Commitments and Contingencies

3 Months Ended

Apr. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Non-cancelable Purchase Obligations

As of April 30, 2020, we had additional outstanding non-cancelable purchase obligations with a term of 12 months or longer of $18.0 million, related to third-party cloud hosting to meet the significant increase in usage of our services.

Operating Leases Not Yet Commenced

As of April 30, 2020, we had additional operating leases for office space that have not yet commenced with undiscounted future lease payments of $8.9 million. These operating leases will commence in the fourth quarter of fiscal year 2021.

License Agreement

In May 2020, we entered into a license agreement with MPEG LA, LLC (“MPEGLA”) to obtain the rights for future use of licensed intellectual property in exchange for periodic royalty payments. In connection with the license agreement, we agreed to make a royalty payment of $9.8 million to use the technology until December 31, 2020. In addition, we also agreed to make a one-time payment of $9.8 million for past use, which was recorded in general and administrative expenses in our condensed consolidated statements of operations for the three months ended April 30, 2020.

Legal Proceedings

Beginning on March 30, 2020, multiple putative class actions were filed against us in various U.S. federal district courts and in one state court relating to our alleged privacy and security practices, including alleged data sharing with third parties (the “U.S. Privacy Class Actions”). The plaintiffs claim violations of a variety of state consumer protection and privacy laws, and also assert state constitutional and common law claims, such as negligence and unjust enrichment. They seek to certify both nationwide and state-specific classes of individuals using our services in certain time periods. The plaintiffs seek various forms of injunctive and monetary relief, including restitution, statutory and actual damages, and attorneys’ fees. The federal cases have been transferred to the Northern District of California and have nearly completed the process of being related there for consolidated litigation, with our consent.

On April 7, 2020 and April 8, 2020, securities class action complaints were filed against us and two of our officers in the United States District Court for the Northern District of California. The plaintiffs are purported stockholders of the company.

The complaints allege, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 by making false and misleading statements and omissions of material fact about our data privacy and security measures. The complaints seek unspecified damages, interest, fees, and costs.

We believe these lawsuits are without merit, and we are vigorously defending ourselves against them. Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from these actions.