ESPP purchase rights.
Expected Volatility—The expected volatility for ESPP purchase rights is based on the historical volatility of our common stock for a period equivalent to the expected term of the ESPP purchase rights.
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock option grants and ESPP purchase rights.
Dividend Rate—We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, use an expected dividend yield of zero.
RSUs
A summary of the RSU activity under our equity incentive plans and related information is as follows:
Number of RSUs OutstandingWeighted-Average Grant Date Fair ValueAggregate Intrinsic Value
(in thousands)
Unvested balance at the end of fiscal 202025,434,597 $18.72 $452,736 
Granted18,414,274 12.61 
Assumed in an acquisition2,016,061 15.79 
Vested(11,240,616)16.90 
Forfeited(3,794,234)16.82 
Unvested balance at the end of fiscal 202130,830,082 $15.77 $712,657 
During fiscal 2021, we granted 1,682,266 shares of performance RSUs, at a target percentage of 100%, with both performance and service vesting conditions payable in common stock, from 0% to 125% of the target number granted, contingent upon the degree to which the performance condition is met. A total of 1,406,681 shares were earned at the end of fiscal 2021 based on the performance condition achieved and these shares are subject to service conditions through the vesting periods. The remaining shares will be canceled in fiscal 2022.
The aggregate fair value, as of the respective vesting dates, of RSUs that vested during fiscal 2019, 2020 and 2021 was $184.8 million, $164.1 million and $183.4 million.
During fiscal 2019, 2020 and 2021, we recognized $119.9 million, $161.8 million and $199.1 million in stock-based compensation expense related to RSUs. At the end of fiscal 2021, total unrecognized employee compensation cost related to unvested RSUs was $428.5 million, which is expected to be recognized over a weighted-average period of 2.7 years.
Restricted Stock
A summary of the restricted stock activity under our 2015 Plan and related information is as follows:
 Number of Restricted Stock OutstandingWeighted-
Average
Grant Date
Fair Value
Aggregate
Intrinsic
Value
(in thousands)
Unvested balance at the end of fiscal 20202,127,206 $19.58 $37,864 
Vested(1,252,405)19.61 
Forfeited/canceled(316,965)20.38 
Unvested balance at the end of fiscal 2021557,836 $19.06 $12,903 
All unvested shares of restricted stock are subject to cancellation to the extent vesting conditions are not met. The aggregate fair value of restricted stock that vested during fiscal 2019, 2020 and 2021 was $3.6 million, $24.2 million and $18.3 million.
During fiscal 2019, 2020 and 2021, we recognized $23.3 million, $24.6 million and $9.3 million in stock-based compensation expense related to restricted stock. At the end of fiscal 2021, total unrecognized employee compensation cost related to unvested restricted stock was $2.6 million, which is expected to be recognized over a weighted-average period of approximately 0.9 years.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations (in thousands):
 Fiscal Year Ended
 201920202021
Cost of revenue—product$2,951 $3,732 $4,001 
Cost of revenue—subscription services12,378 14,403 14,979 
Research and development92,484 107,658 117,220 
Sales and marketing66,350 67,560 65,248 
General and administrative36,482 33,352 40,896 
Total stock-based compensation expense$210,645 $226,705 $242,344 
The tax benefit related to stock-based compensation expense for all periods presented was not material.
v3.21.1
Net Loss per Share Attributable to Common Stockholders
12 Months Ended
Jan. 31, 2021
Earnings Per Share [Abstract]  
Net Loss per Share Attributable to Common Stockholders Net Loss per Share Attributable to Common Stockholders
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents, including our outstanding stock options, common stock related to unvested RSUs, unvested restricted stock, our Notes to the extent dilutive, and common stock issuable pursuant to the ESPP. These potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.
In December 2018, all outstanding shares of Class B common stock converted to shares of Class A common stock pursuant to the terms of our amended and restated certificate of incorporation. The conversion did not impact our basic or diluted net loss per share attributable to common stockholders for fiscal 2019.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):
 
 Fiscal Year Ended
 201920202021
 
Net loss$(178,362)$(200,987)$(282,076)
Weighted-average shares used in computing net loss
   per share attributable to common stockholders, basic and diluted
232,042 252,820 267,824 
Net loss per share attributable to common stockholders,
basic and diluted
$(0.77)$(0.79)$(1.05)
 
The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):
 
 Fiscal Year Ended
 201920202021
Stock options to purchase common stock39,928 31,315 23,180 
Unvested restricted stock units19,488 24,374 31,980 
Unvested restricted stock2,881 2,614 1,145 
Shares related to convertible senior notes17,867 21,884 21,884 
Shares issuable pursuant to the ESPP2,411 1,031 2,148 
Early exercised stock options subject to repurchase— — 
Total82,582 81,218 80,337 
v3.21.1
Other Income (Expense), Net
12 Months Ended
Jan. 31, 2021
Other Income and Expenses [Abstract]  
Other Income (Expense), Net Other Income (Expense), Net
Other income (expense), net consists of the following (in thousands):
Fiscal Year Ended
201920202021
Interest income (1)
$18,013 $27,241 $17,442 
Interest expense (2)
(21,615)(27,897)(31,403)
Foreign currency transactions (losses) gains(5,230)(3,396)2,507 
Other income816 669 2,327 
Total other income (expense), net$(8,016)$(3,383)$(9,127)
_________________________________
(1) Interest income includes interest income related to our cash, cash equivalents and marketable securities and non-cash interest income (expense) related to accretion (amortization) of the discount (premium) on marketable securities.
(2) Interest expense includes non-cash interest expense related to amortization of the debt discount and debt issuance costs and the contractual interest expense related to our debt.
v3.21.1
Income Taxes
12 Months Ended
Jan. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The geographical breakdown of loss before provision for income taxes is as follows (in thousands):

 Fiscal Year Ended
 201920202021
Domestic$(145,428)$(212,672)$(312,119)
International(31,845)18,006 41,959 
Total$(177,273)$(194,666)$(270,160)

The components of the provision for income taxes are as follows (in thousands):
 Fiscal Year Ended
 201920202021
Current:   
State$571 $