10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-38856

PAGERDUTY, INC.

(Exact name of registrant as specified in its charter)

_________________________

Delaware	27-2793871
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

600 Townsend St., Suite 200

San Francisco, CA 94103

(844) 800-3889

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.000005 par value	PD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x No  o

Indicate by check mark whether the registrant has submitted electronically on its corporate Web site every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No  x

The total number of shares of common stock outstanding as of September 1, 2020, was 79,433,673.

PAGERDUTY, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4	Controls and Procedures	42

Part II - OTHER INFORMATION

Item 1	Legal Proceedings	43
Item 1A	Risk Factors	43
Item 2	Unregistered Sale of Equity Securities and Use of Proceeds	47
Item 6	Exhibits	47
	Signatures	49

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or this Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which statements involve substantial risk and uncertainties. All statements contained in this report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “likely,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statement contained in this Form 10-Q include, but are not limited to, statements about our expectations regarding:

•the effect of uncertainties related to the novel coronavirus and resulting COVID-19 pandemic on U.S. and global markets, our business, operations, revenue results, cash flow, operating expenses, demand for our solutions, sales cycles, customer retention, and our customers’ businesses;

•trends in key business metrics, including number of customers and dollar-based net retention rate, and non-GAAP financial measures and their usefulness in evaluating our business;

•trends in revenue, cost of revenue, and gross margin;

•trends in operating expenses, including research and development, sales and marketing, and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;

•our existing cash and cash equivalents and cash provided by sales of our subscriptions being sufficient to support working capital and capital expenditures for at least the next 12 months;

•our ability to service the interest on our convertible notes and repay such notes, to the extent required;

•our efforts to maintain proper and effective internal controls;

•our ability to expand our operations and increase adoption of our platform internationally;

•our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

•the increased expenses and administrative workload associated with being a public company; and

•other statements regarding our future operations, financial condition, and prospects and business strategies.

Such forward-looking statements are based on our expectations as of the date of this filing and are subject to a number of risks, uncertainties and assumptions, including but not limited to, risks detailed in the “Risk Factors” section of this Form 10-Q. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission, or the SEC, that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or may not occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future

results, performance, or achievements. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update any of these forward-looking statements for any reason after the date of this Form 10-Q or to conform these statements to actual results or revised expectations.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

PAGERDUTY, INC.

Condensed Consolidated Balance Sheets

(in thousands)

	As of July 31, 2020		As of January 31, 2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	376,638	$	124,024
Accounts receivable, net of allowance for doubtful accounts of $1,712 and $810 as of July 31, 2020 and January 31, 2020, respectively	37,429		37,128
Investments	224,932		227,375
Deferred contract costs, current	10,326		9,301
Prepaid expenses and other current assets	11,950		7,163
Total current assets	661,275		404,991
Property and equipment, net	12,805		12,369
Deferred contract costs, non-current	16,497		16,387
Lease right-of-use assets	26,885		—
Other assets	1,725		1,651
Total assets	$	719,187	$	435,398
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,775	$	6,434
Accrued expenses and other current liabilities	7,713		7,197
Accrued compensation	15,198		13,911
Deferred revenue, current	97,007		87,490
Lease liabilities, current	5,078		—
Total current liabilities	129,771		115,032
Convertible senior notes, net	210,976		—
Deferred revenue, non-current	4,173		5,079
Lease liabilities, non-current	29,064		—
Other liabilities	3,332		7,349
Total liabilities	377,316		127,460
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock	—		—
Additional paid-in capital	546,169		487,008
Accumulated other comprehensive income	1,056		137
Accumulated deficit	(205,354)		(179,207)
Total stockholders’ equity	341,871		307,938
Total liabilities and stockholders’ equity	$	719,187	$	435,398

See Notes to Condensed Consolidated Financial Statements

5

PAGERDUTY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
Revenue	$	50,714	$	40,361	$	100,500	$	77,675
Cost of revenue	6,637		6,106		13,600		11,592
Gross profit	44,077		34,255		86,900		66,083
Operating expenses:
Research and development	15,535		11,635		30,549		22,541
Sales and marketing	27,511		23,786		54,247		44,953
General and administrative	14,480		13,215		28,153		25,699
Total operating expenses	57,526		48,636		112,949		93,193
Loss from operations	(13,449)		(14,381)		(26,049)		(27,110)
Interest income	1,048		1,967		2,401		2,856
Interest expense	(1,608)		—		(1,608)		—
Other (expense) income, net	(431)		80		(412)		101
Loss before provision for income taxes	(14,440)		(12,334)		(25,668)		(24,153)
Provision for income taxes	(248)		(236)		(479)		(481)
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)
Other comprehensive income:
Unrealized gain on investments	277		—		919		—
Total comprehensive loss	$	(14,411)	$	(12,570)	$	(25,228)	$	(24,634)
Net loss per share, basic and diluted	$	(0.19)	$	(0.17)	$	(0.33)	$	(0.45)
Weighted average shares used in calculating net loss per share, basic and diluted	78,775		75,433		78,278		54,327

See Notes to Condensed Consolidated Financial Statements

6

PAGERDUTY, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Three Months Ended July 31, 2020
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances as of April 30, 2020	78,526,004	$	—	$	497,430	$	779	$	(190,666)	$	307,543
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	557,467	—		3,927		—		—		3,927
Vesting of restricted stock units, net of employee payroll taxes	90,903	—		(1,697)		—		—		(1,697)
Vesting of early exercised options	—	—		191		—		—		191
Equity component of convertible senior notes, net of issuance costs	—	—		68,478		—		—		68,478
Purchases of capped calls related to convertible senior notes	—	—		(35,708)		—		—		(35,708)
Issuance of common stock in connection with employee stock purchase plan	181,253	—		3,558		—		—		3,558
Other comprehensive income	—	—		—		277		—		277
Stock-based compensation	—	—		9,990		—		—		9,990
Net loss	—	—		—		—		(14,688)		(14,688)
Balances as of July 31, 2020	79,355,627	$	—	$	546,169	$	1,056	$	(205,354)	$	341,871

	Six Months Ended July 31, 2020
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances as of January 31, 2020	77,793,540	$	—	$	487,008	$	137	$	(179,207)	$	307,938
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	1,286,892	—		5,771		—		—		5,771
Vesting of restricted stock units, net of employee payroll taxes	93,942	—		(1,743)		—		—		(1,743)
Vesting of early exercised options	—	—		507		—		—		507
Equity component of convertible senior notes, net of issuance costs	—	—		68,478		—		—		68,478
Purchases of capped calls related to convertible senior notes	—	—		(35,708)		—		—		(35,708)
Issuance of common stock in connection with employee stock purchase plan	181,253	—		3,558		—		—		3,558
Other comprehensive income	—	—		—		919		—		919
Stock-based compensation	—	—		18,298		—		—		18,298
Net loss	—	—		—		—		(26,147)		(26,147)
Balances as of July 31, 2020	79,355,627	$	—	$	546,169	$	1,056	$	(205,354)	$	341,871

7

	Three Months Ended July 31, 2019
		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
		Shares	Amount
Balances as of April 30, 2019		76,013,403	$	—	$	454,559	$	(140,932)	$	313,627
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases		213,515	—		545		—		545
Vesting of restricted stock units, net of employee payroll taxes		183	—		(10)		—		(10)
Vesting of early exercised options		—	—		338		—		338
Stock-based compensation		—	—		7,233		—		7,233
Net loss		—	—		—		(12,570)		(12,570)
Balances as of July 31, 2019		76,227,101	$	—	$	462,665	$	(153,502)	$	309,163

	Six Months Ended July 31, 2019
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balances as of January 31, 2019	41,273,345	$	173,023	23,189,921	$	—	$	59,938	$	(128,868)	$	(68,930)
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	—	—		1,165,345	—		2,785		—		2,785
Vesting of restricted stock units, net of employee payroll taxes	—	—		183	—		(10)		—		(10)
Exercise of common stock warrants	—	—		737,807	—		—		—		—
Repayment of promissory note	—	—		—	—		515		—		515
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs	—	—		9,860,500	—		213,697		—		213,697
Conversion of convertible preferred stock to common stock in connection with initial public offering	(41,273,345)	(173,023)		41,273,345	—		173,023		—		173,023
Vesting of early exercised options	—	—		—	—		672		—		672
Stock-based compensation	—	—		—	—		12,045		—		12,045
Net loss	—	—		—	—		—		(24,634)		(24,634)
Balances as of July 31, 2019	—	$	—	76,227,101	$	—	$	462,665	$	(153,502)	$	309,163

8

PAGERDUTY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended July 31,
	2020		2019
Cash flows from operating activities
Net loss	$	(26,147)	$	(24,634)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,039		1,046
Amortization of deferred contract costs	5,064		3,442
Amortization of debt discount and issuance costs	1,258		—
Stock-based compensation	18,276		12,045
Non-cash lease expense	2,204		—
Other	1,426		83
Changes in operating assets and liabilities:
Accounts receivable	(1,293)		(2,733)
Deferred contract costs	(6,199)		(6,690)
Prepaid expenses and other assets	(4,989)		(3,411)
Accounts payable	(1,549)		(2,712)
Accrued expenses and other liabilities	3,618		2,433
Accrued compensation	1,287		2,031
Deferred revenue	8,611		13,693
Lease liabilities	(1,744)		—
Net cash provided by (used in) operating activities	1,862		(5,407)
Cash flows from investing activities
Purchases of property and equipment	(3,292)		(2,019)
Capitalization of internal-use software costs	(111)		—
Proceeds from maturities of held-to-maturity investments	24,040		—
Purchases of held-to-maturity investments	—		(34,696)
Purchases of available-for-sale investments	(100,029)		—
Proceeds from maturities of available-for-sale investments	71,632		—
Proceeds from sales of available-for-sale investments	7,285		—
Net cash used in investing activities	(475)		(36,715)
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,151	279,349		—
Purchases of capped calls related to convertible senior notes	(35,708)		—
Proceeds from initial public offering, net of underwriters' discounts and commissions	—		220,086
Payments of costs related to initial public offering	—		(5,208)
Proceeds from employee stock purchase plan	3,558		—
Proceeds from repayment of promissory note	—		515
Proceeds from issuance of common stock upon exercise of stock options	5,771		2,785
Employee payroll taxes paid related to net share settlement of restricted stock units	(1,743)		(10)
Net cash provided by financing activities	251,227		218,168
Net increase in cash, cash equivalents, and restricted cash	252,614		176,046
Cash, cash equivalents, and restricted cash at beginning of period	124,024		130,323
Cash, cash equivalents, and restricted cash at end of period	$	376,638	$	306,369
Supplemental cash flow data:
Cash paid for income taxes	$	—	$	56
Non-cash investing and financing activities:
Vesting of early exercised options	$	507	$	672
Purchase of property and equipment, accrued but not yet paid	$	385	$	1,032
Costs related to issuance of convertible senior notes, accrued but not yet paid	$	1,154	$	—
Costs related to initial public offering, accrued but not yet paid	$	—	$	737
Non-cash purchases of property and equipment	$	—	$	2,364
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	376,638	$	306,316
Restricted cash—included in other assets	—		53
Total cash, cash equivalents, and restricted cash	$	376,638	$	306,369

See Notes to Condensed Consolidated Financial Statements

9

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Description of Business and Basis of Presentation

Description of Business

PagerDuty, Inc. was incorporated under the laws of the state of Delaware in May 2010.

PagerDuty acts as the central nervous system for the digital enterprise. PagerDuty harnesses digital signals from virtually any software-enabled system or device, combines it with human response data and orchestrates teams to take the right actions in real time. The Company’s products help organizations improve operations, accelerate innovation, increase revenue, mitigate security risk, and deliver a great customer experience.

As used herein, “PagerDuty”, “we”, “our”, “the Company” and similar terms include PagerDuty, Inc., unless the context indicates otherwise.

Initial Public Offering

On April 15, 2019, the Company completed its initial public offering (“IPO”), pursuant to which the Company issued and sold 9,860,500 shares of common stock, inclusive of the over-allotment option, at a public offering price of $24.00 per share. The Company received net proceeds of $213.7 million, after deducting underwriters' discounts and commissions of $16.6 million and other issuance costs of $6.4 million. Immediately prior to the closing of the Company’s IPO, all shares of the redeemable convertible preferred stock automatically converted into 41,273,345 shares of common stock.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of January 31, 2020 was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with 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 audited consolidated financial statements and the related notes thereto as of and for the year ended January 31, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC.

The condensed consolidated financial statements include the results of PagerDuty, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and statements of stockholders’ equity. The results of operations for the three and six months ended July 31, 2020 are not necessarily indicative of the results to be expected for the full year ending January 31, 2021 or for any other interim period, or for any future year.

The Company’s fiscal year ends on January 31. References to fiscal 2021, for example, refer to the fiscal year ended January 31, 2021.

Convertible Senior Notes

10

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

In June 2020, The Company issued $287.5 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025 (the “Notes”). See Note 8 for additional details.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s most significant estimates and judgments involve the valuation of the Company’s stock-based awards, including the determination of fair value of common stock (prior to the closing of the IPO) and the fair value of the employee stock purchase plan (“ESPP”) expense, period of benefit for amortizing deferred contract costs, the determination of the allowance for doubtful accounts, the provision for income taxes, including the related valuation allowance and any uncertain tax positions, fair value of the liability and equity components of the Notes, and the incremental borrowing rate for lease liabilities, among others. 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.

In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was reported and in March 2020 the World Health Organization declared it a pandemic. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, and impact on our employees, as discussed in more detail in the Overview section of our Management’s Discussion and Analysis. During the quarter, this uncertainty resulted in a higher level of judgment related to our estimates and assumptions related to the estimate of credit losses for accounts receivable. As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments, or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

2. Summary of Significant Accounting Policies

Concentrations of Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, held-to-maturity investments, available-for-sale investments, and accounts receivable. All of the Company’s cash and cash equivalents and investments are invested in money market funds, United States (“U.S.”) Treasury securities, commercial paper, corporate debt securities, or U.S. Government agency securities that management believes to be of high credit quality.

No single customer accounted for 10% of the total accounts receivable balance as of July 31, 2020 or January 31, 2020. No single customer represented 10% or more of revenue for the three and six months ended July 31, 2020 or 2019.

Segment Information

The Company manages operations and allocates resources as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. See Note 14, “Geographic Information” for information regarding the Company's long-lived assets and revenue by geography.

Significant Accounting Policies

11

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

There have been no significant changes to our significant accounting policies as compared to those described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020, other than as set forth below.

Convertible Senior Notes

The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance is based upon historical loss patterns, the age of each past due invoice, and an evaluation of the potential risk of loss associated with delinquent accounts. The allowance also reflects current market conditions and reasonable and supportable forecasts of future economic conditions. As of July 31, 2020, our allowance reflects considerations related to the COVID-19 pandemic and may increase in future periods as we ascertain future impacts to our customers and business. The allowance for doubtful accounts was $1.7 million and $0.8 million as of July 31, 2020 and January 31, 2020.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases, (“Topic 842”) (“ASU 2016-02”), which would require lessees to recognize most leases on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements in a manner similar to current practice. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The Company adopted the standard using the optional alternative method on a prospective basis with an effective date as of the beginning of the Company’s fiscal year, February 1, 2020, and applied it to the operating leases that existed on that date. Prior year comparative financial information was not recast under the new standard and continues to be presented under ASC 840. The Company elected to utilize the package of practical expedients available for expired or existing contracts which allowed the Company to carryforward historical assessments of (a) whether contracts are or contain leases, (b) lease classification, and (c) initial direct costs. The Company elected to apply the short-term lease exception for all leases. Under the short-term lease exception, the Company will not recognize right-of-use assets or lease liabilities for leases that, at the acquisition date, have a remaining lease term of 12 months or less. As a result of implementing this guidance, the Company recognized a net operating right-of-use asset of $29.1 million and a $35.9 million operating lease liability in its condensed consolidated balance sheets as of February 1, 2020. The adoption of this guidance did not affect our condensed consolidated statements of operations or our condensed consolidated statements of cash flows. See Note 7, “Leases” for further information.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (“Topic 326”) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. The Company adopted the standard as of

12

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (“Topic 820”) (“ASU 2018-13”), which modifies the disclosure requirements for fair value measurements for certain types of investments. We adopted this standard in the first quarter of fiscal year 2020. The adoption did not have an effect on our consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intends to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2022, although early adoption is permitted. The Company early adopted the standard as of the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued Accounting Standard Update No. 2020-06, Debt—Debt with Conversion Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity (“Subtopic 815-40”) (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. ASU 2020-06 also improves and amends the related Earnings Per Share guidance for both Subtopics. The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 will be effective for annual reporting periods beginning after December 15, 2021. Early adoption is permitted, but not before annual reporting periods beginning after December 15, 2020. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

3. Cash, Cash Equivalents, and Investments

Cash, cash equivalents, and investments consisted of the following:

13

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Cash and cash equivalents
Cash	$	282,342	$	2,131
Money market funds	91,296		118,899
U.S. Treasury securities	3,000		2,994
Total cash and cash equivalents	$	376,638	$	124,024
Available-for-sale investments:
U.S. Treasury securities	$	37,031	$	24,987
Commercial paper	22,011		20,132
Corporate debt securities	161,887		149,248
U.S. Government agency securities	—		4,973
Total available-for-sale investments	$	220,929	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	9,016
Commercial paper	—		5,985
Corporate debt securities	—		13,034
Total held-to-maturities investments	$	4,003	$	28,035
Total investments	$	224,932	$	227,375

The following tables summarize the Company’s investments’ adjusted cost, net unrealized gains, and fair value by significant investment category as of July 31, 2020 and January 31, 2020. Gross realized gains or losses from sales of available-for-sale securities were not material for the six months ended July 31, 2020.

	As of July 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	36,966	$	65	$	37,031
Commercial paper	22,008		3		22,011
Corporate debt securities	160,899		988		161,887
Total available-for-sale investments	$	219,873	$	1,056	$	220,929
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	—	$	4,003
Total held-to-maturities investments	$	4,003	$	—	$	4,003
Total investments	$	223,876	$	1,056	$	224,932

14

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

	As of January 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	24,978	$	9	$	24,987
Commercial paper	20,128		4		20,132
Corporate debt securities	149,124		124		149,248
U.S. Government agency securities	4,973		—		4,973
Total available-for-sale investments	$	199,203	$	137	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	9,016	$	—	$	9,016
Commercial paper	5,985		—		5,985
Corporate debt securities	13,034		—		13,034
Total held-to-maturities investments	$	28,035	$	—	$	28,035
Total investments	$	227,238	$	137	$	227,375

All of the Company’s held-to-maturity securities have a contractual maturity of less than one year. The following table presents the Company’s available-for-sale securities by contractual maturity date as of July 31, 2020 and January 31, 2020:

	As of July 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	179,103	$	179,726
Due between one to five years	40,770		41,203
Total	$	219,873	$	220,929

	As of January 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	128,127	$	128,169
Due between one to five years	71,076		71,171
Total	$	199,203	$	199,340

There were no securities in a continuous net loss position for 12 months or longer as of July 31, 2020. When evaluating investments for impairment, we review factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and our intent to sell, or whether it is more likely than not we will be required to sell, the investment before recovery of the investment’s amortized cost. No impairment loss has been recorded on the securities included in the tables above, as we believe that any decrease in fair value of these securities is temporary and we expect to recover at least up to the initial cost of the investment for these securities. We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each period.

4. Fair Value Measurements

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes 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, as follows:

15

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2—Valuations based on inputs that are directly or indirectly observable in the marketplace.

Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.

The following table presents information about the Company’s financial assets that are required to be measured or disclosed at fair value using the above input categories:

	As of July 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	91,296	$	—	$	—	$	91,296
U.S. Treasury securities	3,000		41,034		—		44,034
Commercial paper	—		22,011		—		22,011
Corporate debt securities	—		161,887		—		161,887
Total	$	94,296	$	224,932	$	—	$	319,228
Included in cash equivalents							$	94,296
Included in investments							$	224,932

	As of January 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	118,899	$	—	$	—	$	118,899
U.S. Treasury securities	2,994		34,003		—		36,997
Commercial paper	—		26,117		—		26,117
Corporate debt securities	—		162,282		—		162,282
U.S. Government agency securities	—		4,973		—		4,973
Total	$	121,893	$	227,375	$	—	$	349,268
Included in cash equivalents							$	121,893
Included in investments							$	227,375

The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy.

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of July 31, 2020 and January 31, 2020, the Company’s Level 2 securities were priced by pricing vendors. These pricing vendors utilize observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities.

The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value table above.

Convertible Senior Notes

As of July 31, 2020, the estimated fair value of the Notes was approximately $301.0 million. The fair value was determined based on the quoted price for the Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.

16

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5. Property and Equipment, Net

Property and equipment, net, consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Leasehold improvements	$	12,445	$	12,257
Computers and equipment	5,838		4,431
Furniture and fixtures	3,159		2,540
Capitalized internal-use software	522		389
Gross property and equipment (1)	21,964		19,617
Accumulated depreciation and amortization	(9,159)		(7,248)
Property and equipment, net	$	12,805	$	12,369

⁽¹⁾ Gross property and equipment includes construction-in-progress for leasehold improvements and furniture and fixtures of $0.2 million and $5.1 million that had not yet been placed in service as of July 31, 2020 and January 31, 2020, respectively. The costs associated with construction-in-progress are not amortized until placed in service.

Depreciation and amortization expense was $1.0 million and $0.6 million for the three months ended July 31, 2020 and 2019, respectively, and $1.9 million and $1.0 million for the six months ended July 31, 2020 and 2019, respectively.

6. Deferred Contract Costs

Deferred contract costs, which primarily consist of deferred sales commissions, were $26.8 million and $25.7 million as of July 31, 2020 and January 31, 2020, respectively. Amortization expense for deferred contract costs was $2.6 million and $1.8 million for the three months ended July 31, 2020 and 2019, respectively, and $5.1 million and $3.4 million for the six months ended July 31, 2020 and 2019, respectively. There was no impairment charge related to the costs capitalized for the periods presented.

7. Leases

Operating Leases

The Company has entered into various non-cancellable operating leases for its office spaces with lease periods expiring between fiscal 2022 and fiscal 2029. The operating lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of

17

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances.

Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on our condensed consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

The following tables present information about leases on our condensed consolidated balance sheet.

	As of July 31, 2020
	(in thousands)
Assets
Lease right-of-use assets	$	26,885
Liabilities
Lease liabilities	5,078
Lease liabilities, non-current	29,064

As of July 31, 2020, the weighted average remaining lease term was 6.1 years and the weighted average discount rate used to determine the net present value of the lease liabilities was 3.7%.

The following table presents information about leases on our condensed consolidated statement of operations.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Operating lease expense	$	1,445	$	2,887
Short-term lease expense	261		560
Variable lease expense	361		663

The following table presents supplemental cash flow information about our leases.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,149	$	2,287

18

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of July 31, 2020, remaining maturities of lease liabilities are as follows:

Year ending January 31,
	(in thousands)
2021	$	3,104
2022	6,296
2023	6,489
2024	6,670
2025	6,869
Thereafter	8,928
Gross lease payments	$	38,356
Less: Imputed interest	(4,214)
Total	$	34,142

8. Debt and Financing Arrangements

Convertible Senior Notes

On June 25, 2020, the Company issued $287.5 million in aggregate principal amount of the Notes in a private offering pursuant to an Indenture dated June 25, 2020 (the “Indenture”). The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable by us, were $278.2 million.

The Notes are senior, unsecured obligations of the Company and will accrue interest payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021, at a rate of 1.25% per year. The Notes will mature on July 1, 2025, unless such notes are converted, redeemed or repurchased earlier. The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election in the manner and subject to the terms and conditions provided in the Indenture.

Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on April 1, 2025, only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ending on October 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s 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 on each applicable trading day;

•During the five business day period after any ten consecutive trading day period (the measurement period) in which the “trading price” (as defined in the Indenture) 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 the Company’s common stock and the conversion rate on each such trading day;

•If the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•Upon the occurrence of specified corporate events, as noted in the Indenture.

On or after April 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

19

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The conversion rate will initially be 24.9507 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $40.08 per share of common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture, but will not be adjusted for accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a fundamental change, as defined in the Indenture.

The Company may not redeem the Notes prior to July 6, 2023. The Company may redeem for cash all or any portion of the Notes, at its option, on a redemption date occurring on or after July 6, 2023 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Notes 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 on, and including the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the entire principal of all the Notes plus accrued and unpaid interest to be immediately due and payable.

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated using a discount rate of 7.30%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the conversion option was $70.8 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification, and the equity component was recorded in additional paid-in-capital in the accompanying condensed consolidated balance sheet. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate of 7.88% over the contractual terms of the Notes. The interest rate was based on the interest rate of similar liabilities at the time of issuance that did not have associated convertible features. The debt component is classified as a long-term liability as of July 31, 2020.

In accounting for the issuance costs related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $7.0 million and will be amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were $2.3 million and were netted with the equity component in additional paid-in capital.

The net carrying amount of the liability component of the Notes was as follows:

	As of July 31, 2020
	(in thousands)
Principal	$	287,500
Less: unamortized debt discount	(69,623)
Less: unamortized issuance costs	(6,901)
Net carrying amount	$	210,976

The net carrying amount of the equity component of the Notes was as follows:

20

PAGERDUTY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

	As of July 31, 2020
	(in thousands)
Proceeds allocated to the conversion options (debt discount)	$	70,768
Less: issuance costs	(2,290)
Carrying amount of the equity component	$	68,478

Interest expense recognized related to the Notes is as follows:

	Three Months Ended July 31, 2020
	(in thousands)
Contractual interest expense	$	349
Amortization of debt discount	1,145
Amortization of debt issuance costs	114
Total interest expense related to the Notes	$	1,608

Capped Call Transactions

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution counterparties (the “Option Counterparties”). The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35.7 million incurred to purchase the Capped Calls were recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

The Capped Calls each have an initial strike price of approximately $40.08 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $61.66 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 7.2 million shares of our common stock. The Capped Calls are subject to automatic exercise over a 40 trading day period commencing on May 2, 2025, subject to earlier termination under certain circumstances.

9. Commitments and Contingencies

Legal Matters

From time to time in the normal course of business, the Company may be subject to various claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise and accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. The Company is not currently a party to any legal proceedings and does not anticipate any pending or threatened litigation that would be expected to have a material adverse effect on its financial condition, results of operations, or cash flows.

Warranties and Indemnification

The Company has entered into service-level agreements with a portion of its customers defining levels of uptime reliability and performance and permitting those customers to receive credits if the Company fails to meet the defined levels of uptime. To date, the Company has not experienced any significant failures to meet defined levels of uptime reliability and performance as a result of those agreements and, as a result, the Company has not incurred or accrued any material liabilities related to these agreements in the financial statements.

21

10. Deferred Revenue and Performance Obligations

The following table presents the changes to the Company’s deferred revenue:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Deferred revenue, beginning of period	$	96,446	$	66,545	$	92,569	$	64,104
Billings	55,448		51,613		109,111		91,368
Revenue recognized	(50,714)		(40,361)		(100,500)		(77,675)
Deferred revenue, end of period	$	101,180	$	77,797	$	101,180	$	77,797

For the three and six months ended July 31, 2020 and 2019, the majority of revenue recognized was from the deferred revenue balances at the beginning of each quarter.

As of July 31, 2020 and January 31, 2020, future estimated revenue related to performance obligations for subscriptions with terms of more than one year that are unsatisfied or partially unsatisfied at the end of the reporting periods was approximately $81.4 million and $75.7 million, respectively. The Company expects to satisfy the substantial majority of these unsatisfied performance obligations over the next 24 months and the remainder thereafter. The Company applied the optional exemption for subscriptions with terms of less than a one year.

11. Common Stock and Stockholders’ Equity

Redeemable Convertible Preferred Stock

Immediately prior to the completion of the IPO in April 2019, all shares of redeemable convertible preferred stock then outstanding were converted into 41,273,345 shares of common stock on a one-to-one basis and then immediately reclassified into common stock.

Equity Incentive Plans

The Company has two equity incentive plans: the 2010 Stock Plan (the “2010 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”, collectively the “Stock Plans”). Upon completion of the Company’s IPO in April 2019, the Company ceased granting awards under the 2010 Plan, and all shares that remained available for future issuance under the 2010 Plan at that time were transferred to the 2019 Plan. The 2019 Plan superseded and replaced the 2010 Plan. As of July 31, 2020 and January 31, 2020, respectively, the Company was authorized to grant up to 17,679,277 shares and 13,126,301 shares of common stock under the Stock Plans.

In March 2019, the Company granted 3,041,000 stock options to existing employees with 50 percent of these options vesting over four years from the grant date and 50 percent vesting over five years from the grant date.

The Company currently uses authorized and unissued shares to satisfy stock award exercises. As of July 31, 2020 and January 31, 2020, there were 13,660,976 shares and 11,841,156 shares available for future issuance under the Stock Plans, respectively.

Shares of common stock reserved for future issuance are as follows:

	July 31, 2020
Outstanding stock options and unvested RSUs outstanding	16,300,947
Available for future stock option and RSU grants	13,660,976
Available for ESPP	2,235,888
Total common stock reserved at July 31, 2020	32,197,811

22

Stock Option Activity

Stock option activity is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in thousands)
Outstanding at January 31, 2020	14,498,045	$	7.37	7.8 years	$	231,300
Granted	231,028	$	21.44
Exercised	(1,287,830)	$	4.43
Canceled	(663,393)	$	10.88
Outstanding at July 31, 2020	12,777,850	$	7.73	7.3 years	$	290,647
Vested as of July 31, 2020	7,675,279	$	4.76	6.7 years	$	197,386

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options on the date of grant. The Company accounts for forfeitures as they occur. The following assumptions were used to calculate the fair value of employee stock option grants made during the periods:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020	2019
Expected dividend yield	—		—		—	—
Expected volatility	43.9	%	42.0% - 42.1%		43.3% - 43.9%	42.0% - 42.8%
Expected term (years)	6.1		6.0 - 6.1		6.1	5.5 - 6.9
Risk-free interest rate	0.41	%	1.80	%	0.41% - 0.47%	1.80% - 2.48%

Stock options granted during the three months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $12.59 and $23.08 per share, respectively. The aggregate intrinsic value of stock options exercised during the three months ended July 31, 2020 and 2019 was $11.6 million and $10.5 million, respectively.

Stock options granted during the six months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $8.96 and $10.83 per share, respectively. The aggregate intrinsic value of stock options exercised during the six months ended July 31, 2020 and 2019 was $23.0 million and $30.5 million, respectively.

The intrinsic value for options exercised is the difference between the market value of the stock and the exercise price of the stock option at the date of exercise.

As of July 31, 2020 there was approximately $37.0 million of total unrecognized compensation cost related to unvested stock options granted under the Stock Plans, which will be recognized over a weighted average period of 2.9 years.

Restricted Stock Units

A summary of the Company’s RSU activity and related information is as follow:

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	Number of RSUs	Weighted Average Grant Date Fair Value Per Share
Outstanding at January 31, 2020	1,114,911	$	28.10
Granted	2,682,462	$	17.76
Vested, net of shares withheld for employee payroll taxes	(93,942)	$	22.33
Canceled	(180,334)	$	21.60
Outstanding at July 31, 2020	3,523,097	$	20.69

The Company uses the fair value of RSUs based on the fair value of the underlying shares on the date of grant. The Company accounts for forfeitures as they occur.

As of July 31, 2020, there was $67.1 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 3.5 years based on vesting under the award service conditions.

Employee Stock Purchase Plan

In April 2019, the Board adopted and approved the 2019 Employee Stock Purchase Plan, which became effective on April 11, 2019. The ESPP initially reserved and authorized the issuance of up to a total of 1,850,000 shares of common stock to participating employees. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 777,916 shares on February 1, 2020. The ESPP generally provides for 24-month offering periods, with each offering period consisting of four six-month purchase periods, except for the initial offering period which began on April 11, 2019 and ended on December 13, 2019. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s stock as of the beginning of the offering period or (2) the fair market value of the Company’s stock on the purchase date, as defined in the ESPP.

During the three months ended July 31, 2020 and 2019, the Company recognized $1.2 million and $1.8 million of stock-based compensation expense related to the ESPP, respectively. During the six months ended July 31, 2020 and 2019, the Company recognized $2.8 million and $2.2 million of stock-based compensation expense related to the ESPP, respectively.

During the three months ended July 31, 2020 and 2019, the Company withheld $1.6 million and $2.6 million in contributions from employees, respectively. During the six months ended July 31, 2020 and 2019, the Company withheld $3.5 million and $2.6 million in contributions from employees, respectively.

During the three and six months ended July 31, 2020, 181,253 shares of common stock were issued under the ESPP at a purchase price of $19.63. During the three and six months ended July 31, 2019, there were no purchases related to the ESPP.

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Stock-Based Compensation

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Cost of revenue	$	263	$	327	$	607	$	470
Research and development	2,469		1,437		4,652		2,297
Sales and marketing	2,870		2,326		5,155		3,790
General and administrative	4,366		3,143		7,862		5,488
Total	$	9,968	$	7,233	$	18,276	$	12,045

12. Net Loss per Share

The following table presents the calculation of basic and diluted net loss per share:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands, except per share amounts)
Numerator:
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)
Denominator:
Weighted average shares used in calculating net loss per share, basic and diluted	78,775		75,433		78,278		54,327
Net loss per share, basic and diluted	$	(0.19)	$	(0.17)	$	(0.33)	$	(0.45)

Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

	As of July 31,
	2020	2019
	(in thousands)
Shares subject to outstanding common stock awards	16,298	16,278
Convertible senior notes	7,173	—
Unvested early exercised stock options	—	205
Restricted stock awards purchased with promissory notes	142	429
Shares issuable pursuant to the 2019 Employee Stock Purchase Plan	64	125
Total	23,677	17,037

13. Income Taxes

The Company's provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates

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its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.

The Company's quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income (or loss) relates, changes in how the Company does business, and tax law developments. The Company's estimated effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in the U.S.

The Company recorded an income tax expense of $0.2 million for the three months ended July 31, 2020 and 2019, and $0.5 million for the six months ended July 31, 2020 and 2019.

14. Geographic Information

Revenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
United States	$	38,997	$	31,592	$	77,269	$	61,060
International	11,717		8,769		23,231		16,615
Total	$	50,714	$	40,361	$	100,500	$	77,675

Other than the United States, no other individual country accounted for 10% or more of revenue for the three and six months ended July 31, 2020 or 2019. As of July 31, 2020, 87% of the Company’s long-lived assets, including property and equipment and right-of-use lease assets, was located in the United States and 13% was located in Canada. As of January 31, 2020, 76% of the Company’s property and equipment was located in the United States, 23% was located in Canada, and 1% was located in the United Kingdom.

15. Subsequent Events

The Company has evaluated subsequent events through September 3, 2020.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended January 31, 2020, filed with the SEC on March 19, 2020. You should review the sections titled “Special Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, impacts on our business and general economic conditions due to the current COVID-19 pandemic, those identified below, and those discussed in the section titled “Risk Factors” included in Part II, Item 1A below. The last day of our fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October 31 and January 31.

Overview

Our mission is to connect teams to real-time opportunity and elevate work to the outcomes that matter.

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We act as the central nervous system for the digital enterprise. We collect machine generated data from virtually any software-enabled system or device, combine it with human response data, correlating and interpreting this data to understand issues and opportunities that need to be addressed in real-time. Using machine learning and automation, we bring together the right people with the right information so they can resolve issues and act on opportunities in minutes and seconds, not hours.

Since our founding in 2009, we have expanded our capabilities from a single product focused on on-call management to a real-time operations platform, spanning event intelligence, incident response, on-call management, business visibility, and advanced analytics. We have invested in developing the scalability, reliability, and security of our platform to address the needs of even the largest and most demanding customers. We have spent years building deep product integrations to our platform, and our ecosystem includes over 370 integrations to enable our customers to gather and correlate digital signals from virtually any software-enabled system or device and allow them to connect with popular collaboration tools and business applications.

Our platform is easy to adopt and scalable for businesses of all sizes. We generate revenue primarily through sales of subscriptions to our software. We offer a range of pricing plans aligned with our customers’ needs and the sophistication of their digital operations. We have a land and expand business model that leads to viral adoption of our products and subsequent expansion. Our online self-service model is the primary mechanism for landing new customers and enabling teams to get started without assistance. We complement our self-service model with a high-velocity inside sales team focused on the midmarket and small and medium business, and a field sales team focused on enterprise customers. These teams drive expansion to additional users, additional teams, and new use cases, as well as upsell premium functionality.

COVID-19 Update

In December 2019, a novel coronavirus and the resulting disease (“COVID-19”) was reported, and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. In February 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and in March 2020, the WHO characterized COVID-19 as a pandemic. 

As of the filing date, the full extent to which the COVID-19 pandemic may impact our financial condition or results of operations remains uncertain. While our revenues, billings, and earnings are relatively predictable as a result of our subscription-based business model and the majority of our revenues are generated from annual subscriptions, the effect of the COVID-19 pandemic, along with the seasonality we historically experience, may not be fully reflected in our results of operations and overall financial performance until future periods, if at all. In addition, while the majority of our revenues are generated from annual subscriptions, we have seen, and anticipate there may continue to be greater variability in the demand of our product from small and medium business customers. We also have experienced an increase in churn and a decline in the number of users that we believe to be associated with the impact of COVID-19, and may continue to see a decline in the number of users if our customers are required to make workforce reductions. Because of this, we have, and may continue to experience declines in customer demand, reduced customer spend or contract duration, and lengthened payment terms that could materially adversely impact our business, results of operations, and overall financial performance in future periods.

The extent and continued impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, government responses to the pandemic, impact on our customers and our sales cycles, and effect on our partners, vendors, and supply chains, all of which are uncertain and difficult to predict.

In March 2020, we temporarily closed all of our offices, transitioned our employees to work remotely, and implemented travel restrictions on all business-related travel. We have extended our paid time off and sick leave benefits for employees directly impacted by COVID-19 or caring for children or a member of their household impacted by COVID-19. In addition, we are providing allowances to our employees to cover expenses related to transitioning to a work from home environment. We also continue to offer local employee assistance programs to employees if needed. These changes remain in effect and could extend into future quarters. We have a limited

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history of remote working and it is difficult to measure and predict the medium and long-term impacts on productivity across our workforce, and the resulting types of continuing investments for, our employee base is uncertain. The impact, if any, of these and any additional operational changes we may implement is uncertain but changes we have implemented have not affected and are not expected to affect our ability to maintain operations, including financial reporting systems, internal control over financial reporting and disclosure controls, and procedures.

In addition, due to restrictions on travel and in-person meetings, we have converted Summit, our global customer conference series, to virtual events. We have also canceled or shifted other planned events to virtual-only experiences and may determine to alter, postpone or cancel additional customer, employee or industry events in the future. We have typically relied on marketing and promotional events such as Summit and other in-person conferences, events, and meetings to facilitate customer sign-ups and generate leads for potential customers, and we cannot predict whether virtual marketing events and phone or virtual sales interactions will be as successful as in-person events and meetings or, for how long, or the extent to which the COVID-19 pandemic may continue to constrain our marketing, promotional, and sales activities.

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes several significant provisions for corporations, including modifications to the limitation on business interest expense and the usage of net operating losses, and a payment deferral of employer payroll taxes. We have elected to defer the payment of employer payroll taxes in the six months ended July 31, 2020 and will assess whether we will continue to do so in future periods. The CARES Act is not expected to have a material impact on the Company’s consolidated financial statements.

See Item 1A, “Risk Factors”, for further discussion of the possible impact of the COVID-19 pandemic on our business.

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Key Business Metrics

We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

Number of Customers

We believe that the number of customers using our platform, particularly those that have subscription agreements for more than $100,000 in annual recurring revenue, or ARR, are indicators of our market penetration, particularly within enterprise accounts, the growth of our business, and our potential future business opportunities. We define ARR as the annualized recurring value of all active contracts at the end of a reporting period. We define a customer as a separate legal entity, such as a company or an educational or government institution, that has an active subscription with us or one of our partners to access our platform. In situations where an organization has multiple subsidiaries or divisions, we treat the parent entity as the customer instead of treating each subsidiary or division as a separate customer. Increasing awareness of our platform and its broad range of capabilities, coupled with the fact that the world is always on and powered by increasingly complex technology, has expanded the diversity of our customer base to include organizations of all sizes across virtually all industries. Over time, enterprise and mid-market customers have constituted a greater share of our revenue.

	As of July 31,
	2020	2019
Customers	13,346	12,045
Customers greater than $100,000 in ARR	369	274

Dollar-based Net Retention Rate

We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, since this metric reflects our ability to retain and expand the ARR from our existing customers. Our dollar-based net retention rate compares our ARR from the same set of customers across comparable periods.

We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same customers as of the current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of downgrades or churn over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the dollar-based net retention rate.

	Last 12 Months Ended July 31,
	2020		2019
Dollar-based net retention rate for all customers	116	%	132	%

Components of Results of Operations

Revenue

We generate subscription revenue from customers accessing our platform. Our subscriptions are typically one year in duration but can range from monthly to multi-year. Subscription revenue is driven primarily by the number of customers, the number of users per customer, and the level of subscription purchased. We generally invoice customers in advance in annual installments for subscriptions to our platform. We recognize subscription revenue ratably over the term of the subscription period beginning on the date we grant access to our platform, assuming that all other revenue recognition criteria have been met.

Due to the low complexity of implementation and integration of our platform with our customers’ existing infrastructure, revenue from professional services has been immaterial to date.

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Cost of Revenue

Cost of revenue primarily consists of expenses related to providing our platform to customers, including personnel expenses for operations and global support, payments to our third-party cloud infrastructure providers for hosting our software, payment processing fees, amortization of capitalized internal-use software costs, and allocated overhead costs for facilities, information technology, and other allocated overhead costs. We will continue to invest additional resources in our platform infrastructure and our customer support and success organizations to expand the capability of our platform and ensure that our customers are realizing the full benefit of our offerings. The level and timing of investment in these areas could affect our cost of revenue in the future.

Gross Profit and Gross Margin

Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period as our revenue fluctuates, and as a result of the timing and amount of investments to expand the capacity of our third-party cloud infrastructure providers and our continued efforts to enhance our platform support and customer success teams.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense, and sales commissions. Operating expenses also include allocated overhead costs for facilities, shared IT related expenses, including depreciation expense, and certain company-wide events and functions.

Research and development

Research and development expenses consist primarily of personnel costs for our engineering, product, and design teams. Additionally, research and development expenses include contractor fees, depreciation of equipment used in research and development activities, and allocated overhead costs. We expect that our research and development expenses will increase in dollar value as our business grows.

Sales and marketing

Sales and marketing expenses consist primarily of personnel costs, costs of general marketing activities and promotional activities, travel related expenses, allocated overhead costs, and bad debt expense. Sales commissions earned by our sales force that are considered incremental and recoverable costs of obtaining a subscription with a customer are deferred and amortized on a straight-line basis over the expected period of benefit, which we have determined to be four years. We expect that our sales and marketing expenses will increase in dollar value and continue to be our largest operating expense for the foreseeable future as we expand our sales and marketing efforts.

General and administrative

General and administrative expenses consist primarily of personnel costs and contractor fees for finance, legal, human resources, information technology, and other administrative functions. In addition, general and administrative expenses include non-personnel costs, such as legal, accounting, and other professional fees, hardware and software costs, certain tax, license and insurance-related expenses, and allocated overhead costs. We expect that our general and administrative expenses will increase in dollar value as our business grows. However, we expect that our general and administrative expenses will decrease as a percentage of our revenue over the longer term as we expect our investments to allow for improved efficiency for future growth in the business.

Interest Income

Interest income consists of income earned on our cash and cash equivalents and interest earned on our short-term investments which consist of U.S. Treasury securities, commercial paper, corporate debt securities, and U.S. Government agency securities.

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Interest Expense

Interest expense consists primarily of contractual interest expense and amortization of the discount and debt issuance costs on our 1.25% Convertible Notes due 2025.

Other (Expense) Income, Net

Other (expense) income, net primarily consists of accretion income and amortization expense on our held-to-maturity and available-for-sale investments and foreign currency transaction gains and losses.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized.

Results of Operations

The following table sets forth our condensed consolidated statements of operations data for the periods indicated:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Revenue	$	50,714	$	40,361	$	100,500	$	77,675
Cost of revenue(1)	6,637		6,106		13,600		11,592
Gross profit	44,077		34,255		86,900		66,083
Operating expenses:
Research and development(1)	15,535		11,635		30,549		22,541
Sales and marketing(1)	27,511		23,786		54,247		44,953
General and administrative(1)	14,480		13,215		28,153		25,699
Total operating expenses	57,526		48,636		112,949		93,193
Loss from operations	(13,449)		(14,381)		(26,049)		(27,110)
Interest income	1,048		1,967		2,401		2,856
Interest expense	(1,608)		—		(1,608)		—
Other (expense) income, net	(431)		80		(412)		101
Loss before provision for income taxes	(14,440)		(12,334)		(25,668)		(24,153)
Provision for income taxes	(248)		(236)		(479)		(481)
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)

______________

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(1) Includes stock-based compensation expense as follows:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Cost of revenue	$	263	$	327	$	607	$	470
Research and development	2,469		1,437		4,652		2,297
Sales and marketing	2,870		2,326		5,155		3,790
General and administrative	4,366		3,143		7,862		5,488
Total	$	9,968	$	7,233	$	18,276	$	12,045

The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
Revenue	100	%	100	%	100	%	100	%
Cost of revenue	13		15		14		15
Gross profit	87	%	85	%	86	%	85	%
Operating expenses:
Research and development	31		29		30		29
Sales and marketing	54		59		54		58
General and administrative	29		33		28		33
Total operating expenses	113	%	121	%	112	%	120	%
Loss from operations	(27)		(36)		(26)		(35)
Interest income	2		5		2		4
Interest expense	(3)		—		(2)		—
Other (expense) income, net	(1)		—		—		—
Loss before provision for income taxes	(28)		(31)		(26)		(31)
Provision for income taxes	—		(1)		—		(1)
Net loss	(29)	%	(31)	%	(26)	%	(32)	%

__________

Note: Certain figures may not sum due to rounding.

Comparison of the Three Months Ended July 31, 2020 and 2019

Revenue

	Three Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Revenue	$	50,714	$	40,361	$	10,353	26	%

Revenue increased by $10.4 million, or 26%, for the three months ended July 31, 2020 compared to the three months ended July 31, 2019. The increase in revenue was attributable to a combination of growth from both new and existing customers. Growth from existing customers is attributable to both increases in the number of users and upsell of additional products.

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Cost of Revenue and Gross Margin

	Three Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Cost of revenue	$	6,637		$	6,106		$	531	9	%
Gross margin	87		%	85		%

Gross margin was 87% for the three months ended July 31, 2020 compared to 85% for the three months ended July 31, 2019, improving as a result of efficiency from our cloud native infrastructure. Cost of revenue increased by $0.5 million, or 9%, primarily due to an increase of $0.4 million in personnel expenses as a result of increased headcount, an increase of $0.1 million in hosting, software, and telecom costs, and an increase of $0.1 million in allocated overhead costs, both of which are related to the support of the continued growth of the business and related infrastructure. This was partially offset by a decrease of $0.1 million in travel and other program related costs due to the COVID-19 pandemic.

Research and Development

	Three Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Research and development	$	15,535		$	11,635		$	3,900	34	%
Percentage of revenue	31		%	29		%

Research and development expenses increased by $3.9 million, or 34%, for the three months ended July 31, 2020 compared to the three months ended July 31, 2019. The increase was primarily driven by an increase in personnel expenses of $3.6 million as a result of increased headcount to support our continued investment in our platform and a $0.8 million increase in costs to support the continued growth of the business and related infrastructure, which includes allocated overhead costs. This was partially offset by a decrease of $0.4 million in travel and other program related costs due to the COVID-19 pandemic.

Sales and Marketing

	Three Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Sales and marketing	$	27,511		$	23,786		$	3,725	16	%
Percentage of revenue	54		%	59		%

Sales and marketing expenses increased by $3.7 million, or 16%, for the three months ended July 31, 2020 compared to the three months ended July 31, 2019. This increase was primarily due to an increase of $4.1 million in personnel expenses driven by headcount growth, including amortization of deferred contract costs, increased allocated overhead costs of $0.5 million to support the continued growth of the business and related infrastructure, and a $0.5 million increase in bad debt expense primarily due to an increase in our allowance as a result of the adoption of Accounting Standards Update No. 2016-13 and increased collections reserves stemming from the COVID-19 pandemic. This was partially offset by a decrease of $1.4 million in travel and other program related costs due to the COVID-19 pandemic, and a decrease of $0.5 million in outside services due to lower usage of consultants during the period.

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General and Administrative

	Three Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
General and administrative	$	14,480		$	13,215		$	1,265	10	%
Percentage of revenue	29		%	33		%

General and administrative expenses increased by $1.3 million, or 10%, for the three months ended July 31, 2020 compared to the three months ended July 31, 2019. The increase was driven by an increase of $3.3 million in personnel expenses as a result of increased headcount. This was partially offset by a decrease of $0.7 million in travel and other program related costs due to the COVID-19 pandemic, a decrease of $0.6 million in costs to support the business and related infrastructure which includes allocated overhead costs, a decrease of $0.4 million in outside professional services, and a decrease of $0.4 million in other expenses.

Interest Expense

	Three Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Interest expense	$	1,608	$	—	$	1,608	N/A

Interest expense increased by $1.6 million for the three months ended July 31, 2020 compared to the three months ended July 31, 2019, due to contractual interest expense and amortization of the discount and issuance costs on the Notes.

Interest Income and Other (Expense) Income, Net

	Three Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Interest income	$	1,048	$	1,967	$	(919)	(47)	%
Other (expense) income, net	$	(431)	$	80	$	(511)	(639)	%

Interest income decreased by $0.9 million for the three months ended July 31, 2020 compared to the three months ended July 31, 2019, primarily due to lower interest rates in the current year. Other (expense) income, net decreased by $0.5 million in the three months ended July 31, 2020 compared to the three months ended July 31, 2019, driven by foreign exchange losses on the revaluation of our international lease liability balance as a result of the implementation of ASC-842.

Comparison of the Six Months Ended July 31, 2020 and 2019

Revenue

	Six Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Revenue	$	100,500	$	77,675	$	22,825	29	%

Revenue increased by $22.8 million, or 29%, for the six months ended July 31, 2020 compared to the six months ended July 31, 2019. The increase in revenue was attributable to growth from both existing and new customers. Growth from existing customers is attributable to both increases in the number of users and upsell of additional products.

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Cost of Revenue and Gross Margin

	Six Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Cost of revenue	$	13,600		$	11,592		$	2,008	17	%
Gross margin	86		%	85		%

Gross margin was 86% for the six months ended July 31, 2020 compared to 85% for the six months ended July 31, 2019, improving as a result of efficiency from our cloud native infrastructure. Cost of revenue increased by $2.0 million, or 17%, primarily due to an increase of $1.0 million in personnel expenses as a result of increased headcount, an increase of $0.5 million in hosting, software, and telecom costs, an increase of $0.3 million in allocated overhead costs, both of which are related to the support of the continued growth of the business and related infrastructure, and an increase of $0.2 million in other expenses.

Research and Development

	Six Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Research and development	$	30,549		$	22,541		$	8,008	36	%
Percentage of revenue	30		%	29		%

Research and development expenses increased by $8.0 million, or 36%, for the six months ended July 31, 2020 compared to the six months ended July 31, 2019. The increase was primarily driven by an increase in personnel expenses of $7.1 million as a result of increased headcount, a $1.5 million increase in costs to support the continued growth of the business and related infrastructure, which includes allocated overhead costs, and a $0.3 million increase in outside services. This was partially offset by a decrease of $0.6 million in travel and other program related expenses and a decrease of $0.3 million in other expenses, both due to the COVID-19 pandemic.

Sales and Marketing

	Six Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
Sales and marketing	$	54,247		$	44,953		$	9,294	21	%
Percentage of revenue	54		%	58		%

Sales and marketing expenses increased by $9.3 million, or 21%, for the six months ended July 31, 2020 compared to the six months ended July 31, 2019. This increase was primarily due to an increase of $8.7 million in personnel expenses driven by headcount growth, including amortization of deferred contract costs, increased allocated overhead costs of $0.9 million to support the continued growth of the business and related infrastructure, a $0.8 million increase in bad debt expense primarily due to an increase in our allowance as a result of the adoption of Accounting Standards Update No. 2016-13 and increased collections reserves stemming from the COVID-19 pandemic, a $0.7 million increase in hosting and software costs due to increased business needs, and a $0.6 million increase in marketing and promotional expenses due to increased volume of marketing and advertising activities. This was partially offset by a decrease of $1.5 million in travel and other program related expenses due to the COVID-19 pandemic and $1.0 million in outside services due to lower usage of consultants during the period.

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General and Administrative

	Six Months Ended July 31,
	2020			2019			Change		% Change
	(dollars in thousands)
General and administrative	$	28,153		$	25,699		$	2,454	10	%
Percentage of revenue	28		%	33		%

General and administrative expenses increased by $2.5 million, or 10%, for the six months ended July 31, 2020 compared to the six months ended July 31, 2019. The increase was driven by an increase of $5.5 million in personnel expenses as a result of increased headcount. This was partially offset by a decrease of $1.6 million in travel and other program related costs due to the COVID-19 pandemic, a decrease of $0.9 million in outside professional services, and a decrease of $0.4 million in other expenses.

Interest Expense

	Six Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Interest expense	$	1,608	$	—	$	1,608	N/A

Interest expense increased by $1.6 million for the six months ended July 31, 2020 compared to the six months ended July 31, 2019, due to contractual interest expense and amortization of the discount and issuance costs on the Notes.

Interest Income and Other (Expense) Income, Net

	Six Months Ended July 31,
	2020		2019		Change		% Change
	(dollars in thousands)
Interest income	$	2,401	$	2,856	$	(455)	(16)	%
Other (expense) income, net	$	(412)	$	101	$	(513)	(508)	%

Interest income decreased by $0.5 million for the six months ended July 31, 2020 compared to the six months ended July 31, 2019, due to lower interest rates in the current year. Other (expense) income, net decreased by $0.5 million for the six months ended July 31, 2020 compared to the six months ended July 31, 2019 driven by foreign exchange losses on the revaluation of our international lease liability balance as a result of the implementation of ASC-842.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the below referenced non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-GAAP financial measures. A

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reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit as gross profit adjusted for stock-based compensation expense. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

	Three Months Ended July 31,						Six Months Ended July 31,
	2020			2019			2020			2019
	(in thousands)
Gross profit	$	44,077		$	34,255		$	86,900		$	66,083
Add:
Stock-based compensation	263			327			607			470
Non-GAAP gross profit	$	44,340		$	34,582		$	87,507		$	66,553
Gross margin	87		%	85		%	86		%	85		%
Non-GAAP gross margin	87		%	86		%	87		%	86		%

Non-GAAP Operating Loss and Non-GAAP Operating Margin

We define non-GAAP operating loss as loss from operations plus our stock-based compensation expense. We define non-GAAP operating margin as non-GAAP operating loss as a percentage of revenue.

	Three Months Ended July 31,						Six Months Ended July 31,
	2020			2019			2020			2019
	(in thousands)
Loss from operations	$	(13,449)		$	(14,381)		$	(26,049)		$	(27,110)
Add:
Stock-based compensation	9,968			7,233			18,276			12,045
Non-GAAP operating loss	$	(3,481)		$	(7,148)		$	(7,773)		$	(15,065)
Operating margin	(27)		%	(36)		%	(26)		%	(35)		%
Non-GAAP operating margin	(7)		%	(18)		%	(8)		%	(19)		%

Non-GAAP Net Loss

We define non-GAAP net loss as net loss plus our stock-based compensation expense and amortization of debt discount and issuance costs.

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	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)
Add:
Stock-based compensation	9,968		7,233		18,276		12,045
Amortization of debt discount and issuance costs	1,258		—		1,258		—
Non-GAAP net loss	$	(3,462)	$	(5,337)	$	(6,613)	$	(12,589)

Free Cash Flow

We define free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment and capitalized internal-use software costs. In addition to the reasons stated above, we believe that free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in excess of our capital investments in property and equipment to enhance the strength of our balance sheet and further invest in our business and potential strategic initiatives. A limitation of the utility of free cash flow as a measure of our liquidity is that it does not represent the total increase or decrease in our cash balance for the period. We use free cash flow in conjunction with traditional GAAP measures as part of our overall assessment of our liquidity, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to assess our liquidity.

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Net cash used in operating activities	$	2,047	2,159		$	1,862	$	(5,407)
Less:
Purchases of property and equipment	(579)		(829)		(3,292)		(2,019)
Capitalization of internal-use software costs	(111)		—		(111)		—
Free cash flow	$	1,357	$	1,330	$	(1,541)	$	(7,426)
Net cash used in investing activities	$	(14,293)	$	(35,525)	$	(475)	$	(36,715)
Net cash provided by (used in) financing activities	$	249,429	$	(750)	$	251,227	$	218,168

Liquidity and Capital Resources

Since inception, we have financed operations primarily through sales of our subscriptions, the issuance of our Notes, and the net proceeds we have received from sales of equity securities.

On April 15, 2019, upon the closing of our IPO, we received net proceeds of $213.7 million, after deducting underwriters' discounts and commissions of $16.6 million and other issuance costs of $6.4 million.

On June 25, 2020, we issued $287.5 million aggregate principal amount of the Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The total net proceeds from the sale of the Notes, after deducting the initial purchasers’ discounts and debt issuance costs of $9.3 million, and purchases of the Capped Calls of $35.7 million, were $242.5 million.

As of July 31, 2020, our principal sources of liquidity were cash and cash equivalents and investments totaling $601.6 million. We believe that our existing cash and cash equivalents, investments, and cash provided by sales of our subscriptions will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including the effects of the COVID-19 pandemic, our subscription growth rate, subscription renewal activity, including the timing and the amount of cash received from customers, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the

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continuing market adoption of our platform. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.

A significant majority of our customers pay in advance for subscriptions. Therefore, a substantial source of our cash is from our deferred revenue, which is included in the liabilities section of our condensed consolidated balance sheets. Deferred revenue consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of July 31, 2020, we had deferred revenue of $101.2 million, of which $97.0 million was recorded as a current liability and expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Cash Flows

The following table shows a summary of our cash flows for the periods presented:

	Six Months Ended July 31,
	2020		2019
	(in thousands)
Net cash provided by (used in) operating activities	$	1,862	$	(5,407)
Net cash used in investing activities	$	(475)	$	(36,715)
Net cash provided by financing activities	$	251,227	$	218,168

Operating Activities

Our largest source of operating cash is cash collection from sales of subscriptions to our customers. Our primary uses of cash from operating activities are for personnel expenses, marketing expenses and hosting and software expenses. In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from both private and public sales of equity securities.

Cash provided by operating activities for the six months ended July 31, 2020 of $1.9 million primarily related to our net loss of $26.1 million, adjusted for non-cash charges of $30.3 million and net cash outflows of $2.3 million due to changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $18.3 million, amortization of our deferred contract costs of $5.1 million, non-cash lease expense of $2.2 million, and depreciation and amortization of property and equipment and capitalized implementation costs of $2.0 million. Changes in operating assets and liabilities reflected cash outflows from a $6.2 million increase in deferred contract costs due to commissions paid on new bookings in line with revenue growth, a $5.0 million increase in prepaid expenses and other assets related to timing of payments made in advance for future services, $1.7 million in payments for operating lease liabilities, and a $1.3 million increase in accounts receivable due to timing of cash collections. These amounts were partially offset by inflows from an $8.6 million increase in deferred revenue resulting primarily from increased billings for subscriptions, a $2.1 million increase in accounts payable and accrued expenses and other liabilities, and a $1.3 million increase in accrued compensation primarily due to employee contributions for the ESPP and increased headcount.

Cash used in operating activities for the six months ended July 31, 2019 of $5.4 million primarily related to our net loss of $24.6 million, adjusted for non-cash charges of $16.6 million and net cash inflows of $2.6 million due to changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $12.0 million, amortization of our deferred contract costs of $3.4 million, and depreciation and amortization of property and equipment of $1.0 million. Changes in operating assets and liabilities reflected cash inflows from a $13.7 million increase in deferred revenue resulting primarily from increased billings for subscriptions and a $2.0 million increase in accrued compensation primarily due to withholdings on the ESPP and increased headcount. These amounts were partially offset by a $6.7 million increase in deferred contract costs due to commissions paid on

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new bookings, a $3.4 million increase in prepaid expenses and other assets related to prepayments made in advance for future services, a $2.7 million increase in accounts receivable due to timing of cash collections., and a $0.3 million decrease in accounts payable, accrued expenses and other liabilities.

Investing Activities

Cash used in investing activities for the six months ended July 31, 2020 of $0.5 million consisted of purchases of available-for-sale investments of $100.0 million and purchases of property and equipment of $3.3 million primarily to support additional office space for our Atlanta office and purchases of computers for new employees. This was partially offset by proceeds from sales and maturities of investments of $103.0 million.

Cash used in investing activities for the six months ended July 31, 2019 of $36.7 million consisted of purchases of held-to-maturity investment of $34.7 million, and purchases of property and equipment of $2.0 million to support additional office space for our San Francisco office and purchases of computers for new employees.

Financing Activities

Cash provided by financing activities for the six months ended July 31, 2020 of $251.2 million consisted primarily of net proceeds of $279.3 million related to the issuance of the Notes, proceeds from the ESPP of $3.6 million, and proceeds of $5.8 million from the exercise of stock options. This was partially offset by purchases of the Capped Calls of $35.7 million.

Cash provided by financing activities for the six months ended July 31, 2019 of $218.2 million consisted primarily of net proceeds from the initial public offering of $220.1 million, after underwriting discounts and commissions, proceeds from the exercise of stock options and repayment of a promissory note of $3.3 million, partially offset by $5.2 million in payments related to costs associated with our initial public offering.

Contractual Obligations and Commitments

Except for the Notes, there were no material changes during the six months ended July 31, 2020 to our contractual obligations and other commitments, as disclosed in the Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed with the SEC on March 19, 2020.

For further information on our commitments and contingencies, refer to Note 9, “Commitments and Contingencies”, in the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q.

Indemnification Agreements

In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No demands have been made upon us to provide indemnification under such agreements, and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

Off-Balance Sheet Arrangements

We do not currently have and, as of July 31, 2020 or during the periods presented, did not have any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with U.S. GAAP. In the preparation of these condensed consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates.

Except for the accounting policy related to the Notes, there have been no significant changes to our critical accounting policies described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed with the SEC on March 19, 2020, that had a material impact on our condensed consolidated financial statements and related notes.

Convertible Senior Notes

The Notes are accounted for in accordance with the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Codification, or ASC, Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective terms of the Notes using an effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

Recent Accounting Pronouncements

For further information on our recently adopted accounting pronouncements, refer to Note 2 in the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our market risk as compared to the disclosures in Part II, Item 7A in our Annual Report on Form 10-K for the year ended January 31, 2020, which was filed with the SEC on March 19, 2020, other than interest rate risk as set forth below, and market risk that is created by the global market disruptions and uncertainties resulting from the COVID-19 pandemic. See Item 1A, “Risk Factors”, for further discussion of the possible impact to our business.

Interest Rate Risk

In June 2020, we issued the Notes with an aggregate principal amount of $287.5 million. The Notes have a fixed annual interest rate of 1.25%; accordingly, we do not have economic interest rate exposure on the Notes. However, the fair market value of the Notes is exposed to interest rate risk. Generally, the fair market value of the fixed interest rate of the Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair market value of the Notes fluctuates when the market price of our common stock fluctuates. The fair market value 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. See Note 4 to our condensed consolidated financial statements for more information.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation and supervision of our chief executive officer and our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our chief executive officer and chief financial officer have concluded that as of such date, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.

Limitations on the Effectiveness of Controls

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Changes in Internal Controls Over Financial Reporting

 There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than as described above.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business.

Item 1A. Risk Factors

Our business involves significant risks, some of which are described below. You should carefully consider the following risks, together with all of the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Any of the following risks could have an adverse effect on our business, results of operations, financial condition or prospects, and could cause the trading price of our common stock to decline. Our business, results of operations, financial condition or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

There have been no material changes to the Risk Factors described under "Part I—Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended January 31, 2020 and under “Part II--Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2020, other than as set forth below.

Risks Related to our Outstanding Convertible Notes

Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle for cash conversions of the Notes or to repurchase the Notes for cash upon a fundamental change, which could adversely affect our business and results of operations.

In June 2020, we completed the private offering of Notes, issuing an aggregate principal amount of $287.5 million 1.25% convertible senior notes due 2025. The interest rate is fixed at 1.25% per annum and is payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not generate cash flows from operations in the future that are sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives.

Holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. Upon conversion, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases in connection with such conversion and our ability to pay may additionally be limited by law, by regulatory authority, or by agreements governing our existing and future indebtedness. Our failure to repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes or to pay any cash payable on future conversions as required by such indenture would constitute a default under such indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our existing and future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

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In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:

•make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;

•limit our flexibility in planning for, or reacting to, changes in our business and our industry;

•place us at a disadvantage compared to our competitors who have less debt;

•limit our ability to borrow additional amounts for funding acquisitions, for working capital, and for other general corporate purposes; and

•make an acquisition of our company less attractive or more difficult.

Any of these factors could harm our business, results of operations, and financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and results of operations.

In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Transactions relating to our Notes may affect the value of our common stock.

The conversion of some or all of the Notes would dilute the ownership interests of existing stockholders to the extent we satisfy our conversion obligation by delivering shares of our common stock upon any conversion of such Notes. Our Notes may become in the future convertible at the option of their holders under certain circumstances. If holders of our Notes elect to convert their Notes, we may settle our conversion obligation by delivering to them a significant number of shares of our common stock, which would cause dilution to our existing stockholders.

In addition, in connection with the pricing of the Notes, we entered into the Capped Calls with certain financial institutions, or the Option Counterparties. The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion or settlement of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the Capped Calls, the Option Counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock and/or purchased shares of our common stock concurrently with or shortly after the pricing of the Notes.

From time to time, the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so following any conversion of the Notes, any repurchase of the Notes by us on any fundamental change repurchase date, any redemption date, or any other date on which the Notes are retired by us, in each case, if we exercise our option to terminate the relevant portion of the Capped Calls). This activity could cause a decrease and/or increased volatility in the market price of our common stock.

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We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Notes or our common stock. In addition, we do not make any representation that the Option Counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

We are subject to counterparty risk with respect to the Capped Calls.

The Option Counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the Option Counterparties will not be secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an Option Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Calls with such Option Counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an Option Counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the Option Counterparties.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.

Under FASB ASC Subtopic 470-20, Debt with Conversion and Other Options, or ASC 470-20, an entity must separately account for the liability and equity components of convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. ASC 470-20 requires the value of the conversion options of the Notes, representing the equity component, to be recorded as additional paid-in capital within stockholders’ equity in our consolidated balance sheet and as a discount to the Notes, which reduces their initial carrying value. The carrying value of the Notes, net of the applicable discount recorded, will be accreted up to the principal amount of the Notes, as the case may be, from the issuance date until maturity, which will result in non-cash charges to interest expense in our consolidated statement of operations. Accordingly, we will report lower net income or higher net loss in our financial results because ASC 470-20 requires interest to include both the current period’s accretion of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock, and the respective trading price of the Notes.

The accounting for the Notes is subject to change. Specifically, in August 2020, FASB issued Accounting Standard Update No. 2020-06, Debt—Debt with Conversion Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity but also requires the application of the “if-converted method”. We have not yet evaluated the impact of the new guidance on our consolidated financial statements.

Future sales of our common stock in the public market could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

Under our investors’ rights agreement, certain stockholders can require us to register shares owned by them for public sale in the U.S. In addition, we filed a registration statement to register shares reserved for future issuance under our equity compensation plans. As a result, subject to the satisfaction of applicable exercise and/or vesting periods, the shares issued upon exercise of outstanding stock options or upon settlement of outstanding RSU awards will be available for immediate resale in the U.S. in the open market.

45

Furthermore, a substantial number of shares of our common stock is reserved for issuance upon the exercise of the Notes. If we elect to satisfy our conversion obligation on the Notes solely in shares of our common stock upon conversion of the Notes, we will be required to deliver the shares of our common stock, together with cash for any fractional share, on the second business day following the relevant conversion date.

We may issue our shares of common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

46

Item 2.    Unregistered Sales of Securities and Use of Proceeds

Use of Proceeds

On April 10, 2019, our registration statement on Form S-1 (File No. 333-230323), was declared effective by the SEC for our IPO of our common stock. There have been no material changes in the planned use of proceeds from our IPO from that described in the final prospectus filed pursuant to Rule 424(b) under the Securities Act and other periodic reports previously filed with the SEC.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Items 3, 4, and 5 are not applicable and have been omitted.

Item 6.    Exhibits

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

47

EXHIBIT INDEX

Exhibit Number	Description	Form	File No.	Incorporated by Exhibit Reference	Filing Date
3.1	Amended and Restated Certificate of Incorporation of PagerDuty, Inc.	8-K	001-38856	3.1	April 15, 2019
3.2	Amended and Restated Bylaws of PagerDuty, Inc.	8-K	001-38856	3.2	April 15, 2019
4.1	Indenture, dated as of June 25, 2020, by and between PagerDuty, Inc. and U.S. Bank National Association, as Trustee	8-K	001-38856	4.1	June 25, 2020
4.2	Form of Global Note, representing PagerDuty, Inc.’s 1.25% Convertible Senior Notes due 2025 (included as Exhibit A to the Indenture filed as Exhibit 4.1)	8-K	001-38856	4.2	June 25, 2020
10.1	Form of Confirmation for Capped Call Transactions	8-K	001-38856	10.1	June 25, 2020
31.1	Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			Filed herewith
31.2	Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			Filed herewith
32.1*	Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			Furnished herewith
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.			Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document.			Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.			Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.			Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.			Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.			Filed herewith
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, and 101.PRE).

* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this September 3, 2020.

	PAGERDUTY, INC.
By:	/s/ Jennifer G. Tejada
	Jennifer G. Tejada
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Owen Howard Wilson
	Owen Howard Wilson
	Chief Financial Officer
	(Principal Financial Officer)
By:	/s/ Karen Walker
	Karen Walker
	Senior Vice President, Finance
	(Principal Accounting Officer)

49

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jennifer G. Tejada, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PagerDuty, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2020

/s/ Jennifer G. Tejada

Jennifer G. Tejada

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Owen Howard Wilson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PagerDuty, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2020

/s/ Owen Howard Wilson

Owen Howard Wilson

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jennifer G. Tejada, the Chief Executive Officer of PagerDuty, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of PagerDuty, Inc. for the fiscal quarter ended April 30, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PagerDuty, Inc. 

Date: September 3, 2020

/s/ Jennifer G. Tejada

Jennifer G. Tejada

Chief Executive Officer

(Principal Executive Officer)

I, Owen Howard Wilson, the Chief Financial Officer of PagerDuty, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of PagerDuty, Inc. for the fiscal quarter ended April 30, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of PagerDuty, Inc.  

Date: September 3, 2020

/s/ Owen Howard Wilson

Owen Howard Wilson

Chief Financial Officer

(Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jul. 31, 2020	Sep. 01, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 31, 2020
Document Transition Report	false
Entity File Number	001-38856
Entity Registrant Name	PAGERDUTY, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-2793871
Entity Address, Address Line One	600 Townsend St.
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94103
City Area Code	844
Local Phone Number	800-3889
Title of 12(b) Security	Common Stock, $0.000005 par value
Trading Symbol	PD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		79,433,673
Entity Central Index Key	0001568100
Current Fiscal Year End Date	--01-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020
Current assets:
Cash and cash equivalents	$ 376,638	$ 124,024
Accounts receivable, net of allowance for doubtful accounts of $1,712 and $810 as of July 31, 2020 and January 31, 2020, respectively	37,429	37,128
Investments	224,932	227,375
Deferred contract costs, current	10,326	9,301
Prepaid expenses and other current assets	11,950	7,163
Total current assets	661,275	404,991
Property and equipment, net	12,805	12,369
Deferred contract costs, non-current	16,497	16,387
Lease right-of-use assets	26,885
Other assets	1,725	1,651
Total assets	719,187	435,398
Current liabilities:
Accounts payable	4,775	6,434
Accrued expenses and other current liabilities	7,713	7,197
Accrued compensation	15,198	13,911
Deferred revenue, current	97,007	87,490
Lease liabilities, current	5,078
Total current liabilities	129,771	115,032
Convertible senior notes, net	210,976	0
Deferred revenue, non-current	4,173	5,079
Lease liabilities, non-current	29,064
Other liabilities	3,332	7,349
Total liabilities	377,316	127,460
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock	0	0
Additional paid-in capital	546,169	487,008
Accumulated other comprehensive income	1,056	137
Accumulated deficit	(205,354)	(179,207)
Total stockholders’ equity	341,871	307,938
Total liabilities and stockholders’ equity	$ 719,187	$ 435,398

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,712	$ 810

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Income Statement And Statement Of Comprehensive Income [Abstract]
Revenue	$ 50,714	$ 40,361	$ 100,500	$ 77,675
Cost of revenue	6,637	6,106	13,600	11,592
Gross profit	44,077	34,255	86,900	66,083
Operating expenses:
Research and development	15,535	11,635	30,549	22,541
Sales and marketing	27,511	23,786	54,247	44,953
General and administrative	14,480	13,215	28,153	25,699
Total operating expenses	57,526	48,636	112,949	93,193
Loss from operations	(13,449)	(14,381)	(26,049)	(27,110)
Interest income	1,048	1,967	2,401	2,856
Interest expense	(1,608)	0	(1,608)	0
Other (expense) income, net	(431)	80	(412)	101
Loss before provision for income taxes	(14,440)	(12,334)	(25,668)	(24,153)
Provision for income taxes	(248)	(236)	(479)	(481)
Net loss	(14,688)	(12,570)	(26,147)	(24,634)
Other comprehensive income:
Unrealized gain on investments	277	0	919	0
Total comprehensive loss	$ (14,411)	$ (12,570)	$ (25,228)	$ (24,634)
Net loss per share, basic and diluted (in dollars per share)	$ (0.19)	$ (0.17)	$ (0.33)	$ (0.45)
Weighted average shares used in calculating net loss per share, basic and diluted (in shares)	78,775	75,433	78,278	54,327

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Redeemable convertible preferred stock, beginning balance (in shares) at Jan. 31, 2019	41,273,345
Redeemable convertible preferred stock, beginning balance at Jan. 31, 2019	$ 173,023
Increase (Decrease) in Temporary Equity [Roll Forward]
Conversion of convertible preferred stock to common stock in connection with initial public offering (in shares)	(41,273,345)
Conversion of convertible preferred stock to common stock in connection with initial public offering	$ (173,023)
Redeemable convertible preferred stock, ending balance (in shares) at Jul. 31, 2019	0
Redeemable convertible preferred stock, ending balance at Jul. 31, 2019	$ 0
Beginning balance (in shares) at Jan. 31, 2019		23,189,921
Beginning balance at Jan. 31, 2019	(68,930)	$ 0	$ 59,938		$ (128,868)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases (in shares)		1,165,345
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	2,785		2,785
Vesting of restricted stock units, net of employee payroll taxes (in shares)		183
Vesting of restricted stock units, net of employee payroll taxes	(10)		(10)
Exercise of common stock warrants (in shares)		737,807
Repayment of promissory note	515		515
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs (in shares)		9,860,500
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs	213,697		213,697
Conversion of convertible preferred stock to common stock in connection with initial public offering (in shares)		41,273,345
Conversion of convertible preferred stock to common stock in connection with initial public offering	173,023		173,023
Vesting of early exercised options	672		672
Stock-based compensation	12,045		12,045
Net loss	(24,634)				(24,634)
Ending balance (in shares) at Jul. 31, 2019		76,227,101
Ending balance at Jul. 31, 2019	$ 309,163	$ 0	462,665		(153,502)
Redeemable convertible preferred stock, ending balance (in shares) at Jul. 31, 2019	0
Redeemable convertible preferred stock, ending balance at Jul. 31, 2019	$ 0
Beginning balance (in shares) at Apr. 30, 2019		76,013,403
Beginning balance at Apr. 30, 2019	313,627	$ 0	454,559		(140,932)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases (in shares)		213,515
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	545		545
Vesting of restricted stock units, net of employee payroll taxes (in shares)		183
Vesting of restricted stock units, net of employee payroll taxes	(10)		(10)
Vesting of early exercised options	338		338
Stock-based compensation	7,233		7,233
Net loss	(12,570)				(12,570)
Ending balance (in shares) at Jul. 31, 2019		76,227,101
Ending balance at Jul. 31, 2019	309,163	$ 0	462,665		(153,502)
Beginning balance (in shares) at Jan. 31, 2020		77,793,540
Beginning balance at Jan. 31, 2020	307,938	$ 0	487,008	$ 137	(179,207)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases (in shares)		1,286,892
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	5,771		5,771
Vesting of restricted stock units, net of employee payroll taxes (in shares)		93,942
Vesting of restricted stock units, net of employee payroll taxes	(1,743)		(1,743)
Vesting of early exercised options	507		507
Equity component of convertible senior notes, net of issuance costs	68,478		68,478
Purchases of capped calls related to convertible senior notes	(35,708)		(35,708)
Issuance of common stock in connection with employee stock purchase plan (in shares)		181,253
Issuance of common stock in connection with employee stock purchase plan	3,558		3,558
Other comprehensive income	919			919
Stock-based compensation	18,298		18,298
Net loss	(26,147)				(26,147)
Ending balance (in shares) at Jul. 31, 2020		79,355,627
Ending balance at Jul. 31, 2020	341,871	$ 0	546,169	1,056	(205,354)
Beginning balance (in shares) at Apr. 30, 2020		78,526,004
Beginning balance at Apr. 30, 2020	307,543	$ 0	497,430	779	(190,666)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases (in shares)		557,467
Issuance of common stock upon exercise of stock options and restricted stock agreements, net of repurchases	3,927		3,927
Vesting of restricted stock units, net of employee payroll taxes (in shares)		90,903
Vesting of restricted stock units, net of employee payroll taxes	(1,697)		(1,697)
Vesting of early exercised options	191		191
Equity component of convertible senior notes, net of issuance costs	68,478		68,478
Purchases of capped calls related to convertible senior notes	(35,708)		(35,708)
Issuance of common stock in connection with employee stock purchase plan (in shares)		181,253
Issuance of common stock in connection with employee stock purchase plan	3,558		3,558
Other comprehensive income	277			277
Stock-based compensation	9,990		9,990
Net loss	(14,688)				(14,688)
Ending balance (in shares) at Jul. 31, 2020		79,355,627
Ending balance at Jul. 31, 2020	$ 341,871	$ 0	$ 546,169	$ 1,056	$ (205,354)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019
Cash flows from operating activities
Net loss	$ (26,147)	$ (24,634)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,039	1,046
Amortization of deferred contract costs	5,064	3,442
Amortization of debt discount and issuance costs	1,258	0
Stock-based compensation	18,276	12,045
Non-cash lease expense	2,204
Other	1,426	83
Changes in operating assets and liabilities:
Accounts receivable	(1,293)	(2,733)
Deferred contract costs	(6,199)	(6,690)
Prepaid expenses and other assets	(4,989)	(3,411)
Accounts payable	(1,549)	(2,712)
Accrued expenses and other liabilities	3,618	2,433
Accrued compensation	1,287	2,031
Deferred revenue	8,611	13,693
Lease liabilities	(1,744)
Net cash provided by (used in) operating activities	1,862	(5,407)
Cash flows from investing activities
Purchases of property and equipment	(3,292)	(2,019)
Capitalization of internal-use software costs	(111)	0
Proceeds from maturities of held-to-maturity investments	24,040	0
Purchases of held-to-maturity investments	0	(34,696)
Purchases of available-for-sale investments	(100,029)	0
Proceeds from maturities of available-for-sale investments	71,632	0
Proceeds from sales of available-for-sale investments	7,285	0
Net cash used in investing activities	(475)	(36,715)
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,151	279,349	0
Purchases of capped calls related to convertible senior notes	(35,708)	0
Proceeds from initial public offering, net of underwriters' discounts and commissions	0	220,086
Payments of costs related to initial public offering	0	(5,208)
Proceeds from employee stock purchase plan	3,558	0
Proceeds from repayment of promissory note	0	515
Proceeds from issuance of common stock upon exercise of stock options	5,771	2,785
Employee payroll taxes paid related to net share settlement of restricted stock units	(1,743)	(10)
Net cash provided by financing activities	251,227	218,168
Net increase in cash, cash equivalents, and restricted cash	252,614	176,046
Cash, cash equivalents, and restricted cash at beginning of period	124,024	130,323
Cash, cash equivalents, and restricted cash at end of period	376,638	306,369
Supplemental cash flow data:
Cash paid for income taxes	0	56
Non-cash investing and financing activities:
Vesting of early exercised options	507	672
Purchase of property and equipment, accrued but not yet paid	385	1,032
Costs related to issuance of convertible senior notes, accrued but not yet paid	1,154	0
Costs related to initial public offering, accrued but not yet paid	0	737
Non-cash purchases of property and equipment	0	2,364
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Total cash, cash equivalents, and restricted cash	$ 376,638	$ 306,369

XML

Condensed Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	6 Months Ended
	Jul. 31, 2020 USD ($)
Statement of Cash Flows [Abstract]
Issuance of convertible senior notes, issuance costs paid	$ 8,151

XML

Description of Business and Basis of Presentation

6 Months Ended

Jul. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

Description of Business

PagerDuty, Inc. was incorporated under the laws of the state of Delaware in May 2010.

PagerDuty acts as the central nervous system for the digital enterprise. PagerDuty harnesses digital signals from virtually any software-enabled system or device, combines it with human response data and orchestrates teams to take the right actions in real time. The Company’s products help organizations improve operations, accelerate innovation, increase revenue, mitigate security risk, and deliver a great customer experience.

As used herein, “PagerDuty”, “we”, “our”, “the Company” and similar terms include PagerDuty, Inc., unless the context indicates otherwise.

Initial Public Offering

On April 15, 2019, the Company completed its initial public offering (“IPO”), pursuant to which the Company issued and sold 9,860,500 shares of common stock, inclusive of the over-allotment option, at a public offering price of $24.00 per share. The Company received net proceeds of $213.7 million, after deducting underwriters' discounts and commissions of $16.6 million and other issuance costs of $6.4 million. Immediately prior to the closing of the Company’s IPO, all shares of the redeemable convertible preferred stock automatically converted into 41,273,345 shares of common stock.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of January 31, 2020 was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with 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 audited consolidated financial statements and the related notes thereto as of and for the year ended January 31, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC.

The condensed consolidated financial statements include the results of PagerDuty, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and statements of stockholders’ equity. The results of operations for the three and six months ended July 31, 2020 are not necessarily indicative of the results to be expected for the full year ending January 31, 2021 or for any other interim period, or for any future year.

The Company’s fiscal year ends on January 31. References to fiscal 2021, for example, refer to the fiscal year ended January 31, 2021.

Convertible Senior Notes

In June 2020, The Company issued $287.5 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025 (the “Notes”). See Note 8 for additional details.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s most significant estimates and judgments involve the valuation of the Company’s stock-based awards, including the determination of fair value of common stock (prior to the closing of the IPO) and the fair value of the employee stock purchase plan (“ESPP”) expense, period of benefit for amortizing deferred contract costs, the determination of the allowance for doubtful accounts, the provision for income taxes, including the related valuation allowance and any uncertain tax positions, fair value of the liability and equity components of the Notes, and the incremental borrowing rate for lease liabilities, among others. 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.

In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was reported and in March 2020 the World Health Organization declared it a pandemic. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, and impact on our employees, as discussed in more detail in the Overview section of our Management’s Discussion and Analysis. During the quarter, this uncertainty resulted in a higher level of judgment related to our estimates and assumptions related to the estimate of credit losses for accounts receivable. As of the date of issuance of the financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments, or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

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Summary of Significant Accounting Policies

6 Months Ended

Jul. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Concentrations of Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, held-to-maturity investments, available-for-sale investments, and accounts receivable. All of the Company’s cash and cash equivalents and investments are invested in money market funds, United States (“U.S.”) Treasury securities, commercial paper, corporate debt securities, or U.S. Government agency securities that management believes to be of high credit quality.

No single customer accounted for 10% of the total accounts receivable balance as of July 31, 2020 or January 31, 2020. No single customer represented 10% or more of revenue for the three and six months ended July 31, 2020 or 2019.

Segment Information

The Company manages operations and allocates resources as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. See Note 14, “Geographic Information” for information regarding the Company's long-lived assets and revenue by geography.

Significant Accounting Policies

There have been no significant changes to our significant accounting policies as compared to those described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020, other than as set forth below.

Convertible Senior Notes

The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance is based upon historical loss patterns, the age of each past due invoice, and an evaluation of the potential risk of loss associated with delinquent accounts. The allowance also reflects current market conditions and reasonable and supportable forecasts of future economic conditions. As of July 31, 2020, our allowance reflects considerations related to the COVID-19 pandemic and may increase in future periods as we ascertain future impacts to our customers and business. The allowance for doubtful accounts was $1.7 million and $0.8 million as of July 31, 2020 and January 31, 2020.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases, (“Topic 842”) (“ASU 2016-02”), which would require lessees to recognize most leases on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements in a manner similar to current practice. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The Company adopted the standard using the optional alternative method on a prospective basis with an effective date as of the beginning of the Company’s fiscal year, February 1, 2020, and applied it to the operating leases that existed on that date. Prior year comparative financial information was not recast under the new standard and continues to be presented under ASC 840. The Company elected to utilize the package of practical expedients available for expired or existing contracts which allowed the Company to carryforward historical assessments of (a) whether contracts are or contain leases, (b) lease classification, and (c) initial direct costs. The Company elected to apply the short-term lease exception for all leases. Under the short-term lease exception, the Company will not recognize right-of-use assets or lease liabilities for leases that, at the acquisition date, have a remaining lease term of 12 months or less. As a result of implementing this guidance, the Company recognized a net operating right-of-use asset of $29.1 million and a $35.9 million operating lease liability in its condensed consolidated balance sheets as of February 1, 2020. The adoption of this guidance did not affect our condensed consolidated statements of operations or our condensed consolidated statements of cash flows. See Note 7, “Leases” for further information.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (“Topic 326”) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. The Company adopted the standard as of

the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (“Topic 820”) (“ASU 2018-13”), which modifies the disclosure requirements for fair value measurements for certain types of investments. We adopted this standard in the first quarter of fiscal year 2020. The adoption did not have an effect on our consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intends to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2022, although early adoption is permitted. The Company early adopted the standard as of the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued Accounting Standard Update No. 2020-06, Debt—Debt with Conversion Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity (“Subtopic 815-40”) (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. ASU 2020-06 also improves and amends the related Earnings Per Share guidance for both Subtopics. The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 will be effective for annual reporting periods beginning after December 15, 2021. Early adoption is permitted, but not before annual reporting periods beginning after December 15, 2020. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

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Cash, Cash Equivalents, and Investments

6 Months Ended

Jul. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Cash, Cash Equivalents, and Investments

Cash, Cash Equivalents, and InvestmentsCash, cash equivalents, and investments consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Cash and cash equivalents
Cash	$	282,342	$	2,131
Money market funds	91,296		118,899
U.S. Treasury securities	3,000		2,994
Total cash and cash equivalents	$	376,638	$	124,024
Available-for-sale investments:
U.S. Treasury securities	$	37,031	$	24,987
Commercial paper	22,011		20,132
Corporate debt securities	161,887		149,248
U.S. Government agency securities	—		4,973
Total available-for-sale investments	$	220,929	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	9,016
Commercial paper	—		5,985
Corporate debt securities	—		13,034
Total held-to-maturities investments	$	4,003	$	28,035
Total investments	$	224,932	$	227,375

The following tables summarize the Company’s investments’ adjusted cost, net unrealized gains, and fair value by significant investment category as of July 31, 2020 and January 31, 2020. Gross realized gains or losses from sales of available-for-sale securities were not material for the six months ended July 31, 2020.

	As of July 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	36,966	$	65	$	37,031
Commercial paper	22,008		3		22,011
Corporate debt securities	160,899		988		161,887
Total available-for-sale investments	$	219,873	$	1,056	$	220,929
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	—	$	4,003
Total held-to-maturities investments	$	4,003	$	—	$	4,003
Total investments	$	223,876	$	1,056	$	224,932

	As of January 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	24,978	$	9	$	24,987
Commercial paper	20,128		4		20,132
Corporate debt securities	149,124		124		149,248
U.S. Government agency securities	4,973		—		4,973
Total available-for-sale investments	$	199,203	$	137	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	9,016	$	—	$	9,016
Commercial paper	5,985		—		5,985
Corporate debt securities	13,034		—		13,034
Total held-to-maturities investments	$	28,035	$	—	$	28,035
Total investments	$	227,238	$	137	$	227,375

All of the Company’s held-to-maturity securities have a contractual maturity of less than one year. The following table presents the Company’s available-for-sale securities by contractual maturity date as of July 31, 2020 and January 31, 2020:

	As of July 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	179,103	$	179,726
Due between one to five years	40,770		41,203
Total	$	219,873	$	220,929

	As of January 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	128,127	$	128,169
Due between one to five years	71,076		71,171
Total	$	199,203	$	199,340

There were no securities in a continuous net loss position for 12 months or longer as of July 31, 2020. When evaluating investments for impairment, we review factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and our intent to sell, or whether it is more likely than not we will be required to sell, the investment before recovery of the investment’s amortized cost. No impairment loss has been recorded on the securities included in the tables above, as we believe that any decrease in fair value of these securities is temporary and we expect to recover at least up to the initial cost of the investment for these securities. We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each period.

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Fair Value Measurements

6 Months Ended

Jul. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value MeasurementsThe Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes 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, as follows:

Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2—Valuations based on inputs that are directly or indirectly observable in the marketplace.

Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.

The following table presents information about the Company’s financial assets that are required to be measured or disclosed at fair value using the above input categories:

	As of July 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	91,296	$	—	$	—	$	91,296
U.S. Treasury securities	3,000		41,034		—		44,034
Commercial paper	—		22,011		—		22,011
Corporate debt securities	—		161,887		—		161,887
Total	$	94,296	$	224,932	$	—	$	319,228
Included in cash equivalents							$	94,296
Included in investments							$	224,932

	As of January 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	118,899	$	—	$	—	$	118,899
U.S. Treasury securities	2,994		34,003		—		36,997
Commercial paper	—		26,117		—		26,117
Corporate debt securities	—		162,282		—		162,282
U.S. Government agency securities	—		4,973		—		4,973
Total	$	121,893	$	227,375	$	—	$	349,268
Included in cash equivalents							$	121,893
Included in investments							$	227,375

The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy.

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of July 31, 2020 and January 31, 2020, the Company’s Level 2 securities were priced by pricing vendors. These pricing vendors utilize observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities.

The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value table above.

Convertible Senior Notes

As of July 31, 2020, the estimated fair value of the Notes was approximately $301.0 million. The fair value was determined based on the quoted price for the Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.

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Property and Equipment, Net

6 Months Ended

Jul. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net, consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Leasehold improvements	$	12,445	$	12,257
Computers and equipment	5,838		4,431
Furniture and fixtures	3,159		2,540
Capitalized internal-use software	522		389
Gross property and equipment (1)	21,964		19,617
Accumulated depreciation and amortization	(9,159)		(7,248)
Property and equipment, net	$	12,805	$	12,369

⁽¹⁾ Gross property and equipment includes construction-in-progress for leasehold improvements and furniture and fixtures of $0.2 million and $5.1 million that had not yet been placed in service as of July 31, 2020 and January 31, 2020, respectively. The costs associated with construction-in-progress are not amortized until placed in service.

Depreciation and amortization expense was $1.0 million and $0.6 million for the three months ended July 31, 2020 and 2019, respectively, and $1.9 million and $1.0 million for the six months ended July 31, 2020 and 2019, respectively.

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Deferred Contract Costs

6 Months Ended

Jul. 31, 2020

Revenue from Contract with Customer [Abstract]

Deferred Contract Costs

Deferred Contract CostsDeferred contract costs, which primarily consist of deferred sales commissions, were $26.8 million and $25.7 million as of July 31, 2020 and January 31, 2020, respectively. Amortization expense for deferred contract costs was $2.6 million and $1.8 million for the three months ended July 31, 2020 and 2019, respectively, and $5.1 million and $3.4 million for the six months ended July 31, 2020 and 2019, respectively. There was no impairment charge related to the costs capitalized for the periods presented.Deferred Revenue and Performance Obligations

The following table presents the changes to the Company’s deferred revenue:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Deferred revenue, beginning of period	$	96,446	$	66,545	$	92,569	$	64,104
Billings	55,448		51,613		109,111		91,368
Revenue recognized	(50,714)		(40,361)		(100,500)		(77,675)
Deferred revenue, end of period	$	101,180	$	77,797	$	101,180	$	77,797

For the three and six months ended July 31, 2020 and 2019, the majority of revenue recognized was from the deferred revenue balances at the beginning of each quarter.

As of July 31, 2020 and January 31, 2020, future estimated revenue related to performance obligations for subscriptions with terms of more than one year that are unsatisfied or partially unsatisfied at the end of the reporting periods was approximately $81.4 million and $75.7 million, respectively. The Company expects to satisfy the substantial majority of these unsatisfied performance obligations over the next 24 months and the remainder thereafter. The Company applied the optional exemption for subscriptions with terms of less than a one year.

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Leases

6 Months Ended

Jul. 31, 2020

Leases [Abstract]

Leases

Leases

Operating Leases

The Company has entered into various non-cancellable operating leases for its office spaces with lease periods expiring between fiscal 2022 and fiscal 2029. The operating lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of

lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances.

Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on our condensed consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

The following tables present information about leases on our condensed consolidated balance sheet.

	As of July 31, 2020
	(in thousands)
Assets
Lease right-of-use assets	$	26,885
Liabilities
Lease liabilities	5,078
Lease liabilities, non-current	29,064

As of July 31, 2020, the weighted average remaining lease term was 6.1 years and the weighted average discount rate used to determine the net present value of the lease liabilities was 3.7%.

The following table presents information about leases on our condensed consolidated statement of operations.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Operating lease expense	$	1,445	$	2,887
Short-term lease expense	261		560
Variable lease expense	361		663

The following table presents supplemental cash flow information about our leases.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,149	$	2,287

As of July 31, 2020, remaining maturities of lease liabilities are as follows:

Year ending January 31,
	(in thousands)
2021	$	3,104
2022	6,296
2023	6,489
2024	6,670
2025	6,869
Thereafter	8,928
Gross lease payments	$	38,356
Less: Imputed interest	(4,214)
Total	$	34,142

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Debt and Financing Arrangements

6 Months Ended

Jul. 31, 2020

Debt Disclosure [Abstract]

Debt and Financing Arrangements

Debt and Financing Arrangements

Convertible Senior Notes

On June 25, 2020, the Company issued $287.5 million in aggregate principal amount of the Notes in a private offering pursuant to an Indenture dated June 25, 2020 (the “Indenture”). The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable by us, were $278.2 million.

The Notes are senior, unsecured obligations of the Company and will accrue interest payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021, at a rate of 1.25% per year. The Notes will mature on July 1, 2025, unless such notes are converted, redeemed or repurchased earlier. The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election in the manner and subject to the terms and conditions provided in the Indenture.

Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on April 1, 2025, only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ending on October 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s 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 on each applicable trading day;

•During the five business day period after any ten consecutive trading day period (the measurement period) in which the “trading price” (as defined in the Indenture) 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 the Company’s common stock and the conversion rate on each such trading day;

•If the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•Upon the occurrence of specified corporate events, as noted in the Indenture.

On or after April 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

The conversion rate will initially be 24.9507 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $40.08 per share of common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture, but will not be adjusted for accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a fundamental change, as defined in the Indenture.

The Company may not redeem the Notes prior to July 6, 2023. The Company may redeem for cash all or any portion of the Notes, at its option, on a redemption date occurring on or after July 6, 2023 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Notes 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 on, and including the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the entire principal of all the Notes plus accrued and unpaid interest to be immediately due and payable.

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated using a discount rate of 7.30%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the conversion option was $70.8 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification, and the equity component was recorded in additional paid-in-capital in the accompanying condensed consolidated balance sheet. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate of 7.88% over the contractual terms of the Notes. The interest rate was based on the interest rate of similar liabilities at the time of issuance that did not have associated convertible features. The debt component is classified as a long-term liability as of July 31, 2020.

In accounting for the issuance costs related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $7.0 million and will be amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were $2.3 million and were netted with the equity component in additional paid-in capital.

The net carrying amount of the liability component of the Notes was as follows:

	As of July 31, 2020
	(in thousands)
Principal	$	287,500
Less: unamortized debt discount	(69,623)
Less: unamortized issuance costs	(6,901)
Net carrying amount	$	210,976

The net carrying amount of the equity component of the Notes was as follows:

	As of July 31, 2020
	(in thousands)
Proceeds allocated to the conversion options (debt discount)	$	70,768
Less: issuance costs	(2,290)
Carrying amount of the equity component	$	68,478

Interest expense recognized related to the Notes is as follows:

	Three Months Ended July 31, 2020
	(in thousands)
Contractual interest expense	$	349
Amortization of debt discount	1,145
Amortization of debt issuance costs	114
Total interest expense related to the Notes	$	1,608

Capped Call Transactions

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution counterparties (the “Option Counterparties”). The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35.7 million incurred to purchase the Capped Calls were recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

The Capped Calls each have an initial strike price of approximately $40.08 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $61.66 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 7.2 million shares of our common stock. The Capped Calls are subject to automatic exercise over a 40 trading day period commencing on May 2, 2025, subject to earlier termination under certain circumstances.

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Commitments and Contingencies

6 Months Ended

Jul. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Matters

From time to time in the normal course of business, the Company may be subject to various claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise and accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. The Company is not currently a party to any legal proceedings and does not anticipate any pending or threatened litigation that would be expected to have a material adverse effect on its financial condition, results of operations, or cash flows.

Warranties and Indemnification

The Company has entered into service-level agreements with a portion of its customers defining levels of uptime reliability and performance and permitting those customers to receive credits if the Company fails to meet the defined levels of uptime. To date, the Company has not experienced any significant failures to meet defined levels of uptime reliability and performance as a result of those agreements and, as a result, the Company has not incurred or accrued any material liabilities related to these agreements in the financial statements.

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Deferred Revenue and Performance Obligations

6 Months Ended

Jul. 31, 2020

Revenue from Contract with Customer [Abstract]

Deferred Revenue and Performance Obligations

Deferred Contract CostsDeferred contract costs, which primarily consist of deferred sales commissions, were $26.8 million and $25.7 million as of July 31, 2020 and January 31, 2020, respectively. Amortization expense for deferred contract costs was $2.6 million and $1.8 million for the three months ended July 31, 2020 and 2019, respectively, and $5.1 million and $3.4 million for the six months ended July 31, 2020 and 2019, respectively. There was no impairment charge related to the costs capitalized for the periods presented.Deferred Revenue and Performance Obligations

The following table presents the changes to the Company’s deferred revenue:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Deferred revenue, beginning of period	$	96,446	$	66,545	$	92,569	$	64,104
Billings	55,448		51,613		109,111		91,368
Revenue recognized	(50,714)		(40,361)		(100,500)		(77,675)
Deferred revenue, end of period	$	101,180	$	77,797	$	101,180	$	77,797

For the three and six months ended July 31, 2020 and 2019, the majority of revenue recognized was from the deferred revenue balances at the beginning of each quarter.

As of July 31, 2020 and January 31, 2020, future estimated revenue related to performance obligations for subscriptions with terms of more than one year that are unsatisfied or partially unsatisfied at the end of the reporting periods was approximately $81.4 million and $75.7 million, respectively. The Company expects to satisfy the substantial majority of these unsatisfied performance obligations over the next 24 months and the remainder thereafter. The Company applied the optional exemption for subscriptions with terms of less than a one year.

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Common Stock and Stockholders' Equity

6 Months Ended

Jul. 31, 2020

Equity [Abstract]

Common Stock and Stockholders' Equity

Common Stock and Stockholders’ Equity

Redeemable Convertible Preferred Stock

Immediately prior to the completion of the IPO in April 2019, all shares of redeemable convertible preferred stock then outstanding were converted into 41,273,345 shares of common stock on a one-to-one basis and then immediately reclassified into common stock.

Equity Incentive Plans

The Company has two equity incentive plans: the 2010 Stock Plan (the “2010 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”, collectively the “Stock Plans”). Upon completion of the Company’s IPO in April 2019, the Company ceased granting awards under the 2010 Plan, and all shares that remained available for future issuance under the 2010 Plan at that time were transferred to the 2019 Plan. The 2019 Plan superseded and replaced the 2010 Plan. As of July 31, 2020 and January 31, 2020, respectively, the Company was authorized to grant up to 17,679,277 shares and 13,126,301 shares of common stock under the Stock Plans.

In March 2019, the Company granted 3,041,000 stock options to existing employees with 50 percent of these options vesting over four years from the grant date and 50 percent vesting over five years from the grant date.

The Company currently uses authorized and unissued shares to satisfy stock award exercises. As of July 31, 2020 and January 31, 2020, there were 13,660,976 shares and 11,841,156 shares available for future issuance under the Stock Plans, respectively.

Shares of common stock reserved for future issuance are as follows:

	July 31, 2020
Outstanding stock options and unvested RSUs outstanding	16,300,947
Available for future stock option and RSU grants	13,660,976
Available for ESPP	2,235,888
Total common stock reserved at July 31, 2020	32,197,811

Stock Option Activity

Stock option activity is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in thousands)
Outstanding at January 31, 2020	14,498,045	$	7.37	7.8 years	$	231,300
Granted	231,028	$	21.44
Exercised	(1,287,830)	$	4.43
Canceled	(663,393)	$	10.88
Outstanding at July 31, 2020	12,777,850	$	7.73	7.3 years	$	290,647
Vested as of July 31, 2020	7,675,279	$	4.76	6.7 years	$	197,386

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options on the date of grant. The Company accounts for forfeitures as they occur. The following assumptions were used to calculate the fair value of employee stock option grants made during the periods:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020	2019
Expected dividend yield	—		—		—	—
Expected volatility	43.9	%	42.0% - 42.1%		43.3% - 43.9%	42.0% - 42.8%
Expected term (years)	6.1		6.0 - 6.1		6.1	5.5 - 6.9
Risk-free interest rate	0.41	%	1.80	%	0.41% - 0.47%	1.80% - 2.48%

Stock options granted during the three months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $12.59 and $23.08 per share, respectively. The aggregate intrinsic value of stock options exercised during the three months ended July 31, 2020 and 2019 was $11.6 million and $10.5 million, respectively.

Stock options granted during the six months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $8.96 and $10.83 per share, respectively. The aggregate intrinsic value of stock options exercised during the six months ended July 31, 2020 and 2019 was $23.0 million and $30.5 million, respectively.

The intrinsic value for options exercised is the difference between the market value of the stock and the exercise price of the stock option at the date of exercise.

As of July 31, 2020 there was approximately $37.0 million of total unrecognized compensation cost related to unvested stock options granted under the Stock Plans, which will be recognized over a weighted average period of 2.9 years.

Restricted Stock Units

A summary of the Company’s RSU activity and related information is as follow:

	Number of RSUs	Weighted Average Grant Date Fair Value Per Share
Outstanding at January 31, 2020	1,114,911	$	28.10
Granted	2,682,462	$	17.76
Vested, net of shares withheld for employee payroll taxes	(93,942)	$	22.33
Canceled	(180,334)	$	21.60
Outstanding at July 31, 2020	3,523,097	$	20.69

The Company uses the fair value of RSUs based on the fair value of the underlying shares on the date of grant. The Company accounts for forfeitures as they occur.

As of July 31, 2020, there was $67.1 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 3.5 years based on vesting under the award service conditions.

Employee Stock Purchase Plan

In April 2019, the Board adopted and approved the 2019 Employee Stock Purchase Plan, which became effective on April 11, 2019. The ESPP initially reserved and authorized the issuance of up to a total of 1,850,000 shares of common stock to participating employees. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 777,916 shares on February 1, 2020. The ESPP generally provides for 24-month offering periods, with each offering period consisting of four six-month purchase periods, except for the initial offering period which began on April 11, 2019 and ended on December 13, 2019. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s stock as of the beginning of the offering period or (2) the fair market value of the Company’s stock on the purchase date, as defined in the ESPP.

During the three months ended July 31, 2020 and 2019, the Company recognized $1.2 million and $1.8 million of stock-based compensation expense related to the ESPP, respectively. During the six months ended July 31, 2020 and 2019, the Company recognized $2.8 million and $2.2 million of stock-based compensation expense related to the ESPP, respectively.

During the three months ended July 31, 2020 and 2019, the Company withheld $1.6 million and $2.6 million in contributions from employees, respectively. During the six months ended July 31, 2020 and 2019, the Company withheld $3.5 million and $2.6 million in contributions from employees, respectively.

During the three and six months ended July 31, 2020, 181,253 shares of common stock were issued under the ESPP at a purchase price of $19.63. During the three and six months ended July 31, 2019, there were no purchases related to the ESPP.

Stock-Based Compensation

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Cost of revenue	$	263	$	327	$	607	$	470
Research and development	2,469		1,437		4,652		2,297
Sales and marketing	2,870		2,326		5,155		3,790
General and administrative	4,366		3,143		7,862		5,488
Total	$	9,968	$	7,233	$	18,276	$	12,045

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Net Loss Per Share

6 Months Ended

Jul. 31, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss per Share

The following table presents the calculation of basic and diluted net loss per share:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands, except per share amounts)
Numerator:
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)
Denominator:
Weighted average shares used in calculating net loss per share, basic and diluted	78,775		75,433		78,278		54,327
Net loss per share, basic and diluted	$	(0.19)	$	(0.17)	$	(0.33)	$	(0.45)

Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

	As of July 31,
	2020	2019
	(in thousands)
Shares subject to outstanding common stock awards	16,298	16,278
Convertible senior notes	7,173	—
Unvested early exercised stock options	—	205
Restricted stock awards purchased with promissory notes	142	429
Shares issuable pursuant to the 2019 Employee Stock Purchase Plan	64	125
Total	23,677	17,037

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Income Taxes

6 Months Ended

Jul. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesThe Company's provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates

its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.

The Company's quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income (or loss) relates, changes in how the Company does business, and tax law developments. The Company's estimated effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in the U.S.

The Company recorded an income tax expense of $0.2 million for the three months ended July 31, 2020 and 2019, and $0.5 million for the six months ended July 31, 2020 and 2019.

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Geographic Information

6 Months Ended

Jul. 31, 2020

Segment Reporting [Abstract]

Geographic Information

Geographic Information

Revenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
United States	$	38,997	$	31,592	$	77,269	$	61,060
International	11,717		8,769		23,231		16,615
Total	$	50,714	$	40,361	$	100,500	$	77,675

Other than the United States, no other individual country accounted for 10% or more of revenue for the three and six months ended July 31, 2020 or 2019. As of July 31, 2020, 87% of the Company’s long-lived assets, including property and equipment and right-of-use lease assets, was located in the United States and 13% was located in Canada. As of January 31, 2020, 76% of the Company’s property and equipment was located in the United States, 23% was located in Canada, and 1% was located in the United Kingdom.

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Subsequent Events	6 Months Ended
	Jul. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company has evaluated subsequent events through September 3, 2020.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jul. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of January 31, 2020 was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with 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 audited consolidated financial statements and the related notes thereto as of and for the year ended January 31, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC.

The condensed consolidated financial statements include the results of PagerDuty, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and statements of stockholders’ equity. The results of operations for the three and six months ended July 31, 2020 are not necessarily indicative of the results to be expected for the full year ending January 31, 2021 or for any other interim period, or for any future year.

The Company’s fiscal year ends on January 31. References to fiscal 2021, for example, refer to the fiscal year ended January 31, 2021.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s most significant estimates and judgments involve the valuation of the Company’s stock-based awards, including the determination of fair value of common stock (prior to the closing of the IPO) and the fair value of the employee stock purchase plan (“ESPP”) expense, period of benefit for amortizing deferred contract costs, the determination of the allowance for doubtful accounts, the provision for income taxes, including the related valuation allowance and any uncertain tax positions, fair value of the liability and equity components of the Notes, and the incremental borrowing rate for lease liabilities, among others. 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.

Concentrations of Risk and Significant Customers

Concentrations of Risk and Significant Customers

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, held-to-maturity investments, available-for-sale investments, and accounts receivable. All of the Company’s cash and cash equivalents and investments are invested in money market funds, United States (“U.S.”) Treasury securities, commercial paper, corporate debt securities, or U.S. Government agency securities that management believes to be of high credit quality.

Segment Information

Segment Information The Company manages operations and allocates resources as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

Convertible Senior Notes

Convertible Senior NotesThe Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance is based upon historical loss patterns, the age of each past due invoice, and an evaluation of the potential risk of loss associated with delinquent accounts. The allowance also reflects current market conditions and reasonable and supportable forecasts of future economic conditions.

Recently Adopted/Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases, (“Topic 842”) (“ASU 2016-02”), which would require lessees to recognize most leases on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements in a manner similar to current practice. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The Company adopted the standard using the optional alternative method on a prospective basis with an effective date as of the beginning of the Company’s fiscal year, February 1, 2020, and applied it to the operating leases that existed on that date. Prior year comparative financial information was not recast under the new standard and continues to be presented under ASC 840. The Company elected to utilize the package of practical expedients available for expired or existing contracts which allowed the Company to carryforward historical assessments of (a) whether contracts are or contain leases, (b) lease classification, and (c) initial direct costs. The Company elected to apply the short-term lease exception for all leases. Under the short-term lease exception, the Company will not recognize right-of-use assets or lease liabilities for leases that, at the acquisition date, have a remaining lease term of 12 months or less. As a result of implementing this guidance, the Company recognized a net operating right-of-use asset of $29.1 million and a $35.9 million operating lease liability in its condensed consolidated balance sheets as of February 1, 2020. The adoption of this guidance did not affect our condensed consolidated statements of operations or our condensed consolidated statements of cash flows. See Note 7, “Leases” for further information.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (“Topic 326”) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. The Company adopted the standard as of

the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (“Topic 820”) (“ASU 2018-13”), which modifies the disclosure requirements for fair value measurements for certain types of investments. We adopted this standard in the first quarter of fiscal year 2020. The adoption did not have an effect on our consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intends to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in fiscal 2022, although early adoption is permitted. The Company early adopted the standard as of the beginning of the Company’s fiscal year, February 1, 2020. The adoption of this guidance did not have a material impact to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued Accounting Standard Update No. 2020-06, Debt—Debt with Conversion Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity (“Subtopic 815-40”) (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. ASU 2020-06 also improves and amends the related Earnings Per Share guidance for both Subtopics. The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 will be effective for annual reporting periods beginning after December 15, 2021. Early adoption is permitted, but not before annual reporting periods beginning after December 15, 2020. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes 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, as follows:

Level 1—Valuations based on observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2—Valuations based on inputs that are directly or indirectly observable in the marketplace.

Level 3—Valuations based on unobservable inputs that are supported by little or no market activity.

Operating Leases

Operating Leases

The Company has entered into various non-cancellable operating leases for its office spaces with lease periods expiring between fiscal 2022 and fiscal 2029. The operating lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of

lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances.

Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on our condensed consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

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Cash, Cash Equivalents, and Investments (Tables)

6 Months Ended

Jul. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Cash and Cash Equivalents

Cash, cash equivalents, and investments consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Cash and cash equivalents
Cash	$	282,342	$	2,131
Money market funds	91,296		118,899
U.S. Treasury securities	3,000		2,994
Total cash and cash equivalents	$	376,638	$	124,024
Available-for-sale investments:
U.S. Treasury securities	$	37,031	$	24,987
Commercial paper	22,011		20,132
Corporate debt securities	161,887		149,248
U.S. Government agency securities	—		4,973
Total available-for-sale investments	$	220,929	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	9,016
Commercial paper	—		5,985
Corporate debt securities	—		13,034
Total held-to-maturities investments	$	4,003	$	28,035
Total investments	$	224,932	$	227,375

Components of Available-for-sale Investments

Cash, cash equivalents, and investments consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Cash and cash equivalents
Cash	$	282,342	$	2,131
Money market funds	91,296		118,899
U.S. Treasury securities	3,000		2,994
Total cash and cash equivalents	$	376,638	$	124,024
Available-for-sale investments:
U.S. Treasury securities	$	37,031	$	24,987
Commercial paper	22,011		20,132
Corporate debt securities	161,887		149,248
U.S. Government agency securities	—		4,973
Total available-for-sale investments	$	220,929	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	9,016
Commercial paper	—		5,985
Corporate debt securities	—		13,034
Total held-to-maturities investments	$	4,003	$	28,035
Total investments	$	224,932	$	227,375

Components of Held-to-maturity Investments

Cash, cash equivalents, and investments consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Cash and cash equivalents
Cash	$	282,342	$	2,131
Money market funds	91,296		118,899
U.S. Treasury securities	3,000		2,994
Total cash and cash equivalents	$	376,638	$	124,024
Available-for-sale investments:
U.S. Treasury securities	$	37,031	$	24,987
Commercial paper	22,011		20,132
Corporate debt securities	161,887		149,248
U.S. Government agency securities	—		4,973
Total available-for-sale investments	$	220,929	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	9,016
Commercial paper	—		5,985
Corporate debt securities	—		13,034
Total held-to-maturities investments	$	4,003	$	28,035
Total investments	$	224,932	$	227,375

The following tables summarize the Company’s investments’ adjusted cost, net unrealized gains, and fair value by significant investment category as of July 31, 2020 and January 31, 2020. Gross realized gains or losses from sales of available-for-sale securities were not material for the six months ended July 31, 2020.

	As of July 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	36,966	$	65	$	37,031
Commercial paper	22,008		3		22,011
Corporate debt securities	160,899		988		161,887
Total available-for-sale investments	$	219,873	$	1,056	$	220,929
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	—	$	4,003
Total held-to-maturities investments	$	4,003	$	—	$	4,003
Total investments	$	223,876	$	1,056	$	224,932

	As of January 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	24,978	$	9	$	24,987
Commercial paper	20,128		4		20,132
Corporate debt securities	149,124		124		149,248
U.S. Government agency securities	4,973		—		4,973
Total available-for-sale investments	$	199,203	$	137	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	9,016	$	—	$	9,016
Commercial paper	5,985		—		5,985
Corporate debt securities	13,034		—		13,034
Total held-to-maturities investments	$	28,035	$	—	$	28,035
Total investments	$	227,238	$	137	$	227,375

Summary of Carrying Value of Available-for-sale Investments

The following tables summarize the Company’s investments’ adjusted cost, net unrealized gains, and fair value by significant investment category as of July 31, 2020 and January 31, 2020. Gross realized gains or losses from sales of available-for-sale securities were not material for the six months ended July 31, 2020.

	As of July 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	36,966	$	65	$	37,031
Commercial paper	22,008		3		22,011
Corporate debt securities	160,899		988		161,887
Total available-for-sale investments	$	219,873	$	1,056	$	220,929
Held-to-maturity investments:
U.S. Treasury securities	$	4,003	$	—	$	4,003
Total held-to-maturities investments	$	4,003	$	—	$	4,003
Total investments	$	223,876	$	1,056	$	224,932

	As of January 31, 2020
	Cost Basis		Unrealized Gain, Net		Recorded Basis
Available-for-sale investments:
U.S. Treasury securities	$	24,978	$	9	$	24,987
Commercial paper	20,128		4		20,132
Corporate debt securities	149,124		124		149,248
U.S. Government agency securities	4,973		—		4,973
Total available-for-sale investments	$	199,203	$	137	$	199,340
Held-to-maturity investments:
U.S. Treasury securities	$	9,016	$	—	$	9,016
Commercial paper	5,985		—		5,985
Corporate debt securities	13,034		—		13,034
Total held-to-maturities investments	$	28,035	$	—	$	28,035
Total investments	$	227,238	$	137	$	227,375

Summary of Contractual Maturities of Available-for-sale Securities

The following table presents the Company’s available-for-sale securities by contractual maturity date as of July 31, 2020 and January 31, 2020:

	As of July 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	179,103	$	179,726
Due between one to five years	40,770		41,203
Total	$	219,873	$	220,929

	As of January 31, 2020
	Cost Basis		Recorded Basis
Due within one year	$	128,127	$	128,169
Due between one to five years	71,076		71,171
Total	$	199,203	$	199,340

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Fair Value Measurements (Tables)

6 Months Ended

Jul. 31, 2020

Fair Value Disclosures [Abstract]

Summary of Information about Company's Financial Assets

The following table presents information about the Company’s financial assets that are required to be measured or disclosed at fair value using the above input categories:

	As of July 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	91,296	$	—	$	—	$	91,296
U.S. Treasury securities	3,000		41,034		—		44,034
Commercial paper	—		22,011		—		22,011
Corporate debt securities	—		161,887		—		161,887
Total	$	94,296	$	224,932	$	—	$	319,228
Included in cash equivalents							$	94,296
Included in investments							$	224,932

	As of January 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Money market funds	$	118,899	$	—	$	—	$	118,899
U.S. Treasury securities	2,994		34,003		—		36,997
Commercial paper	—		26,117		—		26,117
Corporate debt securities	—		162,282		—		162,282
U.S. Government agency securities	—		4,973		—		4,973
Total	$	121,893	$	227,375	$	—	$	349,268
Included in cash equivalents							$	121,893
Included in investments							$	227,375

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Property and Equipment, Net (Tables)

6 Months Ended

Jul. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net, consisted of the following:

	As of July 31, 2020		As of January 31, 2020
	(in thousands)
Leasehold improvements	$	12,445	$	12,257
Computers and equipment	5,838		4,431
Furniture and fixtures	3,159		2,540
Capitalized internal-use software	522		389
Gross property and equipment (1)	21,964		19,617
Accumulated depreciation and amortization	(9,159)		(7,248)
Property and equipment, net	$	12,805	$	12,369

⁽¹⁾ Gross property and equipment includes construction-in-progress for leasehold improvements and furniture and fixtures of $0.2 million and $5.1 million that had not yet been placed in service as of July 31, 2020 and January 31, 2020, respectively. The costs associated with construction-in-progress are not amortized until placed in service.

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Leases (Tables)

6 Months Ended

Jul. 31, 2020

Leases [Abstract]

Information About Lease on Condensed Consolidated Balance Sheet

The following tables present information about leases on our condensed consolidated balance sheet.

	As of July 31, 2020
	(in thousands)
Assets
Lease right-of-use assets	$	26,885
Liabilities
Lease liabilities	5,078
Lease liabilities, non-current	29,064

Information About Leases on Condensed Consolidated Statement of Operations and Supplemental Cash Flow Information

The following table presents information about leases on our condensed consolidated statement of operations.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Operating lease expense	$	1,445	$	2,887
Short-term lease expense	261		560
Variable lease expense	361		663

The following table presents supplemental cash flow information about our leases.

	Three Months Ended July 31, 2020		Six Months Ended July 31, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,149	$	2,287

Schedule of Remaining Maturities of Lease Liabilities

As of July 31, 2020, remaining maturities of lease liabilities are as follows:

Year ending January 31,
	(in thousands)
2021	$	3,104
2022	6,296
2023	6,489
2024	6,670
2025	6,869
Thereafter	8,928
Gross lease payments	$	38,356
Less: Imputed interest	(4,214)
Total	$	34,142

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Debt and Financing Arrangements (Tables)

6 Months Ended

Jul. 31, 2020

Debt Disclosure [Abstract]

Net Carrying Amount of Liability and Equity Components of Convertible Notes

The net carrying amount of the liability component of the Notes was as follows:

	As of July 31, 2020
	(in thousands)
Principal	$	287,500
Less: unamortized debt discount	(69,623)
Less: unamortized issuance costs	(6,901)
Net carrying amount	$	210,976

The net carrying amount of the equity component of the Notes was as follows:

	As of July 31, 2020
	(in thousands)
Proceeds allocated to the conversion options (debt discount)	$	70,768
Less: issuance costs	(2,290)
Carrying amount of the equity component	$	68,478

Interest expense recognized related to the Notes is as follows:

	Three Months Ended July 31, 2020
	(in thousands)
Contractual interest expense	$	349
Amortization of debt discount	1,145
Amortization of debt issuance costs	114
Total interest expense related to the Notes	$	1,608

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Deferred Revenue and Performance Obligations (Tables)

6 Months Ended

Jul. 31, 2020

Revenue from Contract with Customer [Abstract]

Summary of Deferred Revenue

The following table presents the changes to the Company’s deferred revenue:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Deferred revenue, beginning of period	$	96,446	$	66,545	$	92,569	$	64,104
Billings	55,448		51,613		109,111		91,368
Revenue recognized	(50,714)		(40,361)		(100,500)		(77,675)
Deferred revenue, end of period	$	101,180	$	77,797	$	101,180	$	77,797

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Common Stock and Stockholders' Equity (Tables)

6 Months Ended

Jul. 31, 2020

Equity [Abstract]

Summary of Shares of Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance are as follows:

	July 31, 2020
Outstanding stock options and unvested RSUs outstanding	16,300,947
Available for future stock option and RSU grants	13,660,976
Available for ESPP	2,235,888
Total common stock reserved at July 31, 2020	32,197,811

Schedule of Stock Option Activity

Stock option activity is as follows:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in thousands)
Outstanding at January 31, 2020	14,498,045	$	7.37	7.8 years	$	231,300
Granted	231,028	$	21.44
Exercised	(1,287,830)	$	4.43
Canceled	(663,393)	$	10.88
Outstanding at July 31, 2020	12,777,850	$	7.73	7.3 years	$	290,647
Vested as of July 31, 2020	7,675,279	$	4.76	6.7 years	$	197,386

Schedule of Assumptions Used to Calculate Fair Value of Employee Stock Option Grants Made

The following assumptions were used to calculate the fair value of employee stock option grants made during the periods:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020	2019
Expected dividend yield	—		—		—	—
Expected volatility	43.9	%	42.0% - 42.1%		43.3% - 43.9%	42.0% - 42.8%
Expected term (years)	6.1		6.0 - 6.1		6.1	5.5 - 6.9
Risk-free interest rate	0.41	%	1.80	%	0.41% - 0.47%	1.80% - 2.48%

Schedule of Restricted Stock Unit Activity

A summary of the Company’s RSU activity and related information is as follow:

	Number of RSUs	Weighted Average Grant Date Fair Value Per Share
Outstanding at January 31, 2020	1,114,911	$	28.10
Granted	2,682,462	$	17.76
Vested, net of shares withheld for employee payroll taxes	(93,942)	$	22.33
Canceled	(180,334)	$	21.60
Outstanding at July 31, 2020	3,523,097	$	20.69

Schedule of Stock-based Compensation Expense

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
Cost of revenue	$	263	$	327	$	607	$	470
Research and development	2,469		1,437		4,652		2,297
Sales and marketing	2,870		2,326		5,155		3,790
General and administrative	4,366		3,143		7,862		5,488
Total	$	9,968	$	7,233	$	18,276	$	12,045

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Net Loss Per Share (Tables)

6 Months Ended

Jul. 31, 2020

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands, except per share amounts)
Numerator:
Net loss	$	(14,688)	$	(12,570)	$	(26,147)	$	(24,634)
Denominator:
Weighted average shares used in calculating net loss per share, basic and diluted	78,775		75,433		78,278		54,327
Net loss per share, basic and diluted	$	(0.19)	$	(0.17)	$	(0.33)	$	(0.45)

Schedule of Anti-dilutive Securities That Were Not Included in Diluted Per Share Calculations

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

	As of July 31,
	2020	2019
	(in thousands)
Shares subject to outstanding common stock awards	16,298	16,278
Convertible senior notes	7,173	—
Unvested early exercised stock options	—	205
Restricted stock awards purchased with promissory notes	142	429
Shares issuable pursuant to the 2019 Employee Stock Purchase Plan	64	125
Total	23,677	17,037

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Geographic Information (Tables)

6 Months Ended

Jul. 31, 2020

Segment Reporting [Abstract]

Disaggregation of Revenue By Geographic Location

Revenue by location is determined by the billing address of the customer. The following table sets forth revenue by geographic area:

	Three Months Ended July 31,				Six Months Ended July 31,
	2020		2019		2020		2019
	(in thousands)
United States	$	38,997	$	31,592	$	77,269	$	61,060
International	11,717		8,769		23,231		16,615
Total	$	50,714	$	40,361	$	100,500	$	77,675

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Description of Business and Basis of Presentation (Details) - USD ($)			6 Months Ended
	Apr. 15, 2019	Apr. 14, 2019	Jul. 31, 2020	Jul. 31, 2019	Jun. 30, 2020	Jun. 25, 2020
Subsidiary, Sale of Stock [Line Items]
Payments of other offering costs			$ 0	$ 5,208,000
IPO
Subsidiary, Sale of Stock [Line Items]
Number of shares issued and sold (in shares)	9,860,500
Public offering price (in dollars per share)	$ 24.00
Proceeds from sale of stock	$ 213,700,000
Payments of underwriters' commissions and discounts	16,600,000
Payments of other offering costs	$ 6,400,000
Convertible Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt issued					$ 287,500,000	$ 287,500,000
Stated interest rate					1.25%	1.25%
Common stock
Subsidiary, Sale of Stock [Line Items]
Number of shares as a result of conversion (in shares)		41,273,345		41,273,345

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Summary of Significant Accounting Policies (Details) $ in Thousands	6 Months Ended
	Jul. 31, 2020 USD ($) segment	Feb. 01, 2020 USD ($)	Jan. 31, 2020 USD ($)
Accounting Policies [Abstract]
Number of operating segments | segment	1
Allowance for doubtful accounts	$ 1,700		$ 800
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201602Member
Net operating right-of-use asset	$ 26,885	$ 29,100
Operating lease liability	$ 34,142	$ 35,900

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Cash, Cash Equivalents, and Investments - Components of Cash and Cash Equivalents and Investments (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020	Jul. 31, 2019
Cash and cash equivalents
Cash	$ 282,342	$ 2,131
Money market funds	91,296	118,899
U.S. Treasury securities	3,000	2,994
Total cash and cash equivalents	376,638	124,024	$ 306,316
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale investments	220,929	199,340
Schedule of Held-to-maturity Securities [Line Items]
Total held-to-maturities investments	4,003	28,035
Total investments	224,932	227,375
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale investments	37,031	24,987
Schedule of Held-to-maturity Securities [Line Items]
Total held-to-maturities investments	4,003	9,016
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale investments	22,011	20,132
Schedule of Held-to-maturity Securities [Line Items]
Total held-to-maturities investments	0	5,985
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale investments	161,887	149,248
Schedule of Held-to-maturity Securities [Line Items]
Total held-to-maturities investments	0	13,034
U.S. Government agency securities
Debt Securities, Available-for-sale [Line Items]
Total available-for-sale investments	$ 0	$ 4,973

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Cash, Cash Equivalents, and Investments - Carrying Value of Investments (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Cost Basis	$ 219,873	$ 199,203
Unrealized Gain, Net	1,056	137
Recorded Basis	220,929	199,340
Schedule of Held-to-maturity Securities [Line Items]
Cost Basis	4,003	28,035
Unrealized Gain, Net	0	0
Recorded Basis	4,003	28,035
Total investments, Cost Basis	223,876	227,238
Total investments, Unrealized Gain (Loss), Net	1,056	137
Total investments	224,932	227,375
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Cost Basis	36,966	24,978
Unrealized Gain, Net	65	9
Recorded Basis	37,031	24,987
Schedule of Held-to-maturity Securities [Line Items]
Cost Basis	4,003	9,016
Unrealized Gain, Net	0	0
Recorded Basis	4,003	9,016
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Cost Basis	22,008	20,128
Unrealized Gain, Net	3	4
Recorded Basis	22,011	20,132
Schedule of Held-to-maturity Securities [Line Items]
Cost Basis		5,985
Unrealized Gain, Net		0
Recorded Basis		5,985
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Cost Basis	160,899	149,124
Unrealized Gain, Net	988	124
Recorded Basis	$ 161,887	149,248
Schedule of Held-to-maturity Securities [Line Items]
Cost Basis		13,034
Unrealized Gain, Net		0
Recorded Basis		13,034
U.S. Government agency securities
Debt Securities, Available-for-sale [Line Items]
Cost Basis		4,973
Unrealized Gain, Net		0
Recorded Basis		$ 4,973

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Cash, Cash Equivalents, and Investments - Contractual Maturity (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020
Cost Basis
Due within one year	$ 179,103	$ 128,127
Due between one to five years	40,770	71,076
Cost Basis	219,873	199,203
Recorded Basis
Due within one year	179,726	128,169
Due between one to five years	41,203	71,171
Recorded Basis	$ 220,929	$ 199,340

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Cash, Cash Equivalents, and Investments - Additional Information (Details)	6 Months Ended
	Jul. 31, 2020 USD ($) security
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Securities in a continuous net loss position for 12 months or longer | security	0
Impairment loss recorded | $	$ 0

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Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Jul. 31, 2020	Jan. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in cash equivalents	$ 94,296	$ 121,893
Included in investments	224,932	227,375
Total	319,228	349,268
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	94,296	121,893
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	224,932	227,375
Fair value of convertible senior notes	301,000
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	0	0
U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	44,034	36,997
U.S. Treasury securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	3,000	2,994
U.S. Treasury securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	41,034	34,003
U.S. Treasury securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	0	0
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	22,011	26,117
Commercial paper | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	0	0
Commercial paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	22,011	26,117
Commercial paper | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	0	0
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	161,887	162,282
Corporate debt securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	0	0
Corporate debt securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	161,887	162,282
Corporate debt securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments	0	0
U.S. Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments		4,973
U.S. Government agency securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments		0
U.S. Government agency securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments		4,973
U.S. Government agency securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in investments		0
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in cash equivalents	91,296	118,899
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in cash equivalents	91,296	118,899
Money market funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in cash equivalents	0	0
Money market funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Included in cash equivalents	$ 0	$ 0

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019	Jan. 31, 2020
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 21,964		$ 21,964		$ 19,617
Accumulated depreciation and amortization	(9,159)		(9,159)		(7,248)
Property and equipment, net	12,805		12,805		12,369
Depreciation and amortization	1,000	$ 600	1,900	$ 1,000
Leasehold improvements
Property, Plant and Equipment [Line Items]
Gross property and equipment	12,445		12,445		12,257
Computers and equipment
Property, Plant and Equipment [Line Items]
Gross property and equipment	5,838		5,838		4,431
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Gross property and equipment	3,159		3,159		2,540
Capitalized internal-use software
Property, Plant and Equipment [Line Items]
Gross property and equipment	522		522		389
Construction-in-progress
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 200		$ 200		$ 5,100

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Deferred Contract Costs (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019	Jan. 31, 2020
Revenue from Contract with Customer [Abstract]
Deferred contract costs	$ 26,800,000		$ 26,800,000		$ 25,700,000
Amortization of deferred contract costs	2,600,000	$ 1,800,000	5,064,000	$ 3,442,000
Impairment loss in relation to costs capitalized	$ 0	$ 0	$ 0	$ 0

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Leases - Information About Lease on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Feb. 01, 2020
Assets
Lease right-of-use assets	$ 26,885	$ 29,100
Liabilities
Lease liabilities	5,078
Lease liabilities, non-current	$ 29,064

XML

Leases - Additional Information (Details)	Jul. 31, 2020
Leases [Abstract]
Weighted average remaining lease term	6 years 1 month 6 days
Weighted average discount rate	3.70%

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Leases - Information About Leases on Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 31, 2020	Jul. 31, 2020
Leases [Abstract]
Operating lease expense	$ 1,445	$ 2,887
Short-term lease expense	261	560
Variable lease expense	$ 361	$ 663

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 31, 2020	Jul. 31, 2020
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 1,149	$ 2,287

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Leases - Schedule of Remaining Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Feb. 01, 2020
Leases [Abstract]
2021	$ 3,104
2022	6,296
2023	6,489
2024	6,670
2025	6,869
Thereafter	8,928
Gross lease payments	38,356
Less: Imputed interest	(4,214)
Total	$ 34,142	$ 35,900

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Debt and Financing Arrangements - Additional Information (Details) $ / shares in Units, shares in Millions		6 Months Ended
	Jun. 25, 2020 USD ($) day $ / shares shares	Jul. 31, 2020 USD ($)	Jul. 31, 2019 USD ($)	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Net proceeds from debt offering, after deducting initial purchaser discounts and debt issuance costs paid or payable | $	$ 278,200,000
Conversion rate	0.0249507
Initial conversion price (in dollars per share) | $ / shares	$ 40.08
Carrying amount of equity component representing conversion option | $	$ 70,800,000	$ 70,768,000
Issuance costs attributable to equity component | $		2,290,000
Net cost incurred to purchase Capped Calls | $	$ 35,700,000	35,708,000	$ 0
Capped Calls
Debt Instrument [Line Items]
Initial strike price (in dollars per share) | $ / shares	$ 40.08
Cap price (in dollars per share) | $ / shares	$ 61.66
Number of shares of common stock covered by Capped Calls (in shares) | shares	7.2
Automatic exercise period for Capped Calls, trading days	40
Debt Conversion Terms, One
Debt Instrument [Line Items]
Threshold trading days	20
Threshold consecutive trading days	30
Threshold percentage of stock price trigger	130.00%
Debt Conversion Terms, Two
Debt Instrument [Line Items]
Threshold trading days	5
Threshold consecutive trading days	10
Threshold percentage of product of last reported sales price of common stock and conversion rate on each such trading day	98.00%
On or after July 6, 2023
Debt Instrument [Line Items]
Threshold trading days	20
Threshold consecutive trading days	30
Threshold percentage of stock price trigger	130.00%
Convertible Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt issued | $	$ 287,500,000			$ 287,500,000
Stated interest rate	1.25%			1.25%
Event of default, option to accelerate amounts due, minimum percentage of aggregate principal amount of outstanding debt	25.00%
Effective interest rate	7.88%
Issuance costs attributable to liability component | $		$ 7,000,000.0
Convertible Senior Notes | Discount Rate
Debt Instrument [Line Items]
Liability component calculation, measurement input	0.0730
Convertible Senior Notes | On or after July 6, 2023
Debt Instrument [Line Items]
Redemption, threshold trading days immediately preceding maturity date	41
Redemption price, percentage of principal amount to be redeemed	100.00%
Convertible Senior Notes | Fundamental Change
Debt Instrument [Line Items]
Redemption price, percentage of principal amount to be redeemed	100.00%

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Debt and Financing Arrangements - Net Carrying Amount (Details) - USD ($) $ in Thousands	Jul. 31, 2020	Jun. 25, 2020
Equity Component:
Proceeds allocated to the conversion options (debt discount)	$ 70,768	$ 70,800
Less: issuance costs	(2,290)
Carrying amount of the equity component	68,478
Convertible Senior Notes
Liability Component:
Principal	287,500
Less: unamortized debt discount	(69,623)
Less: unamortized issuance costs	(6,901)
Net carrying amount	$ 210,976

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Debt and Financing Arrangements - Interest Expense (Details) - Convertible Senior Notes $ in Thousands	3 Months Ended
	Jul. 31, 2020 USD ($)
Debt Instrument [Line Items]
Contractual interest expense	$ 349
Amortization of debt discount	1,145
Amortization of debt issuance costs	114
Total interest expense related to the Notes	$ 1,608

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Deferred Revenue and Performance Obligations - Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Increase (Decrease) In Contract with Customer, Liability [Roll Forward]
Deferred revenue, beginning of period	$ 96,446	$ 66,545	$ 92,569	$ 64,104
Billings	55,448	51,613	109,111	91,368
Revenue recognized	(50,714)	(40,361)	(100,500)	(77,675)
Deferred revenue, end of period	$ 101,180	$ 77,797	$ 101,180	$ 77,797

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Deferred Revenue and Performance Obligations - Additional Information (Details) - USD ($) $ in Millions	Jul. 31, 2020	Jan. 31, 2020
Revenue from Contract with Customer [Abstract]
Future estimated revenue related to performance obligations	$ 81.4	$ 75.7

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Deferred Revenue and Performance Obligations - Performance Obligations (Details)	Jul. 31, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-08-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, period	24 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-08-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, period

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Common Stock and Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands				1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 01, 2020 shares	Apr. 14, 2019 shares	Apr. 11, 2019 purchase_period shares	Mar. 31, 2019 shares	Jul. 31, 2020 USD ($) $ / shares shares	Jul. 31, 2019 USD ($) $ / shares shares	Jul. 31, 2020 USD ($) equity_incentive_plan $ / shares shares	Jul. 31, 2019 USD ($) $ / shares shares	Jan. 31, 2020 shares
Subsidiary, Sale of Stock [Line Items]
Number of equity incentive plans | equity_incentive_plan							2
Number of shares authorized for grant (in shares)					17,679,277		17,679,277		13,126,301
Options granted (in shares)				3,041,000			231,028
Number of shares available for grant (in shares)					13,660,976		13,660,976		11,841,156
Weighted average grant date fair value of stock options (in dollars per share) | $ / shares					$ 12.59	$ 23.08	$ 8.96	$ 10.83
Aggregate intrinsic value of stock options exercised | $					$ 11,600	$ 10,500	$ 23,000	$ 30,500
Unrecognized compensation cost related to unvested stock options | $					37,000		37,000
Stock-based compensation expense | $					9,968	7,233	$ 18,276	12,045
Stock options
Subsidiary, Sale of Stock [Line Items]
Unrecognized compensation cost related to unvested awards, period for recognition							2 years 10 months 24 days
Stock options | 50% vest over four years from grant date
Subsidiary, Sale of Stock [Line Items]
Vesting percentage				50.00%
Vesting period				4 years
Stock options | 50% vest over five years from grant date
Subsidiary, Sale of Stock [Line Items]
Vesting percentage				50.00%
Vesting period				5 years
RSUs
Subsidiary, Sale of Stock [Line Items]
Unrecognized compensation cost related to unvested awards, period for recognition							3 years 6 months
Unrecognized compensation cost related to unvested RSUs | $					$ 67,100		$ 67,100
ESPP
Subsidiary, Sale of Stock [Line Items]
Number of shares authorized for grant (in shares)			1,850,000
Number of shares available for grant (in shares)					2,235,888		2,235,888
Increase in number of shares reserved under ESPP (in shares)	777,916
Offering period			24 months
Number of purchase periods within each offering period | purchase_period			4
Purchase period			6 months
Purchase price as a percentage of fair market value of stock on the offering date or the purchase date			85.00%
Stock-based compensation expense | $					$ 1,200	1,800	$ 2,800	2,200
Amount withheld on behalf of employees for future purchase | $					$ 1,600	$ 2,600	$ 3,500	$ 2,600
Shares purchased (in shares)					181,253	0	181,253	0
Purchase price (in dollars per share) | $ / shares					$ 19.63		$ 19.63
Common stock
Subsidiary, Sale of Stock [Line Items]
Number of shares as a result of conversion (in shares)		41,273,345						41,273,345
Conversion ratio		1

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Common Stock and Stockholders' Equity - Shares Available for Issuance (Details) - shares	Jul. 31, 2020	Jan. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)	13,660,976	11,841,156
Total common stock reserved at period end (in shares)	32,197,811
Stock options and RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding stock options and unvested RSUs outstanding (in shares)	16,300,947
Number of shares available for grant (in shares)	13,660,976
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)	2,235,888

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Common Stock and Stockholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2019	Jul. 31, 2020	Jan. 31, 2020
Number of Shares
Outstanding, beginning balance (in shares)		14,498,045
Granted (in shares)	3,041,000	231,028
Exercised (in shares)		(1,287,830)
Canceled (in shares)		(663,393)
Outstanding, ending balance (in shares)		12,777,850	14,498,045
Weighted Average Exercise Price
Outstanding, beginning balance (in dollars per share)		$ 7.37
Granted (in dollars per share)		21.44
Exercised (in dollars per share)		4.43
Canceled (in dollars per share)		10.88
Outstanding, ending balance (in dollars per share)		$ 7.73	$ 7.37
Weighted Average Remaining Contractual Term
Outstanding		7 years 3 months 18 days	7 years 9 months 18 days
Aggregate Intrinsic Value
Outstanding		$ 290,647	$ 231,300
Vested
Number of shares (in shares)		7,675,279
Weighted average exercise price (in dollars per share)		$ 4.76
Weighted average remaining contractual term		6 years 8 months 12 days
Aggregate intrinsic value		$ 197,386

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Common Stock and Stockholders' Equity - Assumptions Used to Calculate Fair Value of Employee Stock Option Grants Made (Details) - Employee - Stock options	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Expected volatility	43.90%
Expected volatility, minimum		42.00%	43.30%	42.00%
Expected volatility, maximum		42.10%	43.90%	42.80%
Expected term (years)	6 years 1 month 6 days		6 years 1 month 6 days
Risk-free interest rate	0.41%	1.80%
Risk-free interest rate, minimum			0.41%	1.80%
Risk-free interest rate, maximum			0.47%	2.48%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years)		6 years		5 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (years)		6 years 1 month 6 days		6 years 10 months 24 days

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Common Stock and Stockholders' Equity - Restricted Stock Units Activity (Details) - RSUs	6 Months Ended
	Jul. 31, 2020 $ / shares shares
Number of RSUs
Outstanding, beginning balance (in shares) | shares	1,114,911
Granted (in shares) | shares	2,682,462
Vested, net of shares withheld for employee payroll taxes (in shares) | shares	(93,942)
Canceled (in shares) | shares	(180,334)
Outstanding, ending balance (in shares) | shares	3,523,097
Weighted Average Grant Date Fair Value Per Share
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 28.10
Granted (in dollars per share) | $ / shares	17.76
Vested, net of shares withheld for employee payroll taxes (in dollars per share) | $ / shares	22.33
Canceled (in dollars per share) | $ / shares	21.60
Outstanding, ending balance (in dollars per share) | $ / shares	$ 20.69

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Common Stock and Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 9,968	$ 7,233	$ 18,276	$ 12,045
Cost of revenue
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	263	327	607	470
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	2,469	1,437	4,652	2,297
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	2,870	2,326	5,155	3,790
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 4,366	$ 3,143	$ 7,862	$ 5,488

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Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Numerator:
Net loss	$ (14,688)	$ (12,570)	$ (26,147)	$ (24,634)
Denominator:
Weighted average shares used in calculating net loss per share, basic and diluted (in shares)	78,775	75,433	78,278	54,327
Net loss per share, basic and diluted (in dollars per share)	$ (0.19)	$ (0.17)	$ (0.33)	$ (0.45)

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Net Loss Per Share - Anti-dilutive Securities (Details) - shares shares in Thousands	6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	23,677	17,037
Shares subject to outstanding common stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	16,298	16,278
Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	7,173	0
Unvested early exercised stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	0	205
Restricted stock awards purchased with promissory notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	142	429
Shares issuable pursuant to the 2019 Employee Stock Purchase Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	64	125

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Income Tax Disclosure [Abstract]
Income tax expense	$ 248	$ 236	$ 479	$ 481

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Geographic Information - Revenue by Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2020	Jul. 31, 2019	Jul. 31, 2020	Jul. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 50,714	$ 40,361	$ 100,500	$ 77,675
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	38,997	31,592	77,269	61,060
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 11,717	$ 8,769	$ 23,231	$ 16,615

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Geographic Information - Additional Information (Details) - Long-Lived Assets - Geographic Concentration Risk	6 Months Ended	12 Months Ended
	Jul. 31, 2020	Jan. 31, 2020
United States
Concentration Risk [Line Items]
Concentration risk, percentage	87.00%	76.00%
Canada
Concentration Risk [Line Items]
Concentration risk, percentage	13.00%	23.00%
United Kingdom
Concentration Risk [Line Items]
Concentration risk, percentage		1.00%

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Label	Element	Value
Restricted Cash	us-gaap_RestrictedCash	$ 0
Restricted Cash	us-gaap_RestrictedCash	$ 53,000