Related Party Transactions

12 Months Ended

Apr. 30, 2022

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.

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-cancellable 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 the fiscal year ending April 30, 2021, $75.0 million in the fiscal year ending April 30, 2022, $125.0 million in the fiscal year ending April 30, 2023, and $150.0 million in the fiscal year ending April 30, 2024. The Company also agreed to pay Baker Hughes a sales commission on subscriptions and services offerings it resold in excess of these minimum revenue commitments.

The Company and Baker Hughes further revised these agreements in October 2021 to extend the term by an additional year, for a total of six years, with an expiration date in the fiscal year ending April 30, 2025, to modify the amount of Baker Hughes’ annual commitments to $85.0 million in fiscal year 2023, $110.0 million in fiscal year 2024, and $125.0 million in fiscal year 2025, and to revise the structure of the arrangement to further incentivize Baker Hughes’ sales of the Company’s products and services.

A portion of the transaction price in the Company’s arrangement with Baker Hughes is variable. Beginning in the fiscal year ending April 30, 2023, Baker Hughes’ annual commitments will be reduced by any revenue the Company generates from certain customers. Known and estimable revenue from certain customers related to the arrangement is a form of variable consideration, which was determined at contract inception and reduces the revenues recognized from the arrangement. At the end of each reporting period, the Company reviews and updates the estimate as additional information becomes available.

Pursuant to the revised arrangement, the Company acknowledged that Baker Hughes had met its minimum annual revenue commitment for the fiscal year ending April 30, 2022 and recognized $16.0 million of sales commission as deferred costs during the fiscal quarter ended October 31, 2021 related to this arrangement, which will be amortized over an expected period of five years.

Revenues recognized under the arrangement were as follows (in thousands):


	Fiscal Year Ended April 30,
	2022		2021		2020
Direct subscription	$	60,425	$	30,557	$	40,425
Direct professional services	16,872		4,825		292
Total revenue from direct subscription and professional services	77,297		35,382		40,717
Total revenue from certain customers in Oil and Gas field related to the Baker Hughes arrangement	27,732		20,491		5,929
Total revenue related to the arrangement	$	105,029	$	55,873	$	46,646

As of April 30, 2022 and 2021, balances related to Baker Hughes that are reported within accounts receivable, net (inclusive of unbilled receivables of $16.5 million and $2.8 million, respectively) included $35.8 million and $15.2 million, respectively and deferred revenue, current included $0.1 million and $7.7 million, respectively.

The Company recognized cost of subscription revenue related to services purchased from Baker Hughes of $0.6 million, $0.1 million and nil for the fiscal years ended April 30, 2022, 2021 and 2020, respectively. The Company recognized sales and marketing expenses related to Baker Hughes of $8.2 million, less than $0.1 million and nil for the fiscal years ended April 30, 2022, 2021 and 2020, respectively. As of April 30, 2022 and 2021, accounts payable related to Baker Hughes included $18.5 million and $0.1 million, respectively.

The remaining performance obligations related to Baker Hughes, which includes both direct subscriptions and reseller arrangements, is comprised of (in thousands):


	As of April 30,
	2022		2021
Deferred revenue	$	2,337	$	8,487
Commitments from non-cancellable contracts	212,934		95,542
Total remaining performance obligations	$	215,271	$	104,029

As of April 30, 2022 and 2021, the current portion of deferred costs of $4.9 million and $1.7 million, respectively, were included in prepaid expenses and other current assets and the non-current portion of $16.1 million and $6.6 million, respectively, were included in other assets, non-current. The Company amortized $3.3 million, nil and nil, respectively, of deferred commissions during the fiscal year ended April 30, 2022, 2021 and 2020, respectively, and these amounts were included in sales and marketing expense in the consolidated statements of operations.

The Company recognized $16.0 million and $8.3 million of sales commission as deferred costs during the fiscal year ended April 30, 2022 and 2021, respectively, related to this arrangement. The sales commissions of $8.3 million recognized in the fiscal year ended April 30, 2021 is payable to Baker Hughes over the term of three years based on the agreements, of which the Company paid $3.4 million during the fiscal year ended April 30, 2022. The sales commissions of $16.0 million recognized in the fiscal year ended April 30, 2022 will be amortized over an expected period of five years and payable to Baker Hughes by April 30, 2022. The sales commission of $16.0 million will be paid in the first quarter of fiscal year 2023.

As of April 30, 2022 and 2021, accrued and other current liabilities related to Baker Hughes included $2.5 million and $3.4 million, respectively, and other long-term liabilities included $2.4 million and $4.9 million, respectively.