Related Party Transactions

12 Months Ended

Apr. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Shareholder Loan

In January 2018, the Company issued 1,251,921 shares of Series F Preferred Stock in exchange for a non-recourse promissory note to Thomas M. Siebel, the Company’s CEO, in the amount of $24.5 million. The promissory note has a term of five years with the ability to renew for up to four successive one-year periods and bears interest at a rate of 2.18% per annum, compounded annually. In September 2020, Mr. Siebel paid the outstanding promissory note in full including accrued interest in the total amount of $26.0 million. Refer to Note 10. Stock-Based Compensation for more information.

Secondary Transactions

In October 2019, two secondary transactions occurred for total proceeds of $50.0 million each. The CEO sold 1,685,979 shares of Series D preferred and 193,489 shares of Series E preferred, each at a price of $26.6034 per share, to an existing stockholder. Additionally, the CEO sold 584,795 shares of Series C* preferred, 825,012 shares of Series D preferred, and 673,526 shares of redeemable convertible Class A-1 common stock at a price of $24.0000 per share to an existing stockholder. Stock-based compensation expense was not recognized in connection with these secondary transactions as the purchase price was equal to fair value in respect of the redemption and liquidation features of the shares sold at the time of sale.

In October 2019, the Company also completed a tender offer to repurchase Class A common stock and vested stock options from employees, including officers, at a price of $30.2310 per share. Refer to Note 9. Stockholders’ Equity for more information.

Revenue Transactions with Baker Hughes Company

In June 2019, the Company entered into multiple agreements with Baker Hughes Company (“Baker Hughes”) under which Baker Hughes received a three-year subscription to use the Company’s software. These agreements were revised in June 2020 to extend the term to five years and modify the subscription fees due. Under the revised agreements, Baker Hughes has made minimum, non-cancelable revenue commitments, which are inclusive of their direct subscription fees and third party revenue generated through a joint marketing arrangement with Baker Hughes, in the amount of $46.7 million in fiscal year 2020, $53.3 million in fiscal year 2021, $75.0 million in fiscal year 2022, $125.0 million in fiscal year 2023, and $150.0 million in fiscal year 2024. During the fiscal year ended April 30, 2021, the Company recognized total revenue of $55.9 million related to this arrangement. For future periods, any shortfalls against the total annual revenue commitment made to the Company by Baker Hughes will be assessed and recorded.

Under the joint marketing arrangement, the Company is obligated to pay Baker Hughes a sales commission on subscriptions and services offerings it resells in excess of these minimum revenue commitments. The Company recognized $8.3 million of sales commission as deferred costs during the fiscal year ended April 30, 2021 related to this arrangement, which will be amortized over an expected period of five years. As of April 30, 2021, the current portion of deferred costs of $1.7 million was included in prepaid expenses and other current assets and the non-current portion of $6.6 million was included in other assets, non-current. The Company amortized an immaterial amount of deferred commissions during the fiscal year ended April 30, 2021, and this amount was included in sales and marketing expense in the consolidated statements of operations.

The sales commissions of $8.3 million is payable to Baker Hughes over the term of three-years based on the agreement. As of April 30, 2021, accrued and other current liabilities included $3.4 million and other long-term liabilities included $4.9 million. The Company did not incur any sales commission related to this arrangement during the fiscal years ended April 30, 2020 and 2019.

The Company recognized subscription revenue from direct subscription fees from Baker Hughes of $30.6 million, $40.4 million and $0.1 million during the fiscal years ended April 30, 2021, 2020 and 2019, respectively and recognized professional services revenue from Baker Hughes of $4.8 million, $0.3 million and nil for the fiscal years ended April 30, 2021, 2020, and 2019, respectively. As of April 30, 2021 and 2020, accounts receivable, net included $15.2 million and $0.3 million and deferred revenue, current included $7.7 million and 1.5 million, respectively.

The Company recognized cost of subscription revenue from Baker Hughes, of $0.1 million, nil and nil for the fiscal years ended April 30, 2021, 2020 and 2019, respectively. As of April 30, 2021 and 2020, accounts payable included $0.1 million and nil, respectively.