Commitment and Contingencies

9 Months Ended

Oct. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

The Company leases its facilities for office space under non-cancelable operating leases with various expiration dates through fiscal 2033. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments.

In addition, the Company subleases certain of its unoccupied facilities to third parties with various expiration dates through fiscal 2030. Such subleases have all been classified as operating leases. Sublease income is recorded as a reduction to the Company’s operating lease costs.

Sublease income was $3.2 million and $2.3 million for the three months ended October 31, 2020 and 2019, respectively, and $9.6 million and $2.8 million for the nine months ended October 31, 2020 and 2019, respectively.

Other Contractual Commitments

Other contractual commitments relate mainly to third-party cloud infrastructure agreements and subscription arrangements used to facilitate the Company’s operations at the enterprise level. 

In August 2020, the Company amended one of its third-party cloud infrastructure agreements and committed to spend at least $550.0 million between September 2020 and December 2025 on cloud infrastructure services with no minimum purchase commitment during any year. The Company is required to pay the difference if it fails to meet the minimum purchase commitment as of December 2025, and such payment can be applied to qualifying spending on cloud infrastructure services for up to twelve months after December 2025. If such agreement had not been amended, the remaining non-cancellable commitments as of January 31, 2020 would have been $50.7 million.

In July 2020, the Company amended one of its third-party cloud infrastructure agreements and committed to spend $1.2 billion between August 2020 and July 2025 on cloud infrastructure services ($115.0 million between August 2020 and July 2021, $185.0 million between August 2021 and July 2022, $250.0 million between August 2022 and July 2023, $300.0 million between August 2023 and July 2024, and $350.0 million between August 2024 and July 2025). The Company is required to pay the difference if it fails to meet the minimum purchase commitment during any year. If such agreement had not been amended, the remaining non-cancellable commitments as of January 31, 2020 would have been $118.8 million ($1.8 million between February 2020 and January 2021, $58.5 million between February 2021 and January 2022, and $58.5 million between February 2022 and January 2023).

401(k) Plan—The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. The Company did not make any matching contributions to the 401(k) plan for each of the three and nine months ended October 31, 2020 and 2019.

Legal Matters—The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings will have a material adverse effect on its financial position, results of operations, or cash flows for each of the three and nine months ended October 31, 2020 and 2019.

Letters of Credit—As of October 31, 2020, the Company had a total of $15.0 million in cash collateralized letters of credit outstanding, substantially in favor of certain landlords for the Company’s leased facilities. For letters of credit outstanding as of October 31, 2020, these letters of credit renew annually and expire at various dates through fiscal 2033.

Indemnification—The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers, and the Company’s officers, directors, and certain employees. The Company has agreed to indemnify and defend the indemnified party for claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claims due to the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. For the three and nine months ended October 31, 2020 and 2019, losses recorded in the condensed consolidated statements of operations in connection with the indemnification provisions were not material.