Business Combination

SignifAI, Inc.

On January 25, 2019, the Company acquired all outstanding stock of SignifAI, Inc. (“SignifAI”), an event intelligence company specializing in artificial intelligence and machine learning. The aggregate purchase price of $36.3 million consisted of $25.1 million in cash and 143,861 shares of Company common stock with an aggregate fair value of approximately $11.9 million. The fair value of the consideration transferred was determined based on an $82.69 per share price of the Company’s common stock. The total purchase price was allocated to the developed technology acquired, net liabilities assumed, deferred taxes related to net operating loss carryforwards and a deferred tax liability related to the developed technology. The excess purchase price was recorded as goodwill, as set forth below. The acquisition has been accounted for as a business combination. Pursuant to ASC 805, the direct transaction costs of the acquisition incurred by both the Company and SignifAI should be accounted for separately from the business combination and expensed as incurred. Total direct transaction costs incurred by the Company was $0.9 million, which were included in general and administrative expense in the Company’s consolidated statement of operations for the year ended March 31, 2019. Acquisition costs for SignifAI were paid for by SignifAI and were expensed in SignifAI’s pre-acquisition financial results.

Per the terms of the merger agreement, all share-based payment awards were accelerated and paid for in cash. The cash consideration paid for unvested share-based payment awards of $0.8 million was recognized as compensation expense separate from the business combination. The acquisition also included a holdback arrangement with certain employees of SignifAI, totaling approximately 152,840 shares of the Company’s common stock, contingent upon their continued employment with the Company. The fair value of these awards, which are subject to the recipients’ continued service, was $12.6 million and was excluded from the aggregate purchase price. These awards will be recognized as stock-based compensation expense over the remaining vesting period which ranges from of 24 months to 36 months.

The following table presents the purchase price allocation related to the acquisition (in thousands):




Cash consideration paid	$	25,119
Fair value of common shares issued	$	24,535
Total consideration	$	49,654
Post-business combination compensation expense	$	(12,639	)
Cash paid to settle unvested stock options	$	(764	)
Total purchase price	$	36,251
Net liabilities assumed	$	259
Deferred tax liabilities	$	2,289
Deferred tax assets	$	(1,721	)
Developed technology acquired	$	(10,900	)
Goodwill	$	26,178

CoScale NV

On October 9, 2018, the Company acquired certain assets of CoScale NV (“CoScale”), a public limited liability company organized and existing under the laws of Belgium that provides solutions for monitoring the performance of software container environments for $6.3 million in cash. The Company held back approximately $0.9 million from the aggregate purchase price. Of the total purchase price, $2.9 million was allocated to acquired technology with an estimated useful life of three years, with the excess $3.4 million of the purchase price over the fair value of intangible assets acquired recorded as goodwill. The Company also recognized transaction costs of approximately $0.3 million, which is also included in general and administrative expense in its consolidated statement of operations for the year ended March 31, 2019. The acquisition has been accounted for as a business combination under the acquisition method. Goodwill generated from the acquisition is attributable to expected synergies from future growth and potential future monetization opportunities, and is not deductible for tax purposes. The business combination did not have a material impact on the consolidated financial statements and therefore historical and proforma disclosures have not been presented.