Composition of certain financial statement captions | Composition of certain financial statement captions (a) Accrued expenses Accrued expenses as of July 31, 2022 and January 31, 2022 are as follows: July 31, 2022 January 31, 2022 Payroll-related expenses and taxes $ 6,771 $ 10,780 Payment processing fees liability 3,876 3,502 Tax liabilities 2,998 2,093 Information technology services 2,142 1,266 Other 2,138 2,487 Total $ 17,925 $ 20,128 (b) Property and equipment Property and equipment as of July 31, 2022 and January 31, 2022 are as follows: Useful Life (years) July 31, 2022 January 31, 2022 PhreesiaPads and Arrivals Kiosks 3 $ 26,835 $ 26,387 Computer equipment 3 55,519 53,957 Computer software 3 to 5 5,520 5,311 Hardware development 3 1,058 1,024 Furniture and fixtures 7 539 539 Leasehold improvements 2 748 748 Total property and equipment $ 90,219 $ 87,966 Less accumulated depreciation (61,661) (53,321) Property and equipment — net $ 28,558 $ 34,645 Depreciation expense related to property and equipment amounted to $4,220 and $3,701 for the three months ended July 31, 2022 and 2021, respectively. Depreciation expense related to property and equipment amounted to $8,498 and $6,998 for the six months ended July 31, 2022 and 2021, respectively. Assets acquired under finance leases included in computer equipment were $27,842 and $27,310 as of July 31, 2022 and January 31, 2022, respectively. Accumulated amortization of assets under finance leases was $17,896 and $15,025 as of July 31, 2022 and January 31, 2022, respectively. (c) Capitalized internal use software For the three months ended July 31, 2022 and 2021, the Company capitalized $5,970 and $2,526, respectively, of costs related to the Phreesia Platform. For the six months ended July 31, 2022 and 2021, the Company capitalized $12,395 and $4,798, respectively, of costs related to the Phreesia Platform. During the three months ended July 31, 2022 and 2021, amortization expense related to capitalized internal-use software was $1,255 and $1,452, respectively. During the six months ended July 31, 2022 and 2021, amortization expense related to capitalized internal-use software was $2,516 and $2,975, respectively. (d) Intangible assets and goodwill The following presents the details of intangible assets as of July 31, 2022 and January 31, 2022: Useful Life (years) July 31, 2022 January 31, 2022 Acquired technology 5 $ 1,410 $ 1,410 Customer relationship 7 to 10 6,340 6,340 License 15 6,200 6,200 Total intangible assets, gross carrying value $ 13,950 $ 13,950 Less accumulated amortization (1,864) (1,178) Net carrying value $ 12,086 $ 12,772 The remaining useful life for acquired technology in years was 3.1 and 3.5 as of July 31, 2022 and January 31, 2022, respectively. The remaining useful life for customer relationships in years was 8.7 and 9.2 as of July 31, 2022 and January 31, 2022, respectively. The remaining useful life for the license to the Patient Activation Measure ("PAM"®) in years was 14.4 and 14.8 as of July 31, 2022 and January 31, 2022, respectively. Amortization expense associated with intangible assets amounted to $344 and $128 for the three months ended July 31, 2022 and 2021, respectively. Amortization expense associated with intangible assets amounted to $687 and $256 for the six months ended July 31, 2022 and 2021, respectively. The estimated amortization expense for intangible assets for the next five years and thereafter is as follows as of July 31, 2022: July 31, 2022 2023 (Remaining six months) $ 686 Fiscal Years Ending January 31, 2024 1,358 2025 1,273 2026 1,242 2027 - thereafter 7,527 Total $ 12,086 There were no significant changes to the Company's goodwill balance during the six months ended July 31, 2022. The Company did not record any impairments of goodwill during the three and six months ended July 31, 2022 or 2021. Goodwill was $33,836 and $33,621 as of July 31, 2022 and January 31, 2022, respectively. (e) Accounts receivable Accounts receivable as of July 31, 2022 and January 31, 2022 are as follows: July 31, 2022 January 31, 2022 Billed $ 45,320 $ 40,733 Unbilled 2,667 392 Total accounts receivable, gross $ 47,987 $ 41,125 Less accounts receivable allowances (1,029) (863) Total accounts receivable $ 46,958 $ 40,262 Activity in the Company's allowance for doubtful accounts was as follows for the six months ended July 31, 2022: July 31, 2022 Balance, January 31, 2022 $ 863 Bad debt expense 317 Write-offs and adjustments (151) Balance, July 31, 2022 $ 1,029 The Company’s allowance for doubtful accounts represents the current estimate of expected future losses based on prior bad debt experience as well as considerations for specific customers as applicable. The Company's accounts receivable are considered past due when they are outstanding past the due date listed on the invoice to the customer. The Company writes off accounts receivable and removes the associated allowance for doubtful accounts when the Company deems the receivables to be uncollectible. (f) Prepaid and other current assets Prepaid and other current assets as of July 31, 2022 and January 31, 2022 are as follows: July 31, 2022 January 31, 2022 Prepaid software and business systems $ 3,036 $ 3,738 Prepaid data center expenses 2,711 3,230 Prepaid insurance 110 1,924 Other prepaid expenses and other current assets 1,864 2,151 Total prepaid and other current assets $ 7,721 $ 11,043 (g) Cloud computing implementation costs The Company enters into cloud computing service contracts to support its sales and marketing, product development and administrative activities. Subsequent to the adoption of ASU 2018-15 in May 2020, the Company capitalizes certain implementation costs for cloud computing arrangements that meet the definition of a service contract. The Company includes these capitalized implementation costs within Prepaid expenses and other current assets and within other assets on its consolidated balance sheets. Once placed in service, the Company amortizes these costs over the remaining subscription term to the same caption in the statements of operations as the related cloud subscription. Capitalized implementation costs for cloud computing arrangements accounted for as service contracts were $1,532 and $1,514 as of July 31, 2022 and January 31, 2022, respectively. Accumulated amortization of capitalized implementation costs for these arrangements was $403 and $199 as of July 31, 2022 and January 31, 2022, respectively. (h) Other income (expense), net Other income (expense), net for the three months ended July 31, 2022 and 2021 was income of $38 and expense of $90, respectively. Other income (expense), net for the six months ended July 31, 2022 and 2021 was income of $7 and expense of $24, respectively. For all periods presented, other income (expense), net was composed primarily of foreign exchange gains and losses. |