The Company operates as one operating and reportable segment. The Company’s chief operating decision maker is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company 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 the financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements and may involve subjective or significant judgment by the Company; therefore, actual results could differ from the Company’s estimates. The Company’s accounting policies that involve judgment include revenue recognition, period of benefit for deferred sales commissions, assumptions used for estimating the fair value of common stock to calculate stock-based compensation (prior to the closing of the IPO), capitalization of internal-use software costs, valuation of goodwill and intangible assets, allowance for doubtful accounts, and valuation allowances associated with income taxes.

While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.

In May 2020, as part of the Company’s efforts to respond to the COVID-19 pandemic and ensure longer-term financial stability, the Company initiated cost reduction measures, including a headcount reduction. The headcount reduction resulted in $1.2 million of severance and benefits expense and $0.1 million in stock-based compensation expense for the year ended January 31, 2021.

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company determines revenue recognition through the following steps:

The Company considers the terms and conditions of the contract and its customary business practices in identifying contracts under ASC 606. The Company determines it has a contract with a customer when the contract is fully approved by both parties, it can identify each party’s rights regarding the services to be transferred, it can identify the payment terms for the services, and it has determined the customer has the ability and intent to pay and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

Performance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or the Company, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. The Company’s performance obligations consist of subscription and support services.

The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company’s policy is to exclude sales and other indirect taxes when measuring the transaction price. None of the Company’s contracts contain a significant financing component.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers, its discounting practices, and the Company’s overall pricing objectives, while maximizing observable inputs.

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company generates all its revenue from contracts with customers.

The Company generates revenue from subscriptions to customers that enable them to access the Company’s cloud-based platform. Subscription arrangements with customers do not provide the customer with the right to take possession of the Company’s software at any time. Instead, customers are granted continuous access to the platform over the contractual period. A time-elapsed method is used to measure progress as control is transferred evenly over the contractual period. Accordingly, the fixed consideration related to subscription fees is generally recognized on a straight-line basis over the contract term, commencing on the date the service is made available to the customer and all other revenue recognition criteria have been met.

The typical subscription term is one to three years. Most of the contracts are non-cancelable over the contractual term. Customers typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms. Some arrangements contain options to purchase additional subscription services at a stated price and are evaluated on a case-by-case basis but generally do not provide a material right as they are priced at or above the Company’s SSP and would not result in a separate performance obligation.

Accounts receivable consist of amounts billed and currently due from customers. The Company’s accounts receivable are subject to collection risk. Gross accounts receivable are adjusted for estimated losses resulting from the inability of the Company’s customers to fulfill their payment obligations. The Company periodically reviews factors such as past collection experience, specific allowances for known troubled accounts, and other currently available evidence to determine the best estimate of probable losses inherent in the receivables. As of January 31, 2021, there was $0.1 million recorded as an allowance for doubtful accounts for the Company’s accounts receivables. There was no allowance for doubtful accounts as of January 31, 2020.

As of January 31, 2021, one customer accounted for 10% of total accounts receivable. As of January 31, 2020, no individual customer accounted for 10% or more of total accounts receivable. The Company performs ongoing credit evaluations of its customers and maintain allowances for potential credit losses on customers’ accounts when deemed necessary.

The Company records an unbilled receivable when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is unconditional when only passage of time is required before payment of that consideration is due. Unbilled receivables totaled $1.0 million and $2.2 million as of January 31, 2021 and 2020, respectively, and were recorded within accounts receivable, net on the consolidated balance sheets.

The Company records contract assets when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is conditional. Contract assets totaled $1.6 million as of January 31, 2021 and were recorded within other current assets on the consolidated balance sheets. There were no contract assets as of January 31, 2020.

Deferred revenue consists of non-cancelable customer billings, or payments received in advance of revenue recognition. The Company generally invoices its customers in monthly, quarterly, or annual installments. Accordingly, the deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription arrangements. Deferred revenue that will be recognized within the next twelve months is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent.

historical customer attrition rates, technological life of the Company’s platform, the impact of competition in its industry, as well as other factors. Commissions for renewals are considered not commensurate with the commission paid for the acquisition of the initial contract and are therefore amortized over the contractual term of the contract, consistent with the pattern of revenue recognition for each performance obligation. The Company capitalized $25.8 million and $16.1 million in sales commissions for the years ended January 31, 2021 and 2020, respectively. Amortized costs are included in sales and marketing expense in the accompanying consolidated statements of operations and were $11.5 million, $8.8 million, and $7.0 million for the years ended January 31, 2021, 2020, and 2019, respectively. There was no impairment loss in relation to deferred sales commissions for the years ended January 31, 2021, 2020, or 2019. Sales commissions that will be amortized within the next twelve months are included in deferred sales commissions, current, on the consolidated balance sheets. Any sales commissions that will be amortized in any period subsequent to the next twelve months are included in deferred sales commissions, noncurrent, on the consolidated balance sheets.

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Although the Company deposits its cash with high-quality credit rated financial institutions, the deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Cash equivalents consist of money market funds which are invested through financial institutions in the United States. Management believes that the institutions are financially stable and, accordingly, minimal credit risk exists.

The functional currency of the Company’s foreign subsidiaries is the respective local currency. All asset and liability accounts of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the consolidated statements of comprehensive loss. Equity transactions are translated using historical exchange rates. Expenses are translated using the average exchange rate during the year. Foreign currency transaction gains and losses are included in interest and other (expense) income, net in the Company’s consolidated statements of operations. The Company incurred $(0.4) million, $(0.3) million, and less than $(0.1) million in foreign currency transaction gains (losses) for the years ended January 31, 2021, 2020, and 2019, respectively.

Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization are removed from the Company’s consolidated balance sheet and the resulting gain or loss is reflected in the Company’s consolidated statement of operations.

In accordance with its policy, the Company reviewed the estimated useful lives of its fixed assets and determined the actual lives of furniture and fixtures were longer than the estimated useful lives used for depreciation purposes in the Company’s financial statements. In the fourth quarter of fiscal 2021, the Company changed the estimated useful lives of its furniture and fixtures from three years to five years to better reflect the estimated periods during which these assets will remain in service. The effect of this change had an immaterial impact on the Company’s consolidated financial statements.

The Company capitalizes certain costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life.

The Company capitalized $1.5 million and $6.1 million of internal-use software costs during the years ended January 31, 2021 and 2020, respectively. Amortization of internal-use software costs included in cost of revenue in the consolidated statements of operations was $0.7 million, $0.9 million, and $1.3 million for the years ended January 31, 2021, 2020, and 2019, respectively. Fully amortized capitalized internal-use software was written off in the amount of $8.0 million during the year ended January 31, 2021. As of January 31, 2021 and 2020, the Company included capitalized internal-use software costs of $1.7 million and $0.9 million within property and equipment, net, respectively.

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. During the year ended January 31, 2020, the Company recorded impairment charges of $6.7 million for certain previously capitalized internal-use software. Refer to Note 4 for further information on the impairment charge recorded during the year ended January 31, 2020. There were no impairments to capitalized internal-use software costs during the year ended January 31, 2021 or 2019.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in connection with business combinations accounted for using the acquisition method of accounting. The Company has one reporting unit and performs such testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. These triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. The Company’s test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. If the Company determines, based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, then a quantitative goodwill impairment test is required. There was no impairment of goodwill recorded for the years ended January 31, 2021, 2020, or 2019.

Intangible assets consist of identifiable intangible assets, primarily developed technology, resulting from the Company’s acquisitions. Acquired intangible assets are recorded at cost, net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization costs are included in cost of revenue within the consolidated statements of operations. Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. There was no impairment of intangible assets recorded for the years ended January 31, 2021, 2020, or 2019.

The Company accounts for its acquisitions using the acquisition method of accounting. The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain identifiable assets include, but are not limited to, reproduction costs, expected long-term market growth, future expected operating expenses, cost build-up to support obligations, and appropriate discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition costs, such as legal and consulting fees, are expensed as incurred. During the measurement period, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations. See Note 5 for additional information regarding the Company’s acquisitions.

The Company leases real estate facilities under operating leases. For leases that contain rent escalation or rent concession provisions, the Company records the total rent expense during the lease term on a straight-line basis over the term of the lease. The Company records the difference between the rent paid and the straight-line rent expense as a deferred rent liability within accrued expenses and other current liabilities and other liabilities on the accompanying consolidated balance sheets.

Cost of revenue includes all direct costs to deliver and support the Company’s platform, including personnel and related costs, third-party hosting fees related to the Company’s cloud platform, amortization of internal-use software and acquired developed technology, as well as allocated facilities and IT costs. These costs are expensed as incurred.

The Company’s costs related to research, design, maintenance, and minor enhancements of the Company’s platform are expensed as incurred. These costs consist primarily of personnel and related expenses, including allocated overhead costs, contractor and consulting fees related to the design, development, testing, and enhancements of the Company’s platform, and software, hardware, and cloud infrastructure fees for staging and development related to research and development activities necessary to support growth in the Company’s employee base and in the adoption of its platform.

Costs related to advertising and promotions of the Company’s service offerings are charged to sales and marketing expense as incurred. The Company incurred $7.2 million, $9.5 million, and $5.8 million in advertising and promotion expenses for the years ended January 31, 2021, 2020, and 2019, respectively.

The Company measures and recognizes compensation expense for all stock-based payment awards granted to employees, directors, and non-employees based on the estimated fair values on the date of the grant. The fair value of options granted and purchase rights granted under the Employee Stock Purchase Plan (“ESPP”) is estimated on the grant date using the Black-Scholes option pricing model. The fair value of Restricted Stock Units (“RSUs”) is estimated on the date of grant based on the fair value of the Company’s underlying common stock. Prior to the Company’s IPO, the fair value of the Company’s common stock for financial reporting purposes was determined considering objective and subjective factors, including valuations from third-party valuation experts, and required judgment to determine the fair value of common stock for financial reporting purposes as of the date of each equity grant or modification.

The Company recognizes stock-based compensation expense for service-based awards and our ESPP purchase rights on a straight-line basis over the service period, net of actual forfeitures. The Company also has certain options and RSUs that have performance-based vesting conditions; stock-based compensation expense for such awards is recognized using an accelerated attribution method from the time the vesting condition is probable through the time the vesting condition has been achieved.

Prior to the Company’s IPO, the Company recognized stock-based compensation expense for RSUs on an accelerated attribution method as the RSUs were subject to service-based and performance-based vesting conditions, which included a liquidity event condition, and in certain cases, the achievement of certain other performance metrics. None of the RSUs would vest unless the liquidity event condition was satisfied. Upon the completion of the IPO, the liquidity event condition was considered probable and the Company recognized cumulative stock-based compensation expense using the accelerated attribution method related to RSUs that had vested as of the IPO. The remaining unrecognized stock-based compensation expense related to the RSUs will be recognized over the remaining requisite service period. All RSUs granted after the IPO, under the 2020 Equity Incentive Plan (the “2020 Plan”) will not be subject to a liquidity event condition and will be recognized on a straight-line basis over the service period.

The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, applicable tax law, and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) a determination is made as to whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.

Other comprehensive income (loss) includes amounts recorded in equity that are not the result of transactions with stockholders. The changes in other comprehensive income (loss) are a result of translation gains and losses for the Company’s foreign subsidiaries assets, liabilities, revenue, and expenses. The Company recorded foreign currency translation gains (losses) of $0.2 million, $(0.1) million, and $(0.2) million for the years ended January 31, 2021, 2020, and 2019, respectively.

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, less any shares subject to repurchase. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock. The Company also considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. In addition, shares that are contingently issuable are excluded from the computation of basic earnings per share. Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

Certain members of the Company’s Board of Directors serve as directors of, or are executive officers of, and in some cases are investors in, companies that are customers or vendors of the Company. The Company received cash payments of $1.5 million from a related party for the year ended January 31, 2021. Related party transactions were not material for the years ended January 31, 2020 or 2019.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment, which simplifies the required methodology to calculate an impairment charge for goodwill. The Company adopted this guidance as of February 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting. The amendments in the updated guidance expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted this guidance as of February 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures for certain investments. The Company adopted this guidance as of February 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance, on a prospective basis, as of February 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The amendments in the updated guidance simplify the accounting for income taxes by removing certain exceptions and improving consistent application of other areas of the topic by clarifying the guidance. The Company adopted this guidance, on a prospective basis, as of February 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Under the JOBS Act, the Company meets the definition of an emerging growth company and can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the Company is no longer an emerging growth company or until the Company affirmatively and irrevocably opts out of the extended transition period.

In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, which amended the effective date of the new guidance. The deferral applies only if those entities have not yet issued their financial statements as of June 3, 2020. The new guidance will be effective for the Company for the fiscal year ending January 31, 2023 and interim periods within the fiscal year ending January 31, 2024. The Company is beginning its process of adoption and plans to adopt this guidance as of February 1, 2021. While the adoption is in progress, the Company expects that adoption will result in the recognition of right-of-use assets and lease liabilities that were not previously recognized, which will increase total assets and liabilities on its consolidated balance sheet. The Company does not expect the adoption of Topic 842 to have a material impact on its statement of operations or cash flows.