Commitments and Contingencies

6 Months Ended

Jul. 31, 2019

Commitments and Contingencies

Commitments and Contingencies

11.  Commitments and Contingencies

Lease Commitments

The Company leases its office space under various non-cancelable operating lease agreements. Leases expire at various dates through fiscal year 2027. The aggregate future minimum payments under noncancelable operating leases as of July 31, 2019 were as follows:

	Operating
	Leases
	(in thousands)
Fiscal 2020 (remaining six months)	$	3,204
Fiscal 2021		5,877
Fiscal 2022		5,600
Fiscal 2023		4,753
Fiscal 2024		3,498
Thereafter		2,058
Total minimum lease payments	$	24,990

Rent expense was $2.2 million and $1.7 million during the three months ended July 31, 2019 and July 31, 2018, respectively, and $4.0 million and $3.2 million during the six months ended July 31, 2019 and July 31, 2018, respectively.

Purchase Obligations

The Company enters into long-term non-cancelable agreements with providers to purchase data center capacity, such as bandwidth and colocation space, for the Company’s cloud platform. As of July 31, 2019, the Company is committed to spend $205.3 million on such agreements through 2027. These obligations are included in purchase obligations below.

In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties to purchase products and services such as technology, equipment, office renovations, corporate events, and consulting services. A summary of noncancelable purchase obligations as of July 31, 2019 with expected date of payment is as follows:

	Total
	Commitments
	(in thousands)
Fiscal 2020 (remaining six months)	$	24,198
Fiscal 2021		63,714
Fiscal 2022		87,294
Fiscal 2023		32,483
Fiscal 2024		9,724
Thereafter		4,367
Total purchase commitments	$	221,780

Letters of Credit

As of July 31, 2019 and January 31, 2019, the Company had an unused standby letter of credit for $0.5 million securing its headquarters facility in Sunnyvale, California. As of July 31, 2019 and January 31, 2019, the Company had an unused standby letter of credit for $1.0 million and $0.8 million, respectively, securing its facility in Austin, Texas.

Litigation

The Company is currently involved in proceedings before the Trademark Trial and Appeal Board at the U.S. Patent and Trademark Office (the “USPTO”) regarding its U.S. trademark registrations for “CrowdStrike Falcon” and its U.S. application to register its “Falcon OverWatch” trademark. On November 23, 2016, Fair Isaac Corporation (“FICO”) filed a Petition for Cancellation of the Company’s “CrowdStrike Falcon” trademark registrations and a Notice of Opposition against the Company’s “Falcon OverWatch” trademark application before the USPTO, Trademark Trial and Appeal Board (“TTAB”). On January 3, 2017, the Company filed answers to both the cancellation and opposition proceedings, and the proceedings thereafter were consolidated. On November 21, 2018, the Company filed a Petition for Partial Cancellation or Amendment of one of FICO’s “Falcon” trademark registrations, and on December 10, 2018, the parties filed a joint request to consolidate the proceedings and adjust the schedule.  On January 16, 2019, FICO moved to dismiss the Company’s petition, and the TTAB thereafter suspended all proceedings pending its ruling on the motions.  On July 2, 2019, the TTAB issued an order granting the request to consolidate the proceedings and granting the motion to dismiss with leave to file an amended petition by July 22, 2019.  The order also set a schedule with trial proceedings to close no earlier than 2021. The Company filed its Amended Petition for Cancellation or Amendment on July 22, 2019. On August 12, 2019, FICO moved to dismiss the Company’s Amended Petition for Cancellation. The Company is vigorously defending the case, but given the early stage, although a loss may reasonably be possible, the Company is unable to predict the likelihood of success of Fair Isaac’s claims or estimate a loss or range of loss. As a result, no liability has been recorded as of July 31, 2019 or January 31, 2019.

In addition, from time to time the Company is a party to various litigation matters and subject to claims that arise in the ordinary course of business. In addition, third parties may from time to time assert claims against the Company in the form of letters and other communications. For any claims for which the Company believes a liability is both probable and reasonably estimable, the Company records a liability in the period for which it makes this determination. There is no pending or threatened legal proceeding to which the Company is a party that, in the

Company’s opinion, is likely to have a material adverse effect on its condensed consolidated financial statements; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on the Company’s business because of defense and settlement costs, diversion of management resources, and other factors. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could adversely affect the Company’s results of operations.

Warranties and Indemnification

The Company’s cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. In addition, for its Falcon Complete module customers, the Company offers a limited warranty, subject to certain conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach. The Company has entered into an insurance policy to cover its potential liability arising from this limited warranty arrangement. To date, the Company has not incurred any material costs because of such obligations and has not accrued any liabilities related to such obligations in the condensed consolidated financial statements.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. No liabilities have been accrued associated with this indemnification provision as of July 31, 2019 or January 31, 2019.