Fair Value Measurements

12 Months Ended

Jan. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4. Fair Value Measurements

Investments

Financial assets subject to the fair value disclosure requirements were as follows (in thousands):    

	January 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	256,861	$	—	$	—	$	256,861
Total cash equivalents	$	256,861	$	—	$	—	$	256,861
	January 31, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	43,558	$	—	$	—	$	43,558
Certificates of deposit		—		20,000		—		20,000
Total cash equivalents	$	43,558	$	20,000	$	—	$	63,558

Derivative Instruments and Hedging

In association with our debt described in Note 8, we are required to make variable rate interest payments based on a contractually specified interest rate index (e.g., LIBOR). The variable rate interest payments create interest rate risk as interest payments will fluctuate based on changes in the contractually specified interest rate index over the life of the loan. To minimize our risk exposure due to the volatility of the interest rate index, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association, effective as of September 5, 2019 (Swap Agreement). This agreement, which is designated as a cash flow hedge, has a maturity of five years. Under the Swap Agreement, we have hedged a portion of the variable interest payments by effectively fixing our interest payments over the term of the agreement. As of January 31, 2021, our interest rate swap had a notional value of $30.0 million.

We classify the Swap Agreement within Level 2. As of January 31, 2021, the net unrealized loss of the interest rate swap, which is included in accrued expenses and other current liabilities and accumulated other comprehensive loss in our consolidated balance sheet, was $1.2 million. As of January 31, 2020, the net unrealized loss of the interest rate swap was not material. During the year ended January 31, 2021, the net derivative loss within accumulated other comprehensive loss reclassified into earnings was not material and we estimate that the amount to be reclassified from accumulated other comprehensive loss into earnings within the next 12 months will not be material.

Fair Value Measurements of Other Financial Instruments

In November 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the November 2017 Facility). As of January 31, 2021, we had total debt outstanding relating to the November 2017 Facility with a carrying amount of $30.0 million. The estimated fair value of the November 2017 Facility, which we have classified as a Level 2 financial instrument, approximates its carrying value.

Our 0.00% convertible senior notes due 2026 are recorded on our consolidated balance sheets at the net carrying value. As of January 31, 2021, the net carrying value of the Notes was $267.6 million and the principal amount of the Notes was $345.0 million. The difference between the principal amount of the Notes and the net carrying value represents the unamortized debt discount and unamortized debt issuance costs. Refer to Note 8 for additional details. The fair value of the Notes, which we have classified as a Level 2 instrument, was $348.4 million as of January 31, 2021. The fair value of the Notes was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period, which was $101.00. As of January 31, 2021, based on the closing price of our Class A common stock of $17.34 on the last trading day of the quarter, the if-converted value of the Notes was less than the principal amount by $113.1 million.