Related Party Transactions

9 Months Ended

Jan. 31, 2023

Revenue Transactions with Baker Hughes Company

In June 2019, the Company entered into multiple agreements with Baker Hughes under which Baker Hughes received a three-year subscription to use the Company’s software. This arrangement was revised in June 2020 to extend the term to five years and modify the subscription fees due. Under the agreements as revised in June 2020, Baker Hughes made minimum, non-cancellable revenue commitments, 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. 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 revised this arrangement 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 incentivize Baker Hughes’ sales of the Company’s products and services. Beginning in the fiscal year ending April 30, 2023, Baker Hughes’ annual commitments are 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 reduced the revenue recognized from the arrangement. The Company acknowledged that Baker Hughes had met its minimum annual revenue commitment for the fiscal year 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.

The Company and Baker Hughes further revised and further expanded this arrangement in January 2023. Pursuant to this revised arrangement, the frequency of payments due from Baker Hughes is accelerated, Baker Hughes obtained expanded reseller rights and the Company will provide additional products and services. This results in an increase of the transaction price by eliminating potential variable consideration attributable to any revenue the Company generated from certain customers. The Company also provides Baker Hughes the option to extend the subscription term upon payment of a renewal fee.

Under this revised arrangement, the amount of consideration may increase if Baker Hughes exceeds certain thresholds and as a result, the Company estimated variable consideration subject to the constraint guidance at the date of revised arrangement utilizing both historical information and current trends. At the end of each reporting period, the Company will review and update the estimate as additional relevant information becomes available.

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


	Three Months Ended January 31,				Nine Months Ended January 31,
	2023		2022		2023		2022
Direct subscription	$	20,316	$	19,744	$	55,884	$	39,964
Direct professional services	8,599		4,891		8,749		12,889
Total revenue from direct subscription and professional services	28,915		24,635		64,633		52,853
Total revenue from certain customers in Oil and Gas field related to the Baker Hughes arrangement	6,869		9,592		22,138		18,076
Total revenue related to the arrangement	$	35,784	$	34,227	$	86,771	$	70,929

As of January 31, 2023 and April 30, 2022, balances related to Baker Hughes that are reported within accounts receivable, net (inclusive of unbilled receivables of $79.6 million and $16.5 million, respectively) included $82.1 million and $35.8 million, respectively, and deferred revenue, current included $0.3 million and $0.1 million, respectively.

The Company recognized cost of subscription revenue related to services purchased from Baker Hughes of nil and $0.2 million during the three months ended January 31, 2023 and 2022, respectively, and nil and $0.4 million during the nine months ended January 31, 2023 and 2022, respectively. The Company recognized sales and marketing expenses related to Baker Hughes of $3.5 million and $2.4 million during the three months ended January 31, 2023 and 2022, respectively, and $10.5 million and $2.6 million during the nine months ended January 31, 2023 and 2022, respectively. As of January 31, 2023 and April 30, 2022, accounts payable included nil and $18.5 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 January 31,
	2023		2022
Deferred revenue	$	318	$	2,320
Commitments from non-cancellable contracts	188,455		234,945
Total remaining performance obligations	$	188,773	$	237,265

As of January 31, 2023 and April 30, 2022, the current portion of deferred costs of $5.0 million and $4.9 million, respectively, were included in prepaid expenses and other current assets, and the non-current portion of $12.5 million and $16.1 million, respectively, were included in other assets, non-current. The Company amortized $1.2 million and $1.2 million of deferred commissions during the three months ended January 31, 2023 and 2022, respectively, and $3.6 million and $2.0 million of deferred commissions during the nine months ended January 31, 2023 and 2022, respectively. These amounts were included in sales and marketing expense in the condensed consolidated statements of operations. The Company paid sales commission of $16.0 million and $3.4 million during the nine months ended January 31, 2023 and 2022, respectively, related to this arrangement.

As of January 31, 2023 and April 30, 2022, accrued and other current liabilities included $2.4 million and $2.5 million, respectively, and other long-term liabilities included nil and $2.4 million, respectively.