Commitments and Contingencies

Leases

The Company leases office space in San Jose, California; London, England; and Sydney, Australia under non-cancelable operating leases with various expiration dates through 2019. Rent expense was $2.1 million, $2.3 million and $2.5 million for the years ended July 31, 2016, 2015 and 2014, respectively.

Future minimum lease payments under non-cancelable operating leases as of July 31, 2016 are as follows:



	(in thousands)
2017	$	2,131
2018	1,851
2019	1,655
Total future minimum operating lease payments	$	5,637

Letters of Credit

As of July 31, 2016, the Company had a total of $0.5 million in letters of credit outstanding related to its leased office space in San Jose, California. The letters of credit are collateralized by substantially all of the Company’s assets, excluding its intellectual property. These letters of credit renew annually and mature at various dates through June 30, 2019.

Legal Matters and Contingencies

The Company makes a provision for a liability relating to legal matters and loss contingencies when it is both probable that a liability has been or will be incurred and the amount of the loss can be reasonably estimated.

Beginning on March 17, 2016, four purported shareholder class action complaints were filed in the Superior Court of the State of California, County of San Mateo, against the Company, the Company’s directors, certain of the Company’s executive officers, the underwriters of the Company’s IPO and other defendants. The lawsuits were brought by purported stockholders of the Company seeking to represent a class consisting of all purchasers of the Company’s common stock pursuant or traceable to the Registration Statement and Prospectus issued in connection with the Company’s IPO. These complaints allege claims under federal securities laws that such Registration Statement and Prospectus contained false and/or misleading statements or omissions. These complaints seek unspecified compensatory damages and other relief. The Company believes that the claims are without merit and intends to defend these lawsuits vigorously.

From time to time, the Company may become a party to other litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, and threatened claims, breach of contract claims, tax, and other matters. The Company is not presently a party to any other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

Indemnification Arrangements

In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers, business partners and other parties with respect to certain matters, including, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities with respect to the Company’s products and services and its business. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.

The Company includes service level commitments to its cloud customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that it fails to meet those levels. To date, the Company has not incurred any material costs as a result of these commitments and the Company expects the time between any potential claims and issuance of the credits to be short. As a result, the Company has not accrued any liabilities related to these commitments in the Company’s consolidated financial statements.

In addition, the Company has indemnification agreements with its directors and certain of its executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.