Variable Interest Entity and Redeemable Non-Controlling Interest

3 Months Ended

Apr. 30, 2022

Variable Interest Entity and Redeemable Non-Controlling Interest

Variable Interest Entity and Redeemable Non-Controlling InterestIn October 2019, the Company entered into an agreement with Japan Cloud Computing, L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management, and operation of nCino K.K. that is focused on the distribution of the Company’s products in Japan. In October 2019, the Company initially contributed $4.7 million in cash in exchange for 51% of the outstanding common stock of nCino K.K. As of April 30, 2022, the Company controls a majority of the outstanding common stock in nCino K.K.

All of the common stock held by the Investors is callable by the Company or puttable by the Investors at the option of the Investors or at the option of the Company beginning on the eighth anniversary of the agreement with the Investors. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of nCino K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash or a combination of the foregoing. As a result of the put right available to the Investors, the redeemable non-controlling interests in nCino K.K. are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheets. The estimated redemption value of the call/put option embedded in the redeemable non-controlling interest was $2.3 million at April 30, 2022.

The following table summarizes the activity in the redeemable non-controlling interests for the period indicated below:


	Three Months Ended April 30,
	2021		2022
Balance, beginning of period	$	3,791	$	2,882
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)	(467)		(344)
Foreign currency translation	(129)		(154)
Adjustment to redeemable non-controlling interest	(130)		1,029
Stock-based compensation expense1	—		6
Balance, end of period	$	3,065	$	3,419

1 nCino K.K. stock options granted in accordance with nCino K.K.'s equity incentive plan.