PURE STORAGE, INC., 10-Q filed on 6/8/2021
Quarterly Report
v3.21.1
Cover Page - shares
3 Months Ended
May 02, 2021
Jun. 04, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date May 02, 2021  
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, $0.0001 par value per share  
Trading Symbol PSTG  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding (in shares)   283,254,906
Amendment Flag false  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q1  
Entity Central Index Key 0001474432  
Current Fiscal Year End Date --02-06  
v3.21.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
May 02, 2021
Jan. 31, 2021
Current assets:    
Cash and cash equivalents $ 300,808 $ 337,147
Marketable securities 933,376 916,388
Accounts receivable, net of allowance of $1,033 and $1,046 327,507 460,879
Inventory 49,287 46,733
Deferred commissions, current 55,212 57,183
Prepaid expenses and other current assets 117,880 89,836
Total current assets 1,784,070 1,908,166
Property and equipment, net 172,381 163,041
Operating lease right-of-use assets 129,582 134,668
Deferred commissions, non-current 130,663 130,741
Intangible assets, net 72,351 76,648
Goodwill 358,736 358,736
Restricted cash 10,544 10,544
Other assets, non-current 39,611 36,896
Total assets 2,697,938 2,819,440
Current liabilities:    
Accounts payable 40,563 67,530
Accrued compensation and benefits 84,322 160,817
Accrued expenses and other liabilities 52,823 61,754
Operating lease liabilities, current 33,886 32,231
Deferred revenue, current 458,705 438,321
Total current liabilities 670,299 760,653
Long-term debt 763,064 755,814
Operating lease liabilities, non-current 114,304 120,361
Deferred revenue, non-current 407,455 405,376
Other liabilities, non-current 27,343 27,230
Total liabilities 1,982,465 2,069,434
Commitments and contingencies (Note 7)
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; 278,363 and 283,352 Class A shares issued and outstanding 28 28
Additional paid-in capital 2,359,895 2,307,580
Accumulated other comprehensive income 4,768 7,410
Accumulated deficit (1,649,218) (1,565,012)
Total stockholders’ equity 715,473 750,006
Total liabilities and stockholders’ equity $ 2,697,938 $ 2,819,440
v3.21.1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
May 02, 2021
Jan. 31, 2021
Accounts receivable, allowance $ 1,046 $ 1,033
Preferred stock    
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Shares authorized (in shares) 20,000,000 20,000,000
Shares issued (in shares) 0 0
Shares outstanding (in shares) 0 0
Common stock    
Shares authorized (in shares) 2,250,000,000 2,250,000,000
Class A    
Common stock    
Par value per share (in dollars per share) $ 0.0001 $ 0.0001
Shares authorized (in shares) 2,000,000,000 2,000,000,000
Shares issued (in shares) 283,351,736 278,363,000
Shares outstanding (in shares) 283,351,736 278,363,000
Class B    
Common stock    
Par value per share (in dollars per share) $ 0.0001 $ 0.0001
Shares authorized (in shares) 250,000,000 250,000,000
v3.21.1
Condensed Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
May 02, 2021
May 03, 2020
Revenue $ 412,707 $ 367,119
Cost of revenue 130,841 110,294
Gross profit 281,866 256,825
Operating expenses:    
Research and development 131,381 112,446
Sales and marketing 183,496 173,433
General and administrative 43,146 41,125
Restructuring and other 0 14,702
Total operating expenses 358,023 341,706
Loss from operations (76,157) (84,881)
Other income (expense), net (4,727) (3,416)
Loss before provision for income taxes (80,884) (88,297)
Provision for income taxes 3,322 2,297
Net loss $ (84,206) $ (90,594)
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) $ (0.30) $ (0.34)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) 280,331 262,935
Product    
Revenue $ 249,888 $ 246,939
Cost of revenue 79,064 69,285
Subscription services    
Revenue 162,819 120,180
Cost of revenue $ 51,777 $ 41,009
v3.21.1
Condensed Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands
3 Months Ended
May 02, 2021
May 03, 2020
Statement of Comprehensive Income [Abstract]    
Net loss $ (84,206) $ (90,594)
Other comprehensive income (loss):    
Unrealized net gains (losses) on available-for-sale securities (2,219) 4,890
Less: reclassification adjustment for net gains on available-for-sale securities included in net loss (423) (166)
Change in unrealized net gains (losses) on available-for-sale securities (2,642) 4,724
Comprehensive loss $ (86,848) $ (85,870)
v3.21.1
Condensed Consolidated Statements of Stockholders’ Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income
Accumulated Deficit
Restricted Stock Units
Common Stock
Restricted stock
Restricted stock
Common Stock
Restricted stock
Additional Paid-in Capital
Beginning balance (in shares) at Feb. 02, 2020   264,008              
Beginning 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)   2,175              
Issuance of common stock upon exercise of stock options 9,388 $ 0 9,388            
Stock-based compensation expense 58,694   58,694            
Vesting of restricted stock units (in shares)           2,525      
Vesting of restricted stock units           $ 0      
Cancellation of restricted stock (in shares)   (230)              
Tax withholding on vesting of equity awards (in shares)               (134)  
Tax withholding on vesting of restricted stock             $ (1,374)   $ (1,374)
Common stock issued under employee stock purchase plan (in shares)   1,585              
Common stock issued under employee stock purchase plan 16,021   16,021            
Repurchases of common stock (in shares)   (5,959)              
Repurchases of common stock (70,119) $ 0 (70,119)            
Other comprehensive income (loss) 4,724     4,724          
Net loss (90,594)       (90,594)        
Ending balance (in shares) at May. 03, 2020   263,970              
Ending balance at May. 03, 2020 756,858 $ 26 2,120,189 10,173 (1,373,530)        
Beginning balance (in shares) at Jan. 31, 2021   278,363              
Beginning balance at Jan. 31, 2021 750,006 $ 28 2,307,580 7,410 (1,565,012)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Issuance of common stock upon exercise of stock options (in shares)   1,331              
Issuance of common stock upon exercise of stock options 7,895 $ 0 7,895            
Stock-based compensation expense 61,764   61,764            
Vesting of restricted stock units (in shares)           3,082      
Vesting of restricted stock units           $ 0      
Tax withholding on vesting of equity awards (in shares)   (226)              
Tax withholding on vesting of restricted stock (5,050)   (5,050)            
Common stock issued under employee stock purchase plan (in shares)   2,185              
Common stock issued under employee stock purchase plan 17,726   17,726            
Repurchases of common stock (in shares)   (1,383)              
Repurchases of common stock (30,020) $ 0 (30,020)            
Other comprehensive income (loss) (2,642)     (2,642)          
Net loss (84,206)       (84,206)        
Ending balance (in shares) at May. 02, 2021   283,352              
Ending balance at May. 02, 2021 $ 715,473 $ 28 $ 2,359,895 $ 4,768 $ (1,649,218)        
v3.21.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
May 02, 2021
May 03, 2020
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (84,206) $ (90,594)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 18,826 15,133
Amortization of debt discount and debt issuance costs 7,403 6,936
Stock-based compensation expense 61,334 58,694
Other 2,621 1,705
Changes in operating assets and liabilities:    
Accounts receivable, net 133,380 109,441
Inventory (3,508) (1,370)
Deferred commissions 2,049 (3,159)
Prepaid expenses and other assets (30,407) (6,298)
Operating lease right-of-use assets 7,581 6,706
Accounts payable (24,354) (14,294)
Accrued compensation and other liabilities (84,837) (49,643)
Operating lease liabilities (6,897) (6,926)
Deferred revenue 22,463 8,772
Net cash provided by operating activities 21,448 35,103
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchases of property and equipment (27,829) (23,782)
Purchases of marketable securities (171,563) (98,161)
Sales of marketable securities 85,537 17,657
Maturities of marketable securities 65,740 95,375
Net cash used in investing activities (48,115) (8,911)
CASH FLOWS FROM FINANCING ACTIVITIES    
Net proceeds from exercise of stock options 8,016 9,275
Proceeds from issuance of common stock under employee stock purchase plan 17,726 16,021
Proceeds from borrowing 0 4,950
Repayments of borrowing (344) 0
Tax withholding on vesting of equity awards (5,050) (1,374)
Repurchases of common stock (30,020) (70,119)
Net cash used in financing activities (9,672) (41,247)
Net decrease in cash, cash equivalents and restricted cash (36,339) (15,055)
Cash, cash equivalents and restricted cash, beginning of period 347,691 377,922
Cash, cash equivalents and restricted cash, end of period 311,352 362,867
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Cash paid for interest 1,455 359
Cash paid for income taxes 3,750 2,376
Cash paid for amounts included in the measurement of lease liabilities 8,820 8,688
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION    
Property and equipment purchased but not yet paid 8,366 8,274
Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 2,495 $ 10,812
v3.21.1
Condensed Consolidated Statement of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
May 02, 2021
May 03, 2020
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD    
Cash and cash equivalents $ 300,808 $ 347,580
Restricted cash 10,544 15,287
Cash, cash equivalents and restricted cash, end of period $ 311,352 $ 362,867
v3.21.1
Business Overview
3 Months Ended
May 02, 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
3 Months Ended
May 02, 2021
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
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 2021 was January 31, 2021 and for fiscal 2022 will be February 6, 2022. The first quarter of fiscal 2021 and 2022 ended on May 3, 2020 and May 2, 2021. Unless otherwise stated, all dates refer to our fiscal year and fiscal periods.
The condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
There were no material changes in the first quarter of fiscal 2022 to our significant accounting policies as described in our Annual Report on Form 10-K for fiscal 2021.
Unaudited Interim Consolidated Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2021.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2022 or any future period.
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, and the 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.
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 2021 and the first quarter of fiscal 2022, we had restricted cash of $10.5 million.
Recent Accounting Pronouncements Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): 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. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) which refines the scope of Topic 848 and clarifies some of its guidance. 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 condensed 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 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 condensed consolidated financial statements.
v3.21.1
Financial Instruments
3 Months Ended
May 02, 2021
Investments, Debt and Equity Securities [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 valuation hierarchy at the end of fiscal 2021 and the first quarter of fiscal 2022 (in thousands):
 
 At the End of Fiscal 2021
 Amortized
Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair
Value
Cash 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 


 
At the End of the First Quarter of Fiscal 2022
 Amortized
Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair
Value
Cash EquivalentsMarketable
Securities
Restricted Cash
Level 1
Money market accounts$— $— $— $49,323 $38,779 $— $10,544 
Level 2       
U.S. government treasury notes320,320 2,387 (14)322,693 — 322,693 — 
U.S. government agencies54,735 395 — 55,130 — 55,130 — 
Corporate debt securities459,297 3,054 (164)462,187 — 462,187 — 
Foreign government bonds19,502 230 (2)19,730 — 19,730 — 
Asset-backed securities70,502 705 (3)71,204 — 71,204 — 
Municipal bonds2,440 — (8)2,432 — 2,432 — 
Total$926,796 $6,771 $(191)$982,699 $38,779 $933,376 $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 the First Quarter of Fiscal 2022
 Amortized CostFair Value
Due within one year$360,362 $362,340 
Due in one to five years566,434 571,036 
Total$926,796 $933,376 
 
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 were no credit losses in the first quarter of fiscal 2021 and 2022.
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 2021 and the first quarter of fiscal 2022, aggregated by investment category (in thousands):
At the End of Fiscal 2021
Less than 12 monthsGreater than 12 monthsTotal
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
U.S. government treasury notes$8,301 $(1)$— $— $8,301 $(1)
Corporate debt securities32,996 (33)— — 32,996 (33)
Total$41,297 $(34)$— $— $41,297 $(34)

At the End of the First Quarter of Fiscal 2022
 Less than 12 monthsGreater than 12 monthsTotal
 Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
U.S. government treasury notes$20,412 $(14)$— $— $20,412 $(14)
Corporate debt securities74,897 (164)— — 74,897 (164)
Foreign government bonds1,238 (2)— — 1,238 (2)
Asset-backed securities2,727 (3)— — 2,727 (3)
Municipal bonds2,432 (8)— — 2,432 (8)
Total$101,706 $(191)$— $— $101,706 $(191)
 
Realized gains or losses on sale of marketable securities were not significant for all periods presented.
Fair Value Measurements of Other Financial Instruments
We measure the fair value of our convertible senior notes (the Notes) on a quarterly basis for disclosure purposes. We consider the fair value of the Notes at the end of the first quarter of fiscal 2022 to be a Level 2 measurement due to its limited trading activity. Refer to Note 6 for the carrying amount and estimated fair value of our Notes at the end of the first quarter of fiscal 2022.
v3.21.1
Balance Sheet Components
3 Months Ended
May 02, 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 2021
First Quarter of Fiscal 2022
Raw materials$4,991 $5,881 
Finished goods41,742 43,406 
Inventory$46,733 $49,287 
Property and Equipment, Net
Property and equipment, net consists of the following (in thousands):
 
At the End of
 Fiscal 2021
First Quarter of Fiscal 2022
Test equipment$238,069 $243,564 
Computer equipment and software184,518 194,991 
Furniture and fixtures8,484 8,492 
Leasehold improvements44,444 44,675 
Total property and equipment475,515 491,722 
Less: accumulated depreciation and amortization(312,474)(319,341)
Property and equipment, net$163,041 $172,381 
 
Depreciation and amortization expense related to property and equipment was $12.4 million and $14.5 million for the first quarter of fiscal 2021 and 2022. No amount of internal-use software development costs were capitalized during the first quarter of fiscal 2021 and the amount capitalized during the first quarter of fiscal 2022 was not material.
Intangible Assets, Net
Intangible assets, net consist of the following (in thousands):
 
At the End of
 Fiscal 2021
First Quarter of Fiscal 2022
Gross Carrying ValueAccumulated AmortizationNet Carrying AmountGross Carrying ValueAccumulated AmortizationNet Carrying Amount
Technology patents$19,125 $(11,722)$7,403 $19,125 $(12,420)$6,705 
Developed technology77,373 (17,499)59,874 77,373 (20,567)56,806 
Customer relationships6,459 (308)6,151 6,459 (538)5,921 
Trade name3,623 (403)3,220 3,623 (704)2,919 
Intangible assets, net$106,580 $(29,932)$76,648 $106,580 $(34,229)$72,351 
 
 Intangible assets amortization expense was $2.7 million and $4.3 million for the first quarter of fiscal 2021 and 2022. At the end of the first quarter of fiscal 2022, the weighted-average remaining amortization period was 2.5 years for technology patents, 4.7 years for developed technology, 6.4 years for customer relationships, and 2.4 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 condensed consolidated statements of operations.
At the end of the first quarter of fiscal 2022, future expected amortization expense for intangible assets is as follows (in thousands):
Fiscal Years EndingEstimated Future
Amortization Expense
Remainder of 2022$11,934 
202315,685 
202415,282 
202514,477 
202611,924 
Thereafter3,049 
Total$72,351 
Goodwill
As of the end of fiscal 2021 and the first quarter of fiscal 2022, goodwill was $358.7 million. There were no impairments to goodwill during the first quarter of fiscal 2021 and 2022.
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following (in thousands):
At the End of
 Fiscal 2021
First Quarter of Fiscal 2022
Taxes payable $4,097 $3,637 
Accrued marketing15,638 11,685 
Accrued travel and entertainment expenses866 636 
Acquisition consideration9,600 4,108 
Other accrued liabilities31,553 32,757 
Total accrued expenses and other liabilities$61,754 $52,823 
v3.21.1
Deferred Revenue and Commissions
3 Months Ended
May 02, 2021
Revenue from Contract with Customer [Abstract]  
Deferred Revenue and Commissions Deferred Revenue and Commissions
Deferred Commissions
Deferred commissions consist of incremental costs paid to our sales force to obtain customer contracts.
Changes in total deferred commissions during the periods presented are as follows (in thousands):
First Quarter of Fiscal
20212022
Beginning balance
$139,204 $187,924 
Additions29,762 29,189 
Recognition of deferred commissions(26,603)(31,238)
Ending balance$142,363 $185,875 
Of the $185.9 million total deferred commissions balance at the end of the first quarter of fiscal 2022, we expect to recognize approximately 30% as commission expense over the next 12 months and the remainder thereafter.
There was no impairment related to capitalized commissions for the first quarter of fiscal 2021 and 2022.
Deferred Revenue
Deferred revenue primarily consists of amounts that have been invoiced but have not yet been recognized as revenue including performance obligations pertaining to subscription services.
Changes in total deferred revenue during the periods presented are as follows (in thousands):
First Quarter of Fiscal
20212022
Beginning balance
$697,288 $843,697 
Additions131,734 186,851 
Recognition of deferred revenue(122,962)(164,388)
Ending balance$706,060 $866,160 
Revenue recognized during the first quarter of fiscal 2021 and 2022 from deferred revenue at the beginning of each respective period was $108.7 million and $145.1 million.
Remaining Performance Obligations
Total contracted but not recognized revenue was $1,129.2 million at the end of the first quarter of fiscal 2022. 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 $1,129.2 million contracted but not recognized revenue at the end of the first quarter of fiscal 2022, we expect to recognize approximately 44% over the next 12 months, and the remainder thereafter.
v3.21.1
Debt
3 Months Ended
May 02, 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 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 2021
First Quarter of Fiscal 2022
Liability:
Principal$575,000 $575,000 
Less: debt discount, net of amortization(64,515)(57,755)
Less: debt issuance costs, net of amortization(4,671)(4,181)
Net carrying amount of the Notes$505,814 $513,064 
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 value of the Notes at the end of the first quarter of fiscal 2022 was $612.4 million. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Based on the closing price of our common stock of $20.22 on the last day of the first quarter of fiscal 2022, the if-converted value of the Notes of $442.5 million was less than its principal amount. At the end of the first quarter of fiscal 2022, the remaining term of the Notes is approximately 23 months.
The following table sets forth total interest expense recognized related to the Notes for the first quarter of fiscal 2021 and 2022 (in thousands):
First Quarter of Fiscal
20212022
Amortization of debt discount$6,468 $6,760 
Amortization of debt issuance costs468 490 
Total amortization of debt discount and debt issuance costs6,936 7,250 
Contractual interest expense177 175 
Total interest expense related to the Notes$7,113 $7,425 
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 condensed 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
On August 24, 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.
In September 2020, we drew down $250.0 million under the Credit Facility which remained outstanding at the end of the first quarter of fiscal 2022. The outstanding loan bore weighted-average interest at the one-month LIBOR of approximately 1.61% resulting in interest expense of $1.0 million during the first quarter of fiscal 2022.
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: 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 the first quarter of fiscal 2022.
v3.21.1
Commitments and Contingencies
3 Months Ended
May 02, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Letters of Credit
At the end of fiscal 2021 and the first quarter of fiscal 2022, we had outstanding letters of credit in the aggregate amount of $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 condensed consolidated balance sheet at the end of the first quarter of fiscal 2022.
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 condensed 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
3 Months Ended
May 02, 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. The components of lease costs during the periods presented were as follows (in thousands):
First Quarter of Fiscal
20212022
Fixed operating lease cost$8,749 $9,756 
Variable lease cost (1)
2,651 1,995 
Short-term lease cost (12 months or less)1,507 1,101 
Total lease cost$12,907 $12,852 
____________________________________
(1) Variable lease cost predominantly included common area maintenance charges.
At the end of the first quarter of fiscal 2022, the weighted-average remaining lease term was 5.0 years and the weighted-average discount rate is 5.74%. Future lease payments under our non-cancelable operating leases at the end of the first quarter of fiscal 2022 were as follows (in thousands):
Fiscal Years EndingOperating Leases
The remainder of 2022$31,804 
202337,777 
202432,170 
202527,488 
202619,322 
Thereafter24,371 
Total future lease payments172,932 
Less: imputed interest(24,742)
Present value of lease liabilities$148,190 
v3.21.1
Restructuring and Other
3 Months Ended
May 02, 2021
Restructuring and Related Activities [Abstract]  
Restructuring and Other Restructuring and Other
In February 2020 and prior to the effects of the COVID-19 pandemic, we effected a workforce realignment plan to streamline our operations and recognized $5.8 million of restructuring costs related to involuntary termination benefit costs. The restructuring charge is included in restructuring and other expenses in our condensed consolidated statement of operations.
During the first quarter of fiscal 2021, we incurred incremental costs of $9.5 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 the $9.5 million, $8.9 million is included in restructuring and other expenses and $0.6 million is included in cost of revenue in our condensed consolidated statements of operations.
v3.21.1
Stockholders' Equity
3 Months Ended
May 02, 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 the first quarter of fiscal 2022, 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. At the end of the first quarter of fiscal 2022, we had 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 the first quarter of fiscal 2022, 283,351,736 shares of Class A common stock were issued and outstanding.
Share Repurchase Program
In February 2021, our board of directors authorized the repurchase of up to an additional $200.0 million of our common stock. During the first quarter of fiscal 2022, we repurchased and retired 1,383,069 shares of common stock at an average purchase price of $21.69 per share for an aggregate repurchase price of $30.0 million. At the end of the first quarter of fiscal 2022, $170.0 million remained available for future share repurchases under our current repurchase authorization.
v3.21.1
Equity Incentive Plans
3 Months Ended
May 02, 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. 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 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 condensed consolidated statements of cash flows.
2015 Amended and Restated Employee Stock Purchase Plan
Under our Amended and Restated 2015 Employee Stock Purchase Plan (2015 ESPP), 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, 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 the first quarter of fiscal 2021, there was an ESPP reset that resulted in a modification charge of $23.8 million, which is being recognized over an offering period ending March 15, 2022. There was no ESPP reset during the first quarter of fiscal 2022.
Stock-based compensation expense related to our 2015 ESPP was $5.6 million and $7.6 million during the first quarter of fiscal 2021 and 2022. At the end of the first quarter of fiscal 2022, total unrecognized stock-based compensation cost related to our 2015 ESPP was $35.4 million, which is expected to be recognized over a weighted-average period of 1.0 year.
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 (In Years)
Aggregate
Intrinsic
Value (in thousands)
Balance at the end of fiscal 202118,558,974 $9.60 4.3$251,503 
Options exercised(1,330,998)5.91   
Options forfeited(42,310)11.49   
Balance at the end of the first quarter of fiscal 2022
17,185,666 $9.88 4.1$178,086 
Vested and exercisable at the end of the first quarter of fiscal 2022
15,177,675 $10.30 3.7$150,613 
 
The aggregate intrinsic value of options vested and exercisable at the end of the first quarter of fiscal 2022 is calculated based on the difference between the exercise price and the closing price of $20.22 of our common stock on the last day of the first quarter of fiscal 2022.
Stock-based compensation expense recognized related to stock options was $2.0 million and $2.3 million during the first quarter of fiscal 2021 and 2022.
At the end of the first quarter of fiscal 2022, total unrecognized employee stock-based compensation cost related to outstanding options was $14.7 million, which is expected to be recognized over a weighted-average period of 2.1 years.
RSUs
A summary of the RSU activity under our equity incentive plans and related information is as follows:
 Number of
RSUs Outstanding
Weighted-
Average
Grant Date
Fair Value
Aggregate
Intrinsic
Value (in thousands)
Unvested balance at the end of fiscal 202130,830,082 $15.77 $712,657 
Granted
9,393,611 22.36 
Vested(3,082,031)15.61 
Forfeited(1,829,331)15.65 
Unvested balance at the end of the first quarter of fiscal 2022
35,312,331 $17.53 $714,015 
RSUs granted during the first quarter of fiscal 2022, include 120,552 shares of performance RSUs, at a target percentage of 100%, with both performance and service vesting conditions payable in common stock, from 0% to 150% of the target number granted, contingent upon the degree to which the performance condition is met. Any portion of shares that are not earned will be canceled.
Stock-based compensation expense recognized related to RSUs was $46.8 million and $51.6 million during the first quarter of fiscal 2021 and 2022. At the end of the first quarter of fiscal 2022, total unrecognized employee stock-based compensation cost related to unvested RSUs was $565.8 million, which is expected to be recognized over a weighted-average period of 3.0 years.
Restricted Stock
A summary of the restricted stock activity under our 2015 Plan and related information is as follows:
 Number of
Restricted Stock Outstanding
Weighted-
Average
Grant Date
Fair Value
Aggregate
Intrinsic
Value (in thousands)
Unvested balance at the end of fiscal 2021557,836 $19.06 $12,903 
Vested(180,337)19.33 
Unvested balance at the end of the first quarter of fiscal 2022
377,499 $18.94 $7,633 

All unvested shares of restricted stock are subject to cancellation to the extent vesting conditions are not met. Stock-based compensation expense recognized related to restricted stock was $4.3 million and $0.6 million during the first quarter of fiscal 2021 and 2022. At the end of the first quarter of fiscal 2022, total unrecognized employee compensation cost related to unvested restricted stock was $1.6 million, which is expected to be recognized over a weighted-average period of 0.7 years.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):
 
 
First Quarter of Fiscal
 20212022
Cost of revenue—product$996 $1,347 
Cost of revenue—subscription services3,392 4,406 
Research and development
28,711 30,421 
Sales and marketing16,272 16,808 
General and administrative9,323 8,352 
Total stock-based compensation expense$58,694 $61,334 
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
3 Months Ended
May 02, 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.
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):
 
First Quarter of Fiscal
 20212022
Net loss$(90,594)$(84,206)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted262,935 280,331 
Net loss per share attributable to common stockholders, basic and diluted$(0.34)$(0.30)
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):
 
 
First Quarter of Fiscal
 20212022
Stock options to purchase common stock25,590 17,856 
Unvested restricted stock units29,146 32,876 
Unvested restricted stock1,705 471 
Shares related to convertible senior notes21,884 21,884 
Shares issuable pursuant to the ESPP1,046 1,049 
Total79,371 74,136 
v3.21.1
Other Income (Expense), Net
3 Months Ended
May 02, 2021
Other Income and Expenses [Abstract]  
Other Income (Expense), Net Other Income (Expense), Net
Other income (expense), net consists of the following (in thousands):
First Quarter of Fiscal
20212022
Interest income(1)
$6,231 $2,774 
Interest expense(2)
(7,151)(8,659)
Foreign currency transactions (losses) gains(2,386)36 
Other (expense) income(110)1,122 
Total other income (expense), net$(3,416)$(4,727)
____________________________________
(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
3 Months Ended
May 02, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our provision for income tax primarily reflects taxes on international operations and state income taxes. The difference between the income tax provision that would be derived by applying the statutory rate to our loss before income taxes and the income tax provision recorded was primarily attributable to changes in our valuation allowance, U.S. taxes on foreign income and research and development credits.
At the end of the first quarter of fiscal 2022, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for fiscal 2021.
v3.21.1
Segment Information
3 Months Ended
May 02, 2021
Segment Reporting [Abstract]  
Segment Information Segment InformationOur chief operating decision maker is our Chief Executive Officer. Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. We have one business activity and there are no segment managers who are held accountable for operations or operating results. Accordingly, we have a single reportable segment.
Disaggregation of Revenue
The following table depicts the disaggregation of revenue by geographic area based on the billing address of our customers and is consistent with how we evaluate our financial performance (in thousands):
 
First Quarter of Fiscal
 20212022
United States$264,146 $295,107 
Rest of the world102,973 117,600 
Total revenue$367,119 $412,707 

Long-Lived Assets by Geographic Area
Long-lived assets, which are comprised of property and equipment, net, by geographic area are summarized as follows (in thousands):
 
At the End of
 Fiscal 2021
First Quarter of Fiscal 2022
United States$152,859 $163,123 
Rest of the world10,182 9,258 
Total long-lived assets$163,041 $172,381 
v3.21.1
Basis of Presentation and Summary of Significant Accounting Policies - (Policies)
3 Months Ended
May 02, 2021
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation
Basis of Presentation and Principles of Consolidation
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 2021 was January 31, 2021 and for fiscal 2022 will be February 6, 2022. The first quarter of fiscal 2021 and 2022 ended on May 3, 2020 and May 2, 2021. Unless otherwise stated, all dates refer to our fiscal year and fiscal periods.
The condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
There were no material changes in the first quarter of fiscal 2022 to our significant accounting policies as described in our Annual Report on Form 10-K for fiscal 2021.
Unaudited Interim Consolidated Financial Information
Unaudited Interim Consolidated Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2021.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year 2022 or any future period.
Use of Estimates
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, and the 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.
Restricted Cash Restricted Cash Restricted cash is comprised of cash collateral for letters of credit related to our leases and for a vendor credit card program.
Recent accounting pronouncements not yet adopted
Recent Accounting Pronouncements Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): 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. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) which refines the scope of Topic 848 and clarifies some of its guidance. 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 condensed 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 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 condensed consolidated financial statements.
Fair Value Measurements
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.
v3.21.1
Financial Instruments - (Tables)
3 Months Ended
May 02, 2021
Investments, Debt and Equity Securities [Abstract]  
Cash Equivalents, Marketable Securities and Restricted Cash The following tables summarize our cash equivalents, marketable securities and restricted cash by significant investment categories and their classification within the valuation hierarchy at the end of fiscal 2021 and the first quarter of fiscal 2022 (in thousands):
 
 At the End of Fiscal 2021
 Amortized
Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair
Value
Cash 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 


 
At the End of the First Quarter of Fiscal 2022
 Amortized
Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair
Value
Cash EquivalentsMarketable
Securities
Restricted Cash
Level 1
Money market accounts$— $— $— $49,323 $38,779 $— $10,544 
Level 2       
U.S. government treasury notes320,320 2,387 (14)322,693 — 322,693 — 
U.S. government agencies54,735 395 — 55,130 — 55,130 — 
Corporate debt securities459,297 3,054 (164)462,187 — 462,187 — 
Foreign government bonds19,502 230 (2)19,730 — 19,730 — 
Asset-backed securities70,502 705 (3)71,204 — 71,204 — 
Municipal bonds2,440 — (8)2,432 — 2,432 — 
Total$926,796 $6,771 $(191)$982,699 $38,779 $933,376 $10,544 
Amortized Cost and Estimated Fair Value
The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):
 
At the End of the First Quarter of Fiscal 2022
 Amortized CostFair Value
Due within one year$360,362 $362,340 
Due in one to five years566,434 571,036 
Total$926,796 $933,376 
Gross Unrealized Losses and Fair Values
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 2021 and the first quarter of fiscal 2022, aggregated by investment category (in thousands):
At the End of Fiscal 2021
Less than 12 monthsGreater than 12 monthsTotal
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
U.S. government treasury notes$8,301 $(1)$— $— $8,301 $(1)
Corporate debt securities32,996 (33)— — 32,996 (33)
Total$41,297 $(34)$— $— $41,297 $(34)

At the End of the First Quarter of Fiscal 2022
 Less than 12 monthsGreater than 12 monthsTotal
 Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
U.S. government treasury notes$20,412 $(14)$— $— $20,412 $(14)
Corporate debt securities74,897 (164)— — 74,897 (164)
Foreign government bonds1,238 (2)— — 1,238 (2)
Asset-backed securities2,727 (3)— — 2,727 (3)
Municipal bonds2,432 (8)— — 2,432 (8)
Total$101,706 $(191)$— $— $101,706 $(191)
v3.21.1
Balance Sheet Components - (Tables)
3 Months Ended
May 02, 2021
Balance Sheet Components Disclosure [Abstract]  
Inventory
Inventory consists of the following (in thousands):
At the End of
Fiscal 2021
First Quarter of Fiscal 2022
Raw materials$