Business Combination, Intangible Assets, and Goodwill

3 Months Ended

Apr. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Business Combination, Intangible Assets, and Goodwill

Business Combination, Intangible Assets, and Goodwill

Business Combination

On March 31, 2022, the Company acquired all outstanding stock of Streamlit, Inc. (Streamlit), a privately-held company which provides an open-source framework for creating and deploying data applications. The Company acquired Streamlit primarily for its talent and developer community. The Company has accounted for this transaction as a business combination. The acquisition date fair value of the purchase consideration was $650.8 million, which was comprised of the following (in thousands):

	Estimated Fair Value
Cash	$	211,839
Common stock(1)	438,916
Total	$	650,755

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(1)Approximately 1.9 million shares of the Company’s Class A common stock were included in the purchase consideration and the fair values of these shares were determined based on the closing market price of $229.13 per share on the acquisition date.

In addition, in connection with this business combination, the Company issued to Streamlit’s three founders a total of 0.4 million shares of the Company’s Class A common stock in exchange for a portion of their Streamlit stock. These shares are subject to vesting agreements pursuant to which the shares will vest over three years, subject to each founder’s continued employment with the Company or its affiliates. The $93.7 million fair value of these shares will be accounted for as post-combination stock-based compensation over the requisite service period of three years. See Note 10 for further discussion.

The following table summarizes the preliminary allocation of purchase consideration to assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition:

	Estimated Fair Value (in thousands)		Estimated Useful Life (in years)
Cash and cash equivalents	$	33,914
Goodwill	494,165
Developer community intangible asset	150,000		5
Other net tangible liabilities	(660)
Deferred tax liabilities, net(1)	(26,664)
Total	$	650,755

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(1)Deferred tax liabilities, net primarily relates to the intangible asset acquired and the amount presented is net of deferred tax assets.

The fair value of the developer community intangible asset was estimated using the replacement cost method which utilizes assumptions for the cost to replace it, such as time and resources required, as well as a theoretical profit margin and opportunity cost. During the measurement period of up to one year from the acquisition date, the Company may record adjustments to the preliminary fair value of the assets acquired and liabilities assumed with a corresponding offset to goodwill.

The excess of purchase consideration over the preliminary fair value of identifiable net assets acquired was recorded as goodwill, which is not deductible for income tax purposes. The Company believes the goodwill balance associated with this business combination represents the synergies expected from expanded market opportunities when integrating the acquired developed technologies with the Company’s offerings.

Acquisition-related costs of $1.9 million associated with this business combination were recorded as a general and administrative expense during the three months ended April 30, 2022.

The results of operations of Streamlit from the date of acquisition, which were not material, have been included in the Company’s condensed consolidated statements of operations for the three months ended April 30, 2022.

The following unaudited pro forma financial information summarizes the combined results of operations of the Company and Streamlit, as if Streamlit had been acquired as of February 1, 2021 (in thousands):

	Pro Forma
	Three Months Ended April 30,
	2022		2021
	(unaudited)
Revenue	$	422,393	$	228,914
Net loss	$	(214,159)	$	(211,589)

The pro forma financial information for all periods presented above has been calculated after adjusting the results of operations of Streamlit to reflect certain business combination effects, including the amortization of the acquired intangible asset, stock-based compensation, income tax impact, and acquisition-related costs incurred by both the Company and Streamlit as though this business combination occurred as of February 1, 2021, the beginning of the Company’s fiscal 2022. The historical condensed consolidated financial information has been adjusted in the pro forma combined financial results to give effect to pro forma events that are directly attributable to the business combination, reasonably estimable, and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if this business combination had taken place as of February 1, 2021.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

	April 30, 2022
	Gross		Accumulated Amortization		Net
Finite-lived intangible assets:
Developer community	$	150,000	$	(2,547)	$	147,453
Assembled workforce	28,252		(5,706)		22,546
Developed technology	11,332		(5,379)		5,953
Patents	8,174		(3,101)		5,073
Other	47		(47)		—
Total finite-lived intangible assets	$	197,805	$	(16,780)	$	181,025
Infinite-lived intangible assets—trademarks					826
Total intangible assets, net					$	181,851

	January 31, 2022
	Gross		Accumulated Amortization		Net
Finite-lived intangible assets:
Assembled workforce	$	28,252	$	(3,941)	$	24,311
Developed technology	11,332		(4,812)		6,520
Patents	8,174		(2,690)		5,484
Other	47		(47)		—
Total finite-lived intangible assets	$	47,805	$	(11,490)	$	36,315
Infinite-lived intangible assets—trademarks					826
Total intangible assets, net					$	37,141

Amortization expense of intangible assets was $5.3 million and $1.8 million for the three months ended April 30, 2022 and 2021, respectively.

As of April 30, 2022, future amortization expense is expected to be as follows (in thousands):

	Amount
Fiscal Year Ending January 31,
Reminder of 2023	$	30,904
2024	40,959
2025	40,192
2026	34,221
2027	29,984
Thereafter	4,765
Total	$	181,025

Goodwill

Changes in goodwill were as follows (in thousands):

	Amount
Balance—January 31, 2022	$	8,449
Addition	494,165
Balance—April 30, 2022	$	502,614