Redeemable Convertible Preferred Stock

12 Months Ended

Jan. 31, 2021

Redeemable convertible preferred stock was carried at its issuance price, net of issuance costs.

During the fiscal year ended January 31, 2021, the Company issued 8,480,857 shares of Series G-1 redeemable convertible preferred stock and 3,868,970 shares of Series G-2 redeemable convertible preferred stock. During the fiscal year ended January 31, 2020, the Company issued 850,118 shares of Series F redeemable convertible preferred stock in February 2019. In August 2019, the Company's Chief Financial Officer purchased 762,112 shares of the Company's Series F redeemable convertible preferred stock at a price per share of $14.96125 for an aggregate purchase price of $11.4 million under the terms of his employment offer letter. During the fiscal year ended January 31, 2019, the Company issued 134,018 shares of Series E redeemable convertible preferred stock in September 2018 and 29,227,556 shares of Series F redeemable convertible preferred stock in October 2018.

Upon completion of the IPO in September 2020, all shares of the Company’s redeemable convertible preferred stock outstanding, totaling 182,271,099, were automatically converted into an equivalent number of shares of Class B common stock on a one-to-one basis and their carrying value of $1.4 billion was reclassified into stockholders’ equity. As of January 31, 2021, there were no shares of redeemable convertible preferred stock issued and outstanding.

As of January 31, 2020, redeemable convertible preferred stock consisted of the following (in thousands, except share and per share data):


	Shares Authorized	Shares Issued and Outstanding	Issuance Price Per Share		Carrying Amount		Liquidation Preference

Seed	4,410,736	4,410,736	$	0.1719	$	758	$	758
Series A	14,240,500	14,240,500	0.3476		4,916		4,950
Series B	20,608,098	20,608,098	0.96805		19,900		19,950
Series C	34,393,170	34,393,170	2.29215		78,741		78,834
Series D	29,981,998	29,981,998	3.5021		104,920		105,000
Series E	35,446,984	35,446,984	7.4617		264,391		264,495
Series F	30,839,786	30,839,786	14.96125		462,848		461,402
	169,921,272	169,921,272			$	936,474	$	935,389

Significant rights and preferences of the above redeemable convertible preferred stock prior to its conversion into Class B common stock were as follows:

Conversion—Each share of redeemable convertible preferred stock was convertible, at the option of the holder, into such number of shares of Class B common stock as was determined by dividing the original issuance price for a share by the conversion price at the time in effect for such share. Each share of Series Seed, A, B, C, D, E, F, G-1, and G-2 redeemable convertible preferred stock would convert into Class B common stock on a one-for-one basis. Each share of redeemable convertible preferred stock would automatically convert into the number of shares of common stock into which such shares were convertible at the then-effective conversion ratio upon (i) election by majority of the outstanding shares of redeemable convertible preferred stock voting together as a single class on an as-if-converted basis, provided that, the automatic conversion of Series G-1 and Series G-2 redeemable convertible preferred stock required the vote or written consent of a majority of the outstanding shares of Series G-1 and Series G-2 redeemable convertible preferred stock voting together as a single class on an as-if-converted basis, except if such conversion was in connection with the consummation of a bona fide equity financing for capital raising purposes wherein the price per share of the equity securities offered in such financing was less than the Series G-1 redeemable convertible preferred stock’s original issue price of $38.77 per share and all existing redeemable convertible preferred stock were converted into a single series of capital stock of the Company; (ii) the closing of a firmly underwritten public offering of Class A common stock with gross proceeds of at least $300.0 million (a Qualifying IPO); or (iii) the settlement of the initial trade of shares of Class A common stock on the New York Stock Exchange, Nasdaq Global Select Market, or Nasdaq Global Market (a Direct Listing).

Voting—The holders of redeemable convertible preferred stock were entitled to ten votes per share, which is the same number of votes per share as the Class B common stock into which the redeemable convertible preferred stock was convertible. The holders of redeemable convertible preferred stock would vote together as one class with the holders of common stock.

As long as at least 4,000,000 shares (subject to adjustments for stock splits, reverse stock splits, or other similar events) of Series A redeemable convertible preferred stock remained outstanding, the holders of such shares were entitled to elect one member of the board of directors. As long as at least 4,000,000 shares (subject to adjustments for stock splits, reverse stock splits, or other similar events) of Series B redeemable convertible preferred stock remained outstanding, the holders of such shares were entitled to elect one member of the board of directors. The holders of outstanding common stock, voting as a separate class, were entitled to elect two members of the board of directors. The holders of common stock and redeemable convertible preferred stock, voting together as a single class on an as-if-converted basis, were entitled to elect all remaining members of the board of directors.

Dividends—Holders of redeemable convertible preferred stock were entitled to receive, when, as, and if declared by the Board of Directors, but only out of funds that were legally available therefor, cash dividends at the rate of eight percent of the original issue price of each redeemable convertible preferred stock series per annum. Such dividends would be payable on a pari passu basis and only when, as, and if declared by the Board and would be non-cumulative. No dividends on redeemable convertible preferred stock or common stock were declared by the Board of Directors through January 31, 2021 or January 31, 2020.

Liquidation Preference—In the event of any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary (a Liquidation Event), the holders of redeemable convertible preferred stock would be entitled, before any distribution or payment was made to the holders of common stock, on a pari passu basis among each other, to be paid out of the assets of the Company legally available for distribution for each share of redeemable convertible preferred stock, an amount per share of redeemable convertible preferred stock equal to the greater of (i) the original issuance price plus all declared and unpaid dividends on such redeemable convertible preferred stock; or (ii) the amount of cash, securities, or other property to which such redeemable convertible preferred stockholders would be entitled to receive if such shares had been converted to common stock immediately prior to the Liquidation Event. If, upon any such Liquidation Event, the assets of the Company were insufficient to make payment in full to all holders of the redeemable convertible preferred stock, then the assets would be distributed among the holders of redeemable convertible preferred stock on a pari passu basis, in proportion to the full amounts to which they would otherwise be respectively entitled.

After the payment of the full liquidation preference to redeemable convertible preferred stock, the remaining assets of the corporation legally available for distribution to stockholders would be distributed ratably to the holders of common stock.

Classification—The convertible preferred stock was contingently redeemable upon certain deemed liquidation events such as a merger or sale of substantially all the assets of the Company. The convertible preferred stock was not mandatorily redeemable, but since a deemed liquidation event would constitute a redemption event outside of the Company’s control, all shares of redeemable convertible preferred stock were presented outside of permanent equity in mezzanine equity on the consolidated balance sheets.