0001614178-22-000057.txt : 20221202 0001614178-22-000057.hdr.sgml : 20221202 20221202160421 ACCESSION NUMBER: 0001614178-22-000057 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 76 CONFORMED PERIOD OF REPORT: 20221031 FILED AS OF DATE: 20221202 DATE AS OF CHANGE: 20221202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Yext, Inc. CENTRAL INDEX KEY: 0001614178 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 208059722 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38056 FILM NUMBER: 221441923 BUSINESS ADDRESS: STREET 1: 61 NINTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 1-888-444-2988 MAIL ADDRESS: STREET 1: 61 NINTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 10-Q 1 yext-20221031.htm 10-Q yext-20221031
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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 EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2022
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: 001-38056
YEXT, INC.
(Exact name of registrant as specified in its charter)
yext-20221031_g1.jpg
Delaware
20-8059722
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
61 Ninth Avenue
New York, NY 10011
(Address of principal executive offices, including zip code)
(212) 994-3900
(Registrant's telephone number, including area code)
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, par value $0.001 per share
YEXT
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      No  
Indicate by check mark whether the registrant has submitted electronically 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 such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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
Accelerated filer
Non-accelerated filer
 ☐
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 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes    No  
As of November 23, 2022, the registrant had 122,098,247 shares of common stock, $0.001 par value per share outstanding.



TABLE OF CONTENTS
PAGE




SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains, and our officers and representatives may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “plan,” “intend,” “could,” “would,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
our future revenue, cost of revenue, operating expenses and cash flows;
anticipated trends, growth rates and challenges in our business and in the markets in which we operate;
the effect of the coronavirus (“COVID-19”) pandemic and its variants, including the effect of governmental restrictions and regulations as well as precautionary measures undertaken by businesses, on our business, operations, and financial results and the business and operations of our customers and potential customers;
our beliefs, objectives and strategies for future operations, including plans to invest in international expansion, research and development, and our sales and marketing teams, and the impact of such investments on our operations;
changes in management and anticipated effects thereof;
our ability to increase sales of our products;
maintaining and expanding our end-customer base and our relationships with our Knowledge Network; and
sufficiency of cash to meet cash needs for at least the next 12 months.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. 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 impact 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 forward-looking events and trends discussed in this Quarterly Report on 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 upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, whether written or oral, except as required by law.
In this Quarterly Report on Form 10-Q, the words “we,” “us,” “our” and “Yext” refer to Yext, Inc. and its wholly owned subsidiaries, unless the context requires otherwise.

4


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
YEXT, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
October 31, 2022January 31, 2022
Assets
Current assets:
Cash and cash equivalents
$162,268 $261,210 
Accounts receivable, net of allowances of $995 and $2,042, respectively
68,027 101,607 
Prepaid expenses and other current assets
14,887 13,538 
Costs to obtain revenue contracts, current
30,368 33,998 
Total current assets
275,550 410,353 
Property and equipment, net
65,308 74,604 
Operating lease right-of-use assets
86,617 97,124 
Costs to obtain revenue contracts, non-current
20,619 27,286 
Goodwill
4,235 4,572 
Intangible assets, net
199 217 
Other long term assets
3,578 6,179 
Total assets
$456,106 $620,335 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities
$48,252 $48,432 
Unearned revenue, current
153,267 223,427 
Operating lease liabilities, current
17,847 18,845 
Total current liabilities
219,366 290,704 
Operating lease liabilities, non-current
102,613 113,776 
Other long term liabilities
4,276 3,985 
Total liabilities
326,255 408,465 
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 50,000,000 shares authorized at October 31, 2022 and January 31, 2022; zero shares issued and outstanding at October 31, 2022 and January 31, 2022
  
Common stock, $0.001 par value per share; 500,000,000 shares authorized at October 31, 2022 and January 31, 2022; 141,658,521 and 137,662,320 shares issued at October 31, 2022 and January 31, 2022, respectively; 122,747,392 and 131,156,986 shares outstanding at October 31, 2022 and January 31, 2022, respectively
141 137 
Additional paid-in capital
886,185 834,429 
Accumulated other comprehensive loss
(6,751)(187)
Accumulated deficit
(668,744)(610,604)
Treasury stock, at cost
(80,980)(11,905)
Total stockholders’ equity
129,851 211,870 
Total liabilities and stockholders’ equity
$456,106 $620,335 
See the accompanying notes to the condensed consolidated financial statements.
5


YEXT, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
(Unaudited)

Three months ended October 31,Nine months ended October 31,
2022202120222021
Revenue
$99,280 $99,529 $298,951 $289,645 
Cost of revenue
25,663 25,255 77,473 73,724 
Gross profit
73,617 74,274 221,478 215,921 
Operating expenses:
Sales and marketing
49,360 58,548 164,244 172,292 
Research and development
17,649 17,986 53,770 50,343 
General and administrative
18,740 22,094 60,619 61,284 
Total operating expenses
85,749 98,628 278,633 283,919 
Loss from operations
(12,132)(24,354)(57,155)(67,998)
Interest income
587 5 797 15 
Interest expense
(211)(113)(483)(403)
Other (expense) income, net
(156)(191)111 (1,018)
Loss from operations before income taxes
(11,912)(24,653)(56,730)(69,404)
(Provision for) benefit from income taxes
(398)(273)(1,410)(745)
Net loss
$(12,310)$(24,926)$(58,140)$(70,149)
Net loss per share attributable to common stockholders, basic and diluted
$(0.10)$(0.19)$(0.46)$(0.55)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
123,500,961 128,570,237 126,239,773 126,967,336 
Other comprehensive loss:
Foreign currency translation adjustment
$(1,127)$(1,586)$(6,548)$(1,239)
Unrealized loss on marketable securities, net
(16) (16) 
Total comprehensive loss
$(13,453)$(26,512)$(64,704)$(71,388)
See the accompanying notes to the condensed consolidated financial statements.



6


YEXT, INC.
Condensed Consolidated Statements of Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
SharesAmountCapitalIncome (Loss)DeficitStockEquity
Balance, January 31, 2021
123,989 $130 $733,933 $2,422 $(517,345)$(11,905)$207,235 
Exercise of stock options2,220 2 19,195 — — — 19,197 
Vested restricted stock units converted to common shares4,402 4 (4)— — —  
Issuance of restricted stock15 — — — — —  
Issuance of common stock under employee stock purchase plan531 1 6,484 — — — 6,485 
Stock-based compensation— — 74,821 — — — 74,821 
Other comprehensive loss— — — (2,609)— — (2,609)
Net loss— — — — (93,259)— (93,259)
Balance, January 31, 2022
131,157 137 834,429 (187)(610,604)(11,905)211,870 
Exercise of stock options208 — 526 — — — 526 
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes2,992 3 (1,960)— — — (1,957)
Issuance of common stock under employee stock purchase plan796 1 3,814 — — — 3,815 
Stock-based compensation— — 49,376 — — — 49,376 
Repurchase of common stock(12,406)— — — — (69,075)(69,075)
Other comprehensive loss— — — (6,564)— — (6,564)
Net loss— — — — (58,140)— (58,140)
Balance, October 31, 2022
122,747 $141 $886,185 $(6,751)$(668,744)$(80,980)$129,851 
See the accompanying notes to the condensed consolidated financial statements.

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YEXT, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine months ended October 31,
20222021
Operating activities:
Net loss
$(58,140)$(70,149)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense
13,098 12,490 
Bad debt expense
381 826 
Stock-based compensation expense
48,990 54,455 
Amortization of operating lease right-of-use assets
6,684 6,934 
Other, net1,180 506 
Changes in operating assets and liabilities:
Accounts receivable
30,296 34,317 
Prepaid expenses and other current assets
(1,747)965 
Costs to obtain revenue contracts
8,173 (8,654)
Other long term assets
1,232 43 
Accounts payable, accrued expenses and other current liabilities
3,910 3,841 
Unearned revenue
(64,786)(39,423)
Operating lease liabilities
(8,158)(4,041)
Other long term liabilities
795 615 
Net cash used in operating activities
(18,092)(7,275)
Investing activities:
Capital expenditures
(5,400)(12,333)
Net cash used in investing activities
(5,400)(12,333)
Financing activities:
Proceeds from exercise of stock options
561 15,869 
Repurchase of common stock(68,695) 
Payments for taxes related to net share settlement of stock-based compensation awards(1,846) 
Payments of deferred financing costs
(284)(263)
Proceeds, net from employee stock purchase plan withholdings
1,947 4,059 
Net cash (used in) provided by financing activities
(68,317)19,665 
Effect of exchange rate changes on cash and cash equivalents
(7,133)(942)
Net decrease in cash and cash equivalents
(98,942)(885)
Cash and cash equivalents at beginning of period
261,210 230,411 
Cash and cash equivalents at end of period
$162,268 $229,526 
See the accompanying notes to the condensed consolidated financial statements.
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YEXT, INC.
Notes to Condensed Consolidated Financial Statements

1. Organization and Description of Business
Description of Business
Yext, Inc. ("Yext" or the "Company") organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. The Yext platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. The platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across approximately 200 service and application providers, which the Company refers to as its Knowledge Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. The Yext platform powers all of the Company's key features, including Listings, Pages, and Answers, along with its other features and capabilities.
Fiscal Year
The Company's fiscal year ends on January 31st. References to fiscal 2023, for example, are to the fiscal year ending January 31, 2023.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. 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 consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 18, 2022 (the "Form 10-K"). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of January 31, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis.
In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three and nine months ended October 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending January 31, 2023, or any other period.
There have been no material changes to the Company's significant accounting policies as described in the Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of those financial statements and the reported amounts of revenue and expense during the reporting period. These estimates include, but are not limited to, the standalone selling prices of performance obligations, the incremental borrowing rate associated with lease liabilities, the useful life of capitalized costs to obtain revenue contracts, income taxes, and the valuation and assumptions underlying stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.
Segment Information
The Company is the provider of the Yext platform and operates as one operating segment. An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM"). The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance. The Company's business operates as one operating segment as all of the Company's offerings operate on the Yext platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis. Since the Company operates as one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.
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Concentration of Credit Risk
Certain financial instruments that could be exposed to a concentration of credit risk include cash and cash equivalents and accounts receivable. The Company deposits its cash with financial institutions, and such deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents to date. Collateral is not required for accounts receivable. At October 31, 2022 and January 31, 2022, no single customer accounted for more than 10% of the Company's accounts receivable. No single customer accounted for more than 10% of the Company's revenue for the three and nine months ended October 31, 2022 and 2021, respectively.
Marketable Securities
The Company's investments in marketable securities may consist of debt securities, including U.S. treasury securities, corporate bonds, and commercial paper. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. The Company considers all of its investments in marketable securities, irrespective of the maturity date, as available for use in current operations, and therefore classifies these securities within current assets on the condensed consolidated balance sheets. All marketable securities are carried at estimated fair value. Credit losses related to marketable securities are recorded, net in the condensed consolidated statements of operations and comprehensive loss through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. As of October 31, 2022 and January 31, 2022, no credit losses related to marketable securities were recorded by the Company. Any remaining unrealized gains or losses for marketable securities are included in accumulated other comprehensive income (loss), as a component of stockholders’ equity.
Recent Accounting Pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts, provided such contracts had been appropriately accounted for under ASC 606 by the acquiree, rather than recognizing them at their estimated fair value on the acquisition date as required under the existing guidance. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 on a prospective basis, with early adoption permitted. This standard is effective for the Company in fiscal year 2024. We do not expect the adoption of this standard to have a significant impact on its consolidated financial statements.
3. Revenue
Performance Obligations
The Company has identified that it has two distinct performance obligations: subscription and associated support to the Yext platform and professional services. The Company's revenue is predominantly related to its subscription and associated support to the Yext platform. Professional services revenue accounted for approximately 9% and 8% of the Company's total revenue for the nine months ended October 31, 2022 and 2021, respectively.
Geographic Region
The Company disaggregates its revenue from contracts with customers by geographic region, as it believes this best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors. Revenue by geographic region is determined based on the region of the Company's contracting entity, which may be different than the region of its customers. The following table presents the Company's revenue by geographic region:
Three months ended October 31,Nine months ended October 31,
(in thousands)2022202120222021
North America$80,826 $79,083 $240,617 $229,782 
International18,454 20,446 58,334 59,863 
Total revenue$99,280 $99,529 $298,951 $289,645 
North America revenue is attributable to the United States. International revenue is predominantly attributable to European countries, but also includes Japan.
The Company's revenue attributable to the United States represented 80% of total revenue, revenue attributable to England, which serves as the Company's main contracting entity for Europe, represented 18% of total revenue, and no other individual country represented more than 10% of total revenue for the nine months ended October 31, 2022.
The Company's revenue attributable to the United States represented 79% of total revenue, revenue attributable to England, which serves as the Company's main contracting entity for Europe, represented 19% of total revenue, and no other individual country represented more than 10% of total revenue for the nine months ended October 31, 2021.
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Contract Liabilities
A contract liability is an obligation to transfer goods or services for which consideration has been received or is due to a customer. The Company's contract liabilities consist primarily of unearned revenue and, to a lesser extent, customer deposits.
As of October 31, 2022, unearned revenue, current was $153.3 million, while unearned revenue, non-current, which is included within other long term liabilities on the Company's condensed consolidated balance sheet, was $0.1 million. Revenue recognized of $195.5 million during the nine months ended October 31, 2022 was included in unearned revenue at the beginning of the period.
Customer deposits represent payments received in advance in instances where a revenue contract is cancelable in nature, and therefore the Company does not have an unconditional obligation to transfer control to a customer. As of October 31, 2022 and January 31, 2022, customer deposits of $0.6 million and $0.2 million were included in accounts payable, accrued expenses and other current liabilities on the Company's condensed consolidated balance sheet, respectively.
Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents amounts under non-cancelable contracts expected to be recognized as revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, and contract terms. As of October 31, 2022, the Company had $365.4 million of remaining performance obligations, of which $312.8 million is expected to be recognized as revenue over the next twenty-four months, with the remaining balance expected to be recognized thereafter. As of January 31, 2022, the Company had $404.9 million of remaining performance obligations.
4. Investments in Marketable Securities
The following tables summarize the Company's investments in marketable securities:
October 31, 2022
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Money market funds$83,339 $ $ $83,339 
U.S. treasury securities24,495  (16)24,479 
Total marketable securities$107,834 $ $(16)$107,818 
January 31, 2022
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Money market funds$138,470 $ $ $138,470 
U.S. treasury securities    
Total marketable securities$138,470 $ $ $138,470 

As of October 31, 2022 and January 31, 2022, the Company's marketable securities have a maturity of 90 days or less and are classified as cash and cash equivalents. During the three and nine months ended October 31, 2022 and 2021, the Company had no material reclassification adjustments from accumulated other comprehensive loss to net loss.
The Company classifies interest income on investments in marketable securities, amortization of premiums and discounts, and realized gains and losses on securities available for sale within interest income in the condensed consolidated statements of operations and comprehensive loss.
The Company regularly reviews its debt securities and monitors the surrounding economic conditions to assess the risk of expected credit losses. As of October 31, 2022 and January 31, 2022, the unrealized losses and the related risk of expected credit losses were not significant.
5. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive (loss) income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions, and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
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Level 1 inputs are based on quoted prices in active markets for identical assets or liabilities. 
Level 2 inputs are based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. 
Level 3 inputs are based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.

The Company's assets measured at fair value on a recurring basis, by level, within the fair value hierarchy are as follows:
October 31, 2022
(in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents:
Money market funds$83,339 $ $ $83,339 
U.S. treasury securities (1)
 24,479  24,479 
Included in cash and cash equivalents$83,339 $24,479 $ $107,818 
January 31, 2022
(in thousands)Level 1Level 2Level 3Total
Cash equivalents:
Money market funds $138,470 $ $ $138,470 
U.S. treasury securities (1)
    
Included in cash and cash equivalents$138,470 $ $ $138,470 
(1) The Company's U.S. treasury securities purchased with an original maturity of less than three months from the purchase date are classified as cash and cash equivalents on its condensed consolidated balance sheet.
The Company’s cash equivalents and marketable securities for the periods presented were valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs and were classified as Level 1 or Level 2, accordingly.
6. Goodwill
As of October 31, 2022 and January 31, 2022, the Company had goodwill of $4.2 million and $4.6 million, respectively. The changes to goodwill during these periods relate to foreign currency.
Goodwill is not amortized but is subject to periodic testing for impairment at the reporting unit level, which is at or one level below the operating segment level. The Company operates as one operating segment, which represents its one reporting unit. The test for impairment is conducted annually each November 1st, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
The Company determined that no events occurred or circumstances changed that would more likely than not reduce the fair value of the Company's reporting unit below its carrying amount during the nine months ended October 31, 2022 and 2021. However, if certain events occur or circumstances change, it may be necessary to record impairment charges in the future.
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7. Property and Equipment, Net
Property and equipment are recorded at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. Property and equipment, net consisted of the following:
(in thousands)October 31, 2022January 31, 2022
Computer software$20,335 $18,814 
Office equipment21,155 18,854 
Furniture and fixtures8,368 8,163 
Leasehold improvements 62,662 62,784 
Construction in progress35 936 
Software in progress1,075 1,342 
Total property and equipment, gross113,630 110,893 
Less: accumulated depreciation(48,322)(36,289)
Total property and equipment, net$65,308 $74,604 
As of October 31, 2022 and January 31, 2022, the Company's property and equipment, net attributable to the United States was 89% and 90%, respectively. No other individual country represented more than 10% of the total property and equipment, net as of those periods. Depreciation expense was $4.4 million and $13.1 million for the three and nine months ended October 31, 2022, respectively and $4.4 million and $12.0 million for the three and nine months ended October 31, 2021, respectively.
8. Accounts Payable, Accrued Expenses and Other Current Liabilities
        Accounts payable, accrued expenses and other current liabilities consisted of the following:
(in thousands)October 31, 2022January 31, 2022
Accounts payable$4,758 $9,218 
Accrued employee compensation21,450 17,589 
Accrued Knowledge Network application provider fees3,152 2,885 
Accrued professional services and associated costs2,107 2,663 
Accrued employee stock purchase plan withholdings liability530 2,397 
Other current liabilities16,255 13,680 
Total accounts payable, accrued expenses and other current liabilities$48,252 $48,432 
As of October 31, 2022 and January 31, 2022, capital expenditures of $0.2 million and $0.9 million were included in accounts payable, accrued expenses and other current liabilities, respectively.
9. Stock-Based Compensation
2008 Equity Incentive Plan
        The Company's 2008 Equity Incentive Plan (the "2008 Plan"), as amended on March 10, 2016, allowed for the issuance of up to 25,912,531 shares of common stock. Awards granted under the 2008 Plan may be incentive stock options ("ISOs"), nonqualified stock options ("NQSOs"), restricted stock and restricted stock units. The 2008 Plan is administered by the Company's Board of Directors, which determines the terms of the options granted, the exercise price, the number of shares subject to option and the option vesting period. No ISO or NQSO is exercisable after 10 years from the date of grant, and option awards will typically vest over a four-year period.
        The 2008 Plan was terminated in connection with the adoption of the Company's 2016 Equity Incentive Plan (the "2016 Plan") in December 2016, and since the 2008 Plan termination the Company has not granted and will not grant any additional awards under the 2008 Plan. However, the 2008 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.
2016 Equity Incentive Plan
        In December 2016, the Company's Board of Directors adopted, and its stockholders approved, the 2016 Plan. The number of shares reserved for issuance under the 2016 Plan will increase on the first day of each fiscal year during the term of the 2016 Plan by the lesser of: (i) 10,000,000 shares, (ii) 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company's Board of Directors may determine. On February 1, 2022, the number of shares of common stock available for issuance under the 2016 Plan was automatically increased according to its terms by 5,246,279 shares. In addition, the shares reserved for issuance under the 2016 Plan also include shares returned to the 2008 Plan as the result of
13


expiration or termination of options or other awards. As of October 31, 2022, the number of shares available for future award under the 2016 Plan is 3,898,183.
Stock Options
       The following table summarizes the activity related to the Company's stock options:
Outstanding Stock OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands)
Balance, January 31, 2022
6,620,701 $7.28 4.32$11,723 
Granted $ 
Exercised(207,623)$2.57 
Forfeited or canceled(1,722,245)$10.16 
Balance, October 31, 2022
4,690,833 $6.43 3.35$1,708 
Vested and expected to vest4,690,833 $6.43 3.35$1,708 
Exercisable at October 31, 2022
4,690,833 $6.43 3.35$1,708 
The aggregate intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of October 31, 2022. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange.
The aggregate intrinsic value of exercised options was $0.7 million and $11.6 million for the nine months ended October 31, 2022 and 2021, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.
Restricted Stock and Restricted Stock Units
        The following table summarizes the activity related to the Company's restricted stock and restricted stock units:
OutstandingWeighted-Average Grant Date Fair Value
Balance as of January 31, 2022
10,184,214 $14.38 
Granted 7,955,218 $6.33 
Vested and converted to shares(3,398,302)$14.00 
Forfeited or canceled(3,073,625)$12.86 
Balance as of October 31, 2022
11,667,505 $8.84 
The estimated weighted-average grant date fair value of restricted stock and restricted stock units granted was $6.33 and $13.22 per share for the nine months ended October 31, 2022 and 2021, respectively. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange.
Employee Stock Purchase Plan
In March 2017, the Company's Board of Directors adopted, and its stockholders approved, the 2017 Employee Stock Purchase Plan ("ESPP"), which became effective on the date it was adopted. The number of shares of the Company's common stock that will be available for sale to employees under the ESPP increases annually on the first day of each fiscal year in an amount equal to the lesser of: (i) 2,500,000 shares; (ii) 1% of the outstanding shares of the Company's common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the administrator may determine. On February 1, 2022, the number of shares of common stock available for issuance under the ESPP was automatically increased according to its terms by 1,311,569 shares. As of October 31, 2022, a total of 4,058,651 shares of the Company's common stock are available for sale to employees under the ESPP.
In connection with the offering period which ended on March 15, 2022, 457,595 shares of common stock were purchased under the ESPP at a purchase price of $5.14 per share for total proceeds of $2.4 million. In connection with the offering period which ended on September 15, 2022, 339,019 shares of common stock were purchased under the ESPP at a purchase price of $4.31 per share for total proceeds of $1.5 million.
A new offering period began on September 15, 2022 and will end on March 15, 2023. As of October 31, 2022, 478,607 shares are estimated to be purchased at the end of the offering period and $0.5 million has been withheld on behalf of employees for these future purchases under the ESPP and is included in accounts payable, accrued expenses and other current liabilities.
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The Black-Scholes option pricing model assumptions used to calculate the fair value of shares, estimated at commencement, to be purchased during an ESPP offering period were as follows:
Three months ended October 31,Nine months ended October 31,
2022202120222021
Expected life (years)0.500.500.500.50
Expected volatility63.52%45.54%
48.87% - 63.52%
45.54% - 59.24%
Dividend yield
Risk-free rate3.78%0.05%
0.86% - 3.78%
0.05% - 0.06%
The expected life assumptions were based on each offering period's respective purchase date. The Company estimated the expected volatility assumption based on the historical volatility of its stock price. The risk-free rate assumptions were based on the U.S. treasury yield curve in effect at commencement of the offering period. The dividend yield assumption was zero as the Company has not historically paid any dividends and does not expect to declare or pay any dividends in the foreseeable future.
During the three and nine months ended October 31, 2022, the Company recorded stock-based compensation expense associated with the ESPP of $0.3 million and $1.0 million, respectively and $0.5 million and $1.6 million for the three and nine months ended October 31, 2021, respectively. As of October 31, 2022, total unrecognized compensation cost related to ESPP was $0.6 million, net of estimated forfeitures, which will be amortized over a weighted-average remaining period of 0.37 years.
A new offering period commences on the first trading day on or after March 15th and September 15th each year, or on such other date as the administrator will determine, and will end on the first trading day, approximately six months later, on or after September 15th and March 15th, respectively. Participants may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Unless changed by the administrator, the purchase price for each share of common stock purchased under the ESPP will be 85% of the lower of the fair market value per share on the first trading day of the applicable offering period or the fair market value per share on the last trading day of the applicable offering period.
Performance-based Restricted Stock Units
In March 2022, the Company made a grant to an executive in the form of 2,000,000 performance-based restricted stock units. This grant was outside of the Company’s 2016 Equity Incentive Plan. These performance-based restricted stock units are subject to the achievement of certain stock price targets. The Company uses a Monte Carlo simulation model to determine the fair value of this award and recognizes expense using the accelerated attribution method over the requisite service period.
Stock-Based Compensation Expense
        Stock-based compensation represents the cost related to stock-based awards granted in lieu of monetary payment. The Company measures stock-based compensation associated with stock-based awards issued to employees at the grant date, based on the estimated fair value of the award, and recognizes expense, net of estimated forfeitures, over the vesting period of the applicable award generally using the straight-line method.
The Company's stock-based compensation expense for the periods presented was as follows:
Three months ended October 31,Nine months ended October 31,
(in thousands)2022202120222021
Cost of revenue$1,176 $1,840 $3,899 $5,597 
Sales and marketing5,432 6,757 17,957 19,635 
Research and development3,946 5,469 12,668 15,285 
General and administrative4,268 5,389 14,466 13,938 
Total stock-based compensation expense$14,822 $19,455 $48,990 $54,455 
During the three and nine months ended October 31, 2022, the Company capitalized $0.1 million and $0.4 million, respectively of stock-based compensation related to software development, and $0.2 million and $1.2 million for the three and nine months ended October 31, 2021, respectively.

As of October 31, 2022, there was approximately $98.5 million of total unrecognized compensation cost related to unvested stock-based awards, which are expected to be recognized over an estimated remaining weighted-average vesting period of approximately 2.67 years.



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10. Equity
The following table summarizes the changes in stockholders' equity during the nine months ended October 31, 2022:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapital(Loss)DeficitStockEquity
Balance, January 31, 2022
131,157 $137 $834,429 $(187)$(610,604)$(11,905)$211,870 
Exercise of stock options123 — 302 — — — 302 
Vested restricted stock units converted to common shares1,165 1 (1)— — —  
Issuance of common stock under employee stock purchase plan457 1 2,353 — — — 2,354 
Stock-based compensation— — 18,201 — — — 18,201 
Repurchase of common stock(4,838)— — — — (30,554)(30,554)
Other comprehensive loss— — — (3,414)— — (3,414)
Net loss— — — — (25,839)— (25,839)
Balance, April 30, 2022
128,064 $139 $855,284 $(3,601)$(636,443)$(42,459)$172,920 
Exercise of stock options74 — 191 — — — 191 
Vested restricted stock units converted to common shares1,081 1 (1)— — —  
Stock-based compensation— — 16,226 — — — 16,226 
Repurchase of common stock(5,386)— — — — (28,393)(28,393)
Other comprehensive loss— — — (2,007)— — (2,007)
Net loss— — — — (19,991)— (19,991)
Balance, July 31, 2022
123,833 140 871,700 (5,608)(656,434)(70,852)138,946 
Exercise of stock options11 — 33 — — — 33 
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes (1)
746 1 (1,958)— — — (1,957)
Issuance of common stock under employee stock purchase plans339 — 1,461 — — — 1,461 
Stock-based compensation— — 14,949 — — — 14,949 
Repurchase of common stock(2,182)— — — — (10,128)(10,128)
Other comprehensive loss— — — (1,143)— — (1,143)
Net loss— — — — (12,310)— (12,310)
Balance, October 31, 2022
122,747 $141 $886,185 $(6,751)$(668,744)$(80,980)$129,851 
(1) During the three months ended October 31, 2022, vested awards were settled net, of employee taxes, where common shares issued and outstanding reflect the net amount of awards provided to employees. Historically, a sell to cover methodology was used.
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The following table summarizes the changes in stockholders' equity during the nine months ended October 31, 2021:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapitalIncomeDeficitStockEquity
Balance, January 31, 2021
123,989 $130 $733,933 $2,422 $(517,345)$(11,905)$207,235 
Exercise of stock options1,069 1 12,110 — — — 12,111 
Vested restricted stock units converted to common shares871 1 (1)— — —  
Issuance of restricted stock4 — — — — —  
Issuance of common stock under employee stock purchase plan282 — 3,817 — — — 3,817 
Stock-based compensation— — 15,288 — — — 15,288 
Other comprehensive income— — — 355 — — 355 
Net loss— — — — (17,631)— (17,631)
Balance, April 30, 2021
126,215 132 765,147 2,777 (534,976)(11,905)221,175 
Exercise of stock options402 1 2,273 — — — $2,274 
Vested restricted stock units converted to common shares1,172 1 (1)— — — $ 
Issuance of restricted stock11 — — — — — $ 
Stock-based compensation— — 20,730 — — — $20,730 
Other comprehensive loss— — — (8)— — $(