Commitments and Contingencies

9 Months Ended

Oct. 31, 2023

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 2035. 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 March 2023, the Company entered into an agreement related to a new office facility located outside of the United States for a total commitment of $33.8 million based on the exchange rate as of October 31, 2023. The lease commenced during the nine months ended October 31, 2023, with an expiration date in fiscal 2032, and resulted in an increase in the Company’s operating lease right-of-use assets and operating lease liabilities in the amount of approximately $31 million.

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 $2.9 million and $9.1 million for the three and nine months ended October 31, 2023, respectively, and $3.0 million and $9.7 million for the three and nine months ended October 31, 2022, 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 June 2023, the Company amended one of its third-party cloud infrastructure agreements. Under the amended agreement, the Company has committed to spend at least $1.0 billion between June 2023 and May 2028 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 May 2028, and such payment can be applied to qualifying spending on cloud infrastructure services for up to twelve months after May 2028. Prior to such amendment, the remaining non-cancelable commitments under the agreement was $416.4 million as of January 31, 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, 2023 and 2022.

Legal Matters—On March 23, 2021, a former employee, whose employment with the Company was terminated on September 29, 2020, filed a charge with the National Labor Relations Board (the NLRB) claiming that he was terminated in retaliation for engaging in concerted activity protected under the National Labor Relations Act. On September 15, 2023, following a hearing before a NLRB administrative law judge, the administrative law judge issued his ruling in favor of the former employee and ordered that he be awarded certain compensatory and other damages.

The Company is appealing the ruling to the Board of the NLRB. The Company believes it is reasonably possible that a loss could ultimately result from an unfavorable outcome and that an estimate of the potential range of loss is between zero and $25 million, plus interest. No material loss accrual was recorded in the Company’s condensed consolidated balance sheet as of October 31, 2023, because management believes the likelihood of material loss resulting from this charge is not probable given the further appellate proceedings that are due to take place.

In addition, 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.

Letters of Credit—As of October 31, 2023, the Company had a total of $17.7 million in cash collateralized letters of credit outstanding, substantially in favor of certain landlords for the Company’s leased facilities. 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, non-employee directors, and certain other 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 each of the three and nine months ended October 31, 2023 and 2022, losses recorded in the condensed consolidated statements of operations in connection with the indemnification provisions were not material.