Business Combination

9 Months Ended

Oct. 31, 2022

Business Combination and Asset Acquisition [Abstract]

7. Business Combination

On December 3, 2021, the Company completed the acquisition of Opstrace, Inc., a technology company based in San Francisco, California.

The transaction was accounted for as a business combination. The acquisition date fair value of the consideration transferred consisted of the following (in thousands):


Cash consideration	$	2,970
Fair value of common stock issued on closing	959
Contingent common stock consideration (classified under additional paid-in capital)	1,754
Contingent cash consideration (paid as of October 31, 2022)	3,007
Contingent cash consideration (classified under other long-term liabilities as of October 31, 2022)	4,893
Total consideration	$	13,583

Cash consideration includes $2.5 million held back as partial security for post-closing indemnification claims made within 18 months of the closing date recorded in accrued expenses and other current

liabilities on the condensed consolidated balance sheet as of October 31, 2022 and in other long-term liabilities as of January 31, 2022.

As a result of acquisition, the fair value of the consideration transferred included contingent cash considerations of $7.9 million in aggregate. These contingent cash considerations are determined based upon the satisfaction of certain defined operational milestones and are remeasured at fair value at each reporting period through earnings. As the fair value is based on unobservable inputs, the liabilities are included in Level 3 of the fair value measurement hierarchy.

In September 2022, one of the operational milestones was achieved and the Company paid $4.2 million of contingent cash consideration, part of which was previously recorded in accrued expenses and other current liabilities. The difference of $1.1 million between the amount accrued and the amount paid was attributable to the change in fair value of the original measurement and was recorded in general and administrative expenses during the three and nine months ended October 31, 2022.

Accretion expense was $0.1 million and $0.3 million for the three and nine months ended October 31, 2022, respectively. There was no accretion expense for the three and nine months ended October 31, 2021.

Results of operations of the business acquired have been included in our condensed consolidated financial statements subsequent to the date of acquisition. The revenue and net income (loss) earned by the business acquired following the acquisition are not material to our condensed consolidated results of operations. Pro forma statements have not been presented because they are not material to our condensed consolidated results of operations.