Cover Page
Cover Page - shares | 9 Months Ended | |
Oct. 31, 2020 | Nov. 16, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38926 | |
Entity Registrant Name | Slack Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-4400325 | |
Entity Address, Address Line One | 500 Howard Street | |
Entity Address, City or Town | San Francisco | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94105 | |
City Area Code | 415 | |
Local Phone Number | 630-7943 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value per share | |
Trading Symbol | WORK | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001764925 | |
Current Fiscal Year End Date | --01-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 489,067,297 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 87,133,669 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 1,099,807 | $ 498,999 |
Marketable securities | 475,690 | 269,593 |
Accounts receivable, net | 122,780 | 145,844 |
Prepaid expenses and other current assets | 59,500 | 55,967 |
Total current assets | 1,757,777 | 970,403 |
Restricted cash | 38,490 | 38,490 |
Strategic investments | 63,132 | 28,814 |
Property and equipment, net | 93,541 | 102,340 |
Operating lease right-of-use assets | 225,771 | 197,830 |
Intangible assets, net | 19,597 | 13,530 |
Goodwill | 76,204 | 48,598 |
Other assets | 36,745 | 41,701 |
Total assets | 2,311,257 | 1,441,706 |
Current liabilities: | ||
Accounts payable | 20,214 | 16,893 |
Accrued compensation and benefits | 77,611 | 65,196 |
Accrued expenses and other current liabilities | 28,380 | 32,123 |
Operating lease liability | 33,009 | 30,465 |
Deferred revenue | 400,606 | 375,263 |
Total current liabilities | 559,820 | 519,940 |
Convertible senior notes, net | 640,767 | 0 |
Operating lease liability, noncurrent | 231,105 | 196,378 |
Deferred revenue, noncurrent | 674 | 1,451 |
Other liabilities | 1,883 | 38 |
Total liabilities | 1,434,249 | 717,807 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Common stock | 58 | 56 |
Additional paid-in-capital | 2,309,771 | 1,945,446 |
Accumulated other comprehensive income (loss) | 269 | (71) |
Accumulated deficit | (1,455,082) | (1,236,621) |
Total Slack Technologies, Inc. stockholders’ equity | 855,016 | 708,810 |
Noncontrolling interest | 21,992 | 15,089 |
Total stockholders’ equity | 877,008 | 723,899 |
Total liabilities and stockholders’ equity | $ 2,311,257 | $ 1,441,706 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 234,498 | $ 168,725 | $ 652,012 | $ 448,519 |
Cost of revenue | 32,528 | 23,140 | 86,517 | 72,820 |
Gross profit | 201,970 | 145,585 | 565,495 | 375,699 |
Operating expenses: | ||||
Research and development | 96,024 | 94,853 | 281,450 | 363,725 |
Sales and marketing | 119,345 | 96,210 | 338,787 | 299,440 |
General and administrative | 52,268 | 49,524 | 155,710 | 209,624 |
Total operating expenses | 267,637 | 240,587 | 775,947 | 872,789 |
Loss from operations | (65,667) | (95,002) | (210,452) | (497,090) |
Interest expense | (11,742) | (258) | (26,136) | (579) |
Interest income and other income, net | 12,644 | 7,393 | 24,304 | 17,902 |
Loss before income taxes | (64,765) | (87,867) | (212,284) | (479,767) |
Benefit for income taxes | (1,162) | (101) | (1,101) | (504) |
Net loss | (63,603) | (87,766) | (211,183) | (479,263) |
Net income attributable to noncontrolling interest | 4,799 | 1,395 | 7,278 | 2,792 |
Net loss attributable to Slack | $ (68,402) | $ (89,161) | $ (218,461) | $ (482,055) |
Basic and diluted net loss per share: | ||||
Net loss per share attributable to Slack common stockholders, basic and diluted (in dollars per share) | $ (0.12) | $ (0.16) | $ (0.39) | $ (1.38) |
Weighted-average shares used in computing net loss per share attributable to Slack common stockholders, basic and diluted (in shares) | 570,374 | 544,057 | 564,095 | 348,580 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (63,603) | $ (87,766) | $ (211,183) | $ (479,263) |
Other comprehensive income (loss), net of tax: | ||||
Change in unrealized gain or loss on marketable securities | (660) | 132 | 340 | 511 |
Other comprehensive income (loss), net of tax | (660) | 132 | 340 | 511 |
Comprehensive loss | (64,263) | (87,634) | (210,843) | (478,752) |
Comprehensive income attributable to noncontrolling interest | 4,799 | 1,395 | 7,278 | 2,792 |
Comprehensive loss attributable to Slack | $ (69,062) | $ (89,029) | $ (218,121) | $ (481,544) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Convertible Preferred Stock | Common Stock | Additional Paid-In-Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Noncontrolling Interest | Restricted stockCommon Stock | Restricted stock unitsCommon Stock |
Beginning of period (in shares) at Jan. 31, 2019 | 373,372 | 127,573 | |||||||
Beginning of period at Jan. 31, 2019 | $ 841,606 | $ 1,392,101 | $ 13 | $ 105,633 | $ (498) | $ (665,563) | $ 9,920 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 2,694 | ||||||||
Exercise of stock options | 2,907 | 2,907 | |||||||
Vesting of early exercised stock options | 88 | 88 | |||||||
Issuance of restricted stock awards (in shares) | 505 | ||||||||
Other comprehensive income (loss) | 420 | 420 | |||||||
Stock-based compensation | 3,639 | 3,639 | |||||||
Net income (loss) | (31,881) | (33,332) | 1,451 | ||||||
End of period (in shares) at Apr. 30, 2019 | 373,372 | 130,772 | |||||||
End of period at Apr. 30, 2019 | 816,779 | $ 1,392,101 | $ 13 | 112,267 | (78) | (698,895) | 11,371 | ||
Beginning of period (in shares) at Jan. 31, 2019 | 373,372 | 127,573 | |||||||
Beginning of period at Jan. 31, 2019 | 841,606 | $ 1,392,101 | $ 13 | 105,633 | (498) | (665,563) | 9,920 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Vesting of early exercised stock options | 214 | ||||||||
Other comprehensive income (loss) | 511 | ||||||||
Net income (loss) | (479,263) | ||||||||
End of period (in shares) at Oct. 31, 2019 | 549,015 | ||||||||
End of period at Oct. 31, 2019 | 747,231 | $ 55 | 1,879,601 | 13 | (1,147,618) | 15,180 | |||
Beginning of period (in shares) at Apr. 30, 2019 | 373,372 | 130,772 | |||||||
Beginning of period at Apr. 30, 2019 | 816,779 | $ 1,392,101 | $ 13 | 112,267 | (78) | (698,895) | 11,371 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 8,046 | ||||||||
Exercise of stock options | 6,805 | $ 1 | 6,804 | ||||||
Vesting of early exercised stock options | 69 | 69 | |||||||
Cancellation of restricted stock options (in shares) | (10) | ||||||||
Repurchase of early exercised stock options (in shares) | (2) | ||||||||
Conversion of convertible preferred stock to common stock in connection with direct listing (in shares) | (373,372) | (373,372) | |||||||
Conversion of convertible preferred stock to common stock in connection with direct listing | 0 | $ (1,392,101) | $ (37) | (1,392,064) | |||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 30,388 | ||||||||
Issuance of common stock upon settlement of restricted stock units (RSUs) | 0 | $ (3) | (3) | ||||||
Other comprehensive income (loss) | (41) | (41) | |||||||
Stock-based compensation | 285,787 | 285,787 | |||||||
Net income (loss) | (359,616) | (359,562) | (54) | ||||||
End of period (in shares) at Jul. 31, 2019 | 542,566 | ||||||||
End of period at Jul. 31, 2019 | 749,783 | $ 54 | 1,796,988 | (119) | (1,058,457) | 11,317 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 896 | ||||||||
Exercise of stock options | 1,345 | 1,345 | |||||||
Vesting of early exercised stock options | 57 | 57 | |||||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 5,217 | ||||||||
Issuance of common stock upon settlement of restricted stock units (RSUs) | (1) | $ (1) | |||||||
Distributions to noncontrolling interest holders | (1,372) | (1,372) | |||||||
Capital contributions from noncontrolling interest holders | 3,840 | 3,840 | |||||||
Other comprehensive income (loss) | 132 | 132 | |||||||
Issuance of common stock for employee share purchase plan (in shares) | 336 | ||||||||
Issuance of common stock for employee share purchase plan | 7,351 | 7,351 | |||||||
Stock-based compensation | 73,861 | 73,861 | |||||||
Net income (loss) | (87,766) | (89,161) | 1,395 | ||||||
End of period (in shares) at Oct. 31, 2019 | 549,015 | ||||||||
End of period at Oct. 31, 2019 | 747,231 | $ 55 | 1,879,601 | 13 | (1,147,618) | 15,180 | |||
Beginning of period (in shares) at Jan. 31, 2020 | 555,360 | ||||||||
Beginning of period at Jan. 31, 2020 | 723,899 | $ 56 | 1,945,446 | (71) | (1,236,621) | 15,089 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 1,062 | ||||||||
Exercise of stock options | 1,932 | 1,932 | |||||||
Vesting of early exercised stock options | 2 | 2 | |||||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 4,724 | ||||||||
Equity component of convertible senior notes, net of issuance costs | 223,622 | 223,622 | |||||||
Purchases of capped calls related to convertible senior notes | (105,570) | (105,570) | |||||||
Other comprehensive income (loss) | 925 | 925 | |||||||
Issuance of common stock for employee share purchase plan (in shares) | 820 | ||||||||
Issuance of common stock for employee share purchase plan | 16,610 | 16,610 | |||||||
Stock-based compensation | 53,711 | 53,711 | |||||||
Net income (loss) | (74,427) | (75,211) | 784 | ||||||
End of period (in shares) at Apr. 30, 2020 | 561,966 | ||||||||
End of period at Apr. 30, 2020 | 840,704 | $ 56 | 2,135,753 | 854 | (1,311,832) | 15,873 | |||
Beginning of period (in shares) at Jan. 31, 2020 | 555,360 | ||||||||
Beginning of period at Jan. 31, 2020 | $ 723,899 | $ 56 | 1,945,446 | (71) | (1,236,621) | 15,089 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 2,460 | ||||||||
Vesting of early exercised stock options | $ 2,398 | ||||||||
Other comprehensive income (loss) | 340 | ||||||||
Net income (loss) | (211,183) | ||||||||
End of period (in shares) at Oct. 31, 2020 | 575,157 | ||||||||
End of period at Oct. 31, 2020 | 877,008 | $ 58 | 2,309,771 | 269 | (1,455,082) | 21,992 | |||
Beginning of period (in shares) at Apr. 30, 2020 | 561,966 | ||||||||
Beginning of period at Apr. 30, 2020 | 840,704 | $ 56 | 2,135,753 | 854 | (1,311,832) | 15,873 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 766 | ||||||||
Exercise of stock options | 1,693 | 1,693 | |||||||
Vesting of early exercised stock options | 972 | 972 | |||||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 5,016 | ||||||||
Issuance of common stock upon settlement of restricted stock units (RSUs) | (1) | $ (1) | |||||||
Distributions to noncontrolling interest holders | (375) | (375) | |||||||
Other comprehensive income (loss) | 75 | 75 | |||||||
Shares issued during period (in shares) | 1,660 | ||||||||
Shares issued related to a business combination | 39,495 | 39,495 | |||||||
Stock-based compensation | 57,288 | 57,288 | |||||||
Net income (loss) | (73,153) | (74,848) | 1,695 | ||||||
End of period (in shares) at Jul. 31, 2020 | 569,408 | ||||||||
End of period at Jul. 31, 2020 | 866,699 | $ 57 | 2,235,200 | 929 | (1,386,680) | 17,193 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 632 | ||||||||
Exercise of stock options | 1,405 | 1,405 | |||||||
Vesting of early exercised stock options | 1,424 | 1,424 | |||||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 4,491 | ||||||||
Issuance of common stock upon settlement of restricted stock units (RSUs) | (1) | $ (1) | |||||||
Other comprehensive income (loss) | (660) | (660) | |||||||
Issuance of common stock for employee share purchase plan (in shares) | 626 | ||||||||
Issuance of common stock for employee share purchase plan | 13,143 | 13,143 | |||||||
Stock-based compensation | 58,600 | 58,600 | |||||||
Net income (loss) | (63,603) | (68,402) | 4,799 | ||||||
End of period (in shares) at Oct. 31, 2020 | 575,157 | ||||||||
End of period at Oct. 31, 2020 | $ 877,008 | $ 58 | $ 2,309,771 | $ 269 | $ (1,455,082) | $ 21,992 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (211,183) | $ (479,263) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 21,198 | 20,419 |
Stock-based compensation | 169,599 | 363,287 |
Amortization of debt discount and issuance costs | 23,059 | 0 |
Noncash operating lease expense | 27,274 | 0 |
Amortization of deferred contract acquisition costs | 11,044 | 5,522 |
Net amortization of bond premium (discount) on debt securities available for sale | 1,038 | (2,077) |
Change in fair value of strategic investments | (18,088) | (5,791) |
Other non-cash adjustments | (421) | (742) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 22,622 | 2,920 |
Prepaid expenses and other assets | (9,296) | (12,049) |
Accounts payable | 3,579 | 1,005 |
Operating lease liabilities | (17,921) | 0 |
Accrued compensation and benefits | 12,411 | 879 |
Deferred revenue | 23,576 | 62,051 |
Other current and long-term liabilities | (1,749) | 20,935 |
Net cash provided by (used in) operating activities | 56,742 | (22,904) |
Cash flows from investing activities: | ||
Purchases of marketable securities | (450,747) | (202,895) |
Maturities of marketable securities | 238,071 | 402,255 |
Sales of marketable securities | 5,900 | 166,074 |
Net cash acquired from a business combination | 6,571 | 0 |
Acquisition of intangible assets | (2,375) | 0 |
Purchases of property and equipment | (9,681) | (38,276) |
Purchase of strategic investments | (15,065) | (9,283) |
Proceeds from liquidation of strategic investments | 1,126 | 2,858 |
Net cash provided by (used in) investing activities | (226,200) | 320,733 |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible senior notes, net of issuance costs | 841,329 | 0 |
Purchases of capped calls related to convertible senior notes | (105,570) | 0 |
Proceeds from exercise of stock options | 10,379 | 11,612 |
Payments of contingent consideration for acquisitions | (5,250) | (5,000) |
Issuance of common stock for employee stock purchase plan | 29,753 | 7,351 |
Capital contributions from noncontrolling interest holders | 0 | 3,840 |
Distributions to noncontrolling interest holders | (375) | (1,372) |
Other financing activities | 0 | (556) |
Net cash provided by financing activities | 770,266 | 15,875 |
Net increase in cash, cash equivalents and restricted cash | 600,808 | 313,704 |
Cash, cash equivalents and restricted cash at beginning of period | 537,489 | 201,260 |
Cash, cash equivalents and restricted cash at end of period | 1,138,297 | 514,964 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 2,546 | 1,157 |
Cash paid for interest | 2,228 | 0 |
Non-cash investing and financing activities: | ||
Increase (decrease) in purchases of property and equipment included in liabilities | (1,715) | 491 |
Purchase of strategic investments, not yet paid | 2,000 | 0 |
Acquisition of intangible assets, not yet paid | 1,000 | 0 |
Fair value of common stock issued as consideration for a business combination | 39,495 | 0 |
Vesting of early exercised stock options | 2,398 | 214 |
Unrealized short-term gain on marketable securities | $ 331 | $ 686 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Business Slack Technologies, Inc. (the “Company” or “Slack”) operates a business technology software platform that brings together people, applications, and data and sells its offering under a software-as-a-service model. The Company was incorporated in Delaware in 2009 as Tiny Speck, Inc. In 2014, the Company changed its name to Slack Technologies, Inc. and publicly launched its current offering. The Company is headquartered in San Francisco, California. Fiscal Year The Company’s fiscal year ends on January 31. References to fiscal year 2021, for example, refer to the fiscal year ended January 31, 2021. Proposed Transaction with Salesforce On December 1, 2020 the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with salesforce.com, inc. (“Salesforce”), Skyline Strategies I Inc., a Delaware corporation and a wholly owned subsidiary of Salesforce (“Merger Sub I”), and Skyline Strategies II LLC, a Delaware limited liability company and a wholly owned subsidiary of Salesforce (“Merger Sub II”). The Merger Agreement provides for the merger of Merger Sub I with and into the Company, with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Salesforce (the “First Merger”), immediately followed by a second merger of the surviving corporation into either Merger Sub II or Salesforce, with either Merger Sub II or Salesforce continuing as the surviving company (the “Second Merger” and together with the First Merger, the “Mergers”). See Note 13 for additional details. Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority-owned subsidiaries and the ownership interest of minority investors is recorded as noncontrolling interest. The unaudited condensed consolidated balance sheet as of January 31, 2020 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2020. Convertible Senior Notes In April 2020, the Company issued $862.5 million aggregate principal amount of 0.50% convertible senior notes due April 15, 2025 in a private offering, including the initial purchasers’ exercise in full of their option to purchase additional notes (the “Notes”). See Note 7 for additional details. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions; however, actual results could materially differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment related to the outbreak of the novel coronavirus pandemic (“COVID-19”). The Company’s most significant estimates and judgments involve revenue recognition, stock-based compensation including the estimation of fair value of common stock, valuation of strategic investments, valuation of acquired goodwill and intangibles from acquisitions, period of benefit for deferred contract acquisition costs, fair value of the liability and equity components of the Notes, and uncertain tax positions. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. For cash, cash equivalents, restricted cash, and marketable securities, the Company is exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the accompanying condensed consolidated balance sheets that are in excess of federal insurance limits. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the accompanying condensed consolidated balance sheets. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. No customer accounted for 10% or greater of total accounts receivable as of October 31, 2020 and January 31, 2020. There were no customers representing 10% or greater of revenue for the three and nine months ended October 31, 2020 and 2019. Summary of Significant Accounting Policies The Company’s significant accounting policies are discussed in “Index to Consolidated Financial Statements–Note 1. Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K filed with the SEC on March 12, 2020. There have been no significant changes to these policies during the nine months ended October 31, 2020, except for the accounting policy for the Notes issued in April 2020. Convertible Senior Notes The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options . Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values. Recently Adopted Accounting Standards In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments , which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. The Company adopted Topic 326 as of February 1, 2020. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners, and external market factors. The Company will continue to actively monitor the impact of the COVID-19 on expected credit losses. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. The Company adopted ASU No. 2018-15 as of February 1, 2020 using a prospective transition approach. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which simplifies the accounting for income taxes by removing certain exceptions to the general principles of income taxes and reducing the cost and complexity in accounting for income taxes. The Company early adopted ASU No. 2019-12 as of February 1, 2020 using the prospective transition approach. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU No. 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU No. 2020-06 is effective for public companies for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures. |
Revenue and Contract Costs
Revenue and Contract Costs | 9 Months Ended |
Oct. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue and Contract Costs | Revenue and Contract Costs Contract Balances Contract liabilities consist of deferred revenue. The changes in deferred revenue were as follows (in thousands): Three Months Ended October 31, 2020 Nine Months Ended October 31, 2020 Balance, beginning of period $ 383,407 $ 376,714 Billings 252,371 675,588 Deferred revenue assumed in the Rimeto acquisition — 990 Revenue (234,498) (652,012) Balance, end of period $ 401,280 $ 401,280 The majority of revenue recognized in the three months ended October 31, 2020 was from the deferred revenue balance as of July 31, 2020. Approximately half of revenue recognized in the nine months ended October 31, 2020 was from the deferred revenue balance as of January 31, 2020. Remaining Performance Obligations The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, which applies primarily to its monthly and annual subscription contracts. As of October 31, 2020, the remaining performance obligations that were unsatisfied or partially unsatisfied at the end of the reporting period were $444.7 million, of which 54% is expected to be recognized in the twelve months following October 31, 2020, with the balance to be recognized as revenue thereafter. Disaggregation of Revenue The following table shows the Company’s revenue by geographic areas, as determined based on the billing address of its customers (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 United States $ 143,518 $ 105,775 $ 403,119 $ 280,838 International 90,980 62,950 248,893 167,681 Total $ 234,498 $ 168,725 $ 652,012 $ 448,519 No individual foreign country contributed in excess of 10% of revenue for the three months or nine months ended October 31, 2020 and 2019. Deferred Contract Acquisition Costs, Net The Company deferred incremental costs of obtaining a contract of $6.1 million and $6.3 million for the three months ended October 31, 2020 and 2019, respectively, and $24.1 million and $17.1 million for the nine months ended October 31, 2020 and 2019, respectively. Deferred contract acquisition costs, net included in prepaid expenses and other current assets were $17.0 million and $11.2 million as of October 31, 2020 and January 31, 2020, respectively. Deferred contract acquisition costs, net included in other assets were $28.7 million and $21.4 million as of October 31, 2020 and January 31, 2020, respectively. Amortized deferred contract acquisition costs were $4.1 million and $2.2 million for the three months ended October 31, 2020 and 2019, respectively, and $11.0 million and $5.5 million for the nine months ended October 31, 2020 and 2019, respectively. There was no impairment loss in relation to the deferred contract acquisition costs for any period presented in the accompanying condensed consolidated statements of operations. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company’s money market funds and sweep account are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s commercial paper, U.S. agency and government securities, international government securities, certificates of deposit, and corporate bonds are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are observable directly or indirectly. The Company’s strategic investments in privately held companies are classified within Level 3 of the fair value hierarchy because they have been valued using unobservable inputs for which the Company has been required to develop its own assumptions. Realized and unrealized gains and losses relating to the strategic investments are recorded in interest income and other income, net in the accompanying condensed consolidated statements of operations. The following tables provide the financial instruments measured at fair value on a recurring basis, within the fair value hierarchy (in thousands): As of October 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 707,678 $ — $ — $ 707,678 Certificates of deposit — 75,406 — 75,406 Total cash equivalents $ 707,678 $ 75,406 $ — $ 783,084 Marketable securities: Certificates of deposit $ — $ 6,048 $ — $ 6,048 U.S. agency securities — 143,023 — 143,023 U.S. government securities — 237,376 — 237,376 Corporate bonds — 89,243 — 89,243 Total marketable securities $ — $ 475,690 $ — $ 475,690 Noncurrent assets: Strategic investments $ — $ — $ 63,132 $ 63,132 As of January 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 357,524 $ — $ — $ 357,524 Commercial paper — 69,882 — 69,882 Total cash equivalents $ 357,524 $ 69,882 $ — $ 427,406 Marketable securities: Commercial paper $ — $ 19,795 $ — $ 19,795 U.S. agency securities — 29,515 — 29,515 U.S. government securities — 97,172 — 97,172 International government securities — 8,115 — 8,115 Corporate bonds — 114,996 — 114,996 Total marketable securities $ — $ 269,593 $ — $ 269,593 Noncurrent assets: Strategic investments $ — $ — $ 28,814 $ 28,814 The following table presents additional information about Level 3 assets measured at fair value on a recurring basis (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Balance at beginning of period $ 42,826 $ 17,496 $ 28,814 $ 12,334 Purchases 8,040 3,813 17,065 9,283 Proceeds from liquidation (2) — (835) (3,193) Realized net gains (losses) 2 (466) 186 2,227 Unrealized net gains relating to investments still held at reporting date 12,266 3,372 17,902 3,564 Balance at end of period $ 63,132 $ 24,215 $ 63,132 $ 24,215 Convertible Senior Notes As of October 31, 2020, the fair value of the Notes was approximately $0.99 billion. The fair value was determined based on the quoted price for the Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. |
Business Combination
Business Combination | 9 Months Ended |
Oct. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination On June 29, 2020, the Company completed its acquisition of all issued and outstanding shares of Rimeto Inc. (“Rimeto”), a provider of an enterprise directory platform that enables users to stay connected with detailed employee profiles and information. The Company effected the business combination by issuing 1,659,715 shares of its Class A common stock, of which 740,837 shares are subject to a re-vesting restriction over four years from the closing of the acquisition. Post-combination stock-based compensation for the re-vesting restricted stock, net of fair value of the pre-combination service portion, which is recorded as purchase price, is $11.4 million and is being ratably recognized over the requisite service period of four years. The acquisition date fair value of the purchase price was $40.1 million, which consisted of the following (in thousands): Fair Value Cash $ 653 Fair value of Class A common stock transferred 28,060 Fair value of the pre-combination service portion of restricted stock 11,435 Total purchase price $ 40,148 The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of October 31, 2020 (in thousands): Fair Value Cash and cash equivalents $ 7,224 Accounts receivable and other assets 732 Operating lease right-of-use assets 616 Intangible assets 7,000 Goodwill 27,606 Accounts payable and other liabilities (464) Operating lease liability (637) Deferred revenue (990) Deferred tax liability (939) Total purchase price $ 40,148 The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of October 31, 2020, the primary area that remains preliminary relates to the valuation of certain tax-related items. The goodwill was primarily attributed to the value of synergies created with the Company’s current and future offerings and the value of the assembled workforce. The Company anticipates both goodwill and intangible assets to be fully deductible for income tax purposes. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands): Fair Value Useful Life Developed technology $ 4,900 3 years Customer relationships 2,100 3 years Total identifiable intangible assets $ 7,000 In connection with the acquisition, the Company agreed to grant restricted stock units (“RSUs”) to Rimeto employees who joined the Company upon the effective date of the acquisition, with a value totaling approximately $19.0 million. The amount is being ratably recognized as stock-based compensation over the requisite service period of four years. The Company incurred costs related to this acquisition of $1.5 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the nine months ended October 31, 2020. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Oct. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Cash, Cash Equivalents, and Marketable Securities The following tables summarize the amortized cost, unrealized gains and losses, and estimated fair value of cash, cash equivalents, and marketable securities consisting of the following (in thousands): As of October 31, 2020 Amortized Unrealized Unrealized Fair value Cash and cash equivalents: Cash $ 316,723 $ — $ — $ 316,723 Money market funds 707,678 — — 707,678 Certificates of deposit 75,406 — — 75,406 Total cash and cash equivalents 1,099,807 — — 1,099,807 Marketable securities: Certificates of deposit 6,000 48 — 6,048 U.S. agency securities 142,932 149 (58) 143,023 U.S. government securities 237,345 91 (60) 237,376 Corporate bonds 88,799 444 — 89,243 Total marketable securities 475,076 732 (118) 475,690 Total cash, cash equivalents and marketable securities $ 1,574,883 $ 732 $ (118) $ 1,575,497 As of January 31, 2020 Amortized Unrealized Unrealized Fair value Cash and cash equivalents: Cash $ 71,593 $ — $ — $ 71,593 Money market funds 357,524 — — 357,524 Commercial paper 69,891 — (9) 69,882 Total cash and cash equivalents 499,008 — (9) 498,999 Marketable securities: Commercial paper 19,799 4 (8) 19,795 U.S. agency securities 29,460 55 — 29,515 U.S. government securities 97,071 102 (1) 97,172 International government securities 8,109 6 — 8,115 Corporate bonds 114,871 139 (14) 114,996 Total marketable securities 269,310 306 (23) 269,593 Total cash, cash equivalents and marketable securities $ 768,318 $ 306 $ (32) $ 768,592 The Company periodically evaluates its investments for other-than-temporary declines in fair value. The unrealized losses on the available-for-sale securities were primarily due to unfavorable changes in interest rates subsequent to the initial purchase of these securities. Gross unrealized losses of the Company’s available-for-sale securities that have been in a continuous unrealized loss position for twelve months or longer were none and immaterial as of October 31, 2020 and January 31, 2020, respectively. The Company expects to recover the full carrying value of its available-for-sale securities in an unrealized loss position as it does not intend or anticipate a need to sell these securities prior to recovering the associated unrealized losses. The Company also expects any credit losses would be immaterial based on the high-grade credit rating for each of such available-for-sale securities. As a result, the Company does not consider any portion of the unrealized losses as of October 31, 2020 or January 31, 2020 to represent an other-than temporary impairment or credit losses. The following table classifies marketable securities by contractual maturities (in thousands): As of October 31, 2020 January 31, 2020 Due in one year $ 323,724 $ 190,344 Due in one to two years 151,966 79,249 Total $ 475,690 $ 269,593 Property and Equipment, Net The following is a summary of the Company’s property and equipment by category (in thousands): As of October 31, 2020 January 31, 2020 Leasehold improvements $ 105,790 $ 98,770 Furniture and fixtures 28,519 27,384 Capitalized internal-use software costs 4,241 4,241 Computer equipment 3,847 3,183 Construction in progress 4,900 10,345 Property and equipment, gross 147,297 143,923 Less: accumulated depreciation and amortization (53,756) (41,583) Property and equipment, net $ 93,541 $ 102,340 Depreciation and amortization expense was $5.8 million and $6.7 million for the three months ended October 31, 2020 and 2019, respectively. Depreciation and amortization expense was $16.9 million and $17.3 million for the nine months ended October 31, 2020 and 2019, respectively. Goodwill As of October 31, 2020 and January 31, 2020, goodwill was $76.2 million and $48.6 million, respectively. During the nine months ended October 31, 2020, the Company recorded $27.6 million of goodwill in connection with the Rimeto acquisition that was completed in June 2020. See Note 4 for further details. No goodwill impairments were recorded for any period presented in the accompanying condensed consolidated statements of operations. Intangible Assets, Net Intangible assets consist of the following (in thousands): October 31, 2020 Weighted-average Gross carrying Accumulated Net carrying Customer relationships 4.2 years $ 11,200 $ 3,213 $ 7,987 Developed technology 2.1 years 13,427 7,195 6,232 Patents and Licenses 5.8 years 5,875 497 5,378 Assembled workforce 0.0 years 1,198 1,198 — Total $ 31,700 $ 12,103 $ 19,597 January 31, 2020 Weighted-average Gross carrying Accumulated Net carrying Customer relationships 5.5 years $ 9,100 $ 2,004 $ 7,096 Developed technology 1.6 years 8,527 4,976 3,551 Patents 4.9 years 2,500 42 2,458 Assembled workforce 0.7 years 1,198 773 425 Total $ 21,325 $ 7,795 $ 13,530 Amortization expense of intangible assets was $1.8 million and $1.0 million for the three months ended October 31, 2020 and 2019, respectively. Amortization expense of intangible assets was $4.3 million and $3.1 million for the nine months ended October 31, 2020 and 2019, respectively. As of October 31, 2020, expected amortization expense relating to intangible assets for each of the next five fiscal years and thereafter is as follows (in thousands): Year ending January 31, 2021 (3 months remaining) $ 1,712 2022 5,934 2023 4,615 2024 3,254 2025 2,240 Thereafter 1,842 Total $ 19,597 |
Operating Leases
Operating Leases | 9 Months Ended |
Oct. 31, 2020 | |
Leases [Abstract] | |
Operating Leases | Operating Leases The Company leases real estate facilities under non-cancelable operating leases with various expiration dates through fiscal year 2031. For the three months ended October 31, 2020, the Company recorded operating lease costs of $12.4 million including variable operating lease costs of $1.9 million and short-term leases of $0.6 million. For the nine months ended October 31, 2020, the Company recorded operating lease costs of $34.2 million, including variable operating lease costs of $4.8 million and short-term leases of $2.1 million. The following table sets forth a summary of and other information pertaining to the Company’s operating leases (dollars in thousands): Nine Months Ended October 31, 2020 Operating cash flows used for operating leases $ 17,921 Operating lease liabilities arising from obtaining ROU assets $ 61,685 Weighted average remaining terms 8.3 years Weighted average discount rate 5.2 % Rent expense, net of sublease income under ASC 840, was $9.3 million and $26.3 million for the three and nine months ended October 31, 2019, respectively. Future minimum lease payments under non-cancelable operating leases with initial lease terms in excess of one year as of October 31, 2020 as follows (in thousands): Year ending January 31, 2021 (3 months remaining) $ 6,979 2022 38,705 2023 51,628 2024 50,261 2025 52,716 Thereafter 262,180 Gross lease payments 462,469 Less: Imputed interest (74,609) Less: Tenant improvement receivables (24,258) Less: Leases executed but not yet commenced (99,488) Present value of lease liabilities $ 264,114 As of October 31, 2020, the Company had a commitment of $99.5 million for a non-cancelable operating lease of a real estate facility that has not yet commenced, and therefore is not included in the ROU assets or operating lease liabilities. This operating lease is expected to commence in fiscal year 2021 with a lease term of 12.0 years. |
Debt and Financing Arrangements
Debt and Financing Arrangements | 9 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Financing Arrangements | Debt and Financing Arrangements Convertible Senior Notes On April 9, 2020, the Company issued $862.5 million in aggregate principal amount of the Notes in a private offering pursuant to an Indenture dated April 9, 2020 (the “Indenture”), including the initial purchasers’ exercise in full of their option to purchase an additional $112.5 million principal amount of the Notes. The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable were $841.3 million. The Notes are senior, unsecured obligations of the Company and will accrue interest payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020, at a rate of 0.50% per year. The Notes will mature on April 15, 2025, unless earlier converted, redeemed, or repurchased. The Notes are convertible into cash, shares of the Company’s Class A common stock or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election. Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on January 14, 2025 only under the following circumstances: • During any fiscal quarter commencing after the fiscal quarter ending on July 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • During the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; or • Upon the occurrence of specified corporate events. On or after January 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its Notes at any time, regardless of the foregoing. The conditions allowing holders of the Notes to convert have not been met since the Company issued the Notes on April 9, 2020. The conversion rate was initially 32.2630 shares of the Company’s Class A common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $31.00 per share of the Company’s Class A common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date (a “make-whole fundamental change”), the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event. If consummated, the Mergers are expected to constitute a make-whole fundamental change that will result in an increase to the conversion rate for a holder who elects to convert its Notes in connection therewith. Any such increase would be determined by reference to a “make-whole” table included in the indenture governing the Notes. The Company may not redeem the Notes prior to April 20, 2023. The Company may redeem for cash all or any portion of the Notes, at its option, on a redemption date occurring on or after April 20, 2023 and on or before the 21st scheduled trading day immediately before the maturity date, if the last reported sale price of the Company’s Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes. If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. If consummated, the Mergers are expected to constitute a fundamental change. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. The Notes are the Company’s general unsecured obligations and rank senior in right of payment to all of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment with all of the Company’s liabilities that are not so subordinated; effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated using a discount rate of 6.85%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $229.2 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate over the contractual terms of the Notes. As of October 31, 2020, the net carrying amount of the liability component of the Notes was as follows (in thousands): Principal $ 862,500 Less: unamortized discount (207,394) Less: unamortized issuance costs (14,339) Net carrying amount $ 640,767 As of October 31, 2020, the net carrying amount of the equity component of the Notes was as follows (in thousands): Proceeds allocated to the conversion options (debt discount) $ 229,249 Less: issuance costs (5,627) Carrying amount of the equity component $ 223,622 The following table sets forth the interest expense recognized related to the Notes (in thousands): Three Months Ended October 31, 2020 Nine Months Ended October 31, 2020 Contractual interest expense $ 1,078 $ 2,408 Amortization of debt discount 9,887 21,854 Amortization of debt issuance costs 553 1,205 Total interest expense related to the Notes $ 11,518 $ 25,467 Capped Call Transactions In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions with certain financial institution counterparties (the “Capped Calls”). The Capped Calls each have an initial strike price of approximately $31.00 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $48.62 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 27.8 million shares of Class A common stock. The Capped Calls are generally intended to reduce or offset the potential dilution to the Class A common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Capped Calls expire on the earlier of (i) the last day on which any convertible securities remain outstanding and (ii) April 15, 2025, subject to earlier exercise. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $105.6 million incurred to purchase the capped call transactions was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet. Revolving Credit Facility On May 30, 2019, the Company entered into a $215.0 million revolving credit and guaranty agreement with a syndicate of financial institutions. The revolving credit facility has an accordion option, which, if exercised, would allow the Company to increase the aggregate commitments by up to the greater of $200.0 million and 100% of the consolidated adjusted EBITDA of the Company and its subsidiaries, plus an unlimited amount subject to satisfaction of certain leverage ratio based compliance tests after giving effect to the exercise, in each case subject to obtaining additional lender commitments and satisfying certain conditions. Pursuant to the terms of the revolving credit facility, the Company may issue letters of credit under the revolving credit facility, which reduce the total amount available for borrowing under such facility. The revolving credit facility terminates on May 30, 2024. Interest on borrowings under the revolving credit facility accrues at a variable rate tied to the prime rate or the LIBOR, plus the applicable margin, at the Company’s election. The margin is 0.25% in the case of prime rate loans and 1.25% in the case of LIBOR loans. Interest is payable quarterly in arrears. Pursuant to the terms of the revolving credit facility, the Company is required to pay an annual commitment fee that accrues at a rate of 0.10% per annum on the unused portion of the borrowing commitments under the revolving credit facility. In addition, the Company is required to pay a fee in connection with letters of credit issued and outstanding under the revolving credit facility that accrues at a rate of 1.25% per annum on the amount to be drawn under such letters of credit outstanding. There is an additional fronting fee of 0.125% per annum multiplied by the aggregate face amount of issued and outstanding letters of credit. The revolving credit facility contains customary conditions to borrowing, events of default, and covenants, including covenants that restrict the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create or incur liens, merge or consolidate with other companies, sell substantially all of the Company’s assets, liquidate or dissolve, make distributions to the Company’s equity holders or its subsidiaries’ equity interests, pay dividends, make redemptions and repurchases of stock, or engage in transactions with affiliates. In addition, the revolving credit facility contains financial covenants, including a minimum liquidity balance and a minimum revenue amount. The Company has been in compliance with all covenants under the revolving credit facility since it entered into the revolving credit and guaranty agreement on May 30, 2019. As of October 31, 2020, the Company had no amounts or letters of credit issued and outstanding under the revolving credit |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit As of October 31, 2020, the Company had $38.5 million in standby letters of credit outstanding related to facility lease obligations in San Francisco, California and Denver, Colorado, which is included in restricted cash in the accompanying condensed consolidated balance sheets. Hosting Commitments On April 30, 2020, the Company executed an amendment to its existing agreement with Amazon Web Services (“AWS”). The amended agreement was effective as of May 1, 2020 and continues through April 30, 2025. Pursuant to the amended agreement, the Company has minimum annual commitments of $75.0 million which will increase by $5.0 million annually, for a total minimum commitment of $425.0 million. As of October 31, 2020, the Company had a remaining minimum payment obligation of $392.5 million to AWS through April 30, 2025. Legal Matters The Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses material contingencies when it believes a loss is not probable but reasonably possible. Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The outcomes of the Company’s legal proceedings are inherently unpredictable and subject to significant uncertainties. For some matters for which a material loss is reasonably possible, an estimate of the amount of loss or range of losses is not possible, nor is the Company able to estimate the loss or range of losses that could potentially result from the application of non-monetary remedies. Many legal and tax contingencies can take years to be resolved. Until the final resolution of legal matters, all amounts of loss or range of losses are estimates only. The final losses the Company incurs may differ materially from these estimates. Beginning in September 2019, seven purported class action lawsuits were filed against the Company, its directors, certain of its officers, and certain investment funds associated with certain of its directors, each alleging violations of securities laws in connection with the Company’s registration statement on Form S-1 filed with the SEC (the “Registration Statement”). All but one of these actions were filed in the Superior Court of California for the County of San Mateo, though one plaintiff originally filed in the County of San Francisco (the “San Francisco Action”) before refiling in the County of San Mateo. The remaining action was filed in the U.S. District Court for the Northern District of California (the “Federal Action”). In the Federal Action, captioned Dennee v. Slack Technologies, Inc., Case No. 3:19-CV-05857-SI, the Company and the other defendants filed a motion to dismiss the complaint in January 2020. In April 2020, the court granted in part and denied in part the motion to dismiss. In May 2020, the Company and the other defendants filed a motion to certify the court’s order for interlocutory appeal, which the court granted. The Company and the other defendants filed a petition for permission to appeal the district court’s order to the Ninth Circuit Court of Appeals, which was granted i n July 2020. The Company and the other defendants filed their opening brief with the Ninth Circuit Court of Appeals in October 2020. The plaintiff-appellee is expected to file its brief in December 2020. No argument date has been set. The state court actions were consolidated in November 2019, and the consolidated action is captioned In re Slack Technologies, Inc. Shareholder Litigation, Lead Case No. 19CIV05370 (the “State Court Action”). An additional state court action was filed in San Mateo County in June 2020 but was consolidated with the State Court Action in July 2020. The Company and the other defendants filed demurrers to the complaint in the State Court Action in February 2020. In August 2020, the court sustained in part and overruled in part the demurrers, and granted plaintiffs leave to file an amended complaint, which they did in October 2020. The Company and the other defendants answered the complaint in November 2020. The plaintiff in the San Francisco Action has sought dismissal of that action after joining the State Court Action. That dismissal remains pending. The Federal Action and the State Court Action seek unspecified monetary damages and other relief on behalf of investors who purchased the Company’s Class A common stock issued pursuant and/or traceable to the Registration Statement. In April 2020, three purported stockholder derivative lawsuits were filed against certain of the Company’s officers and certain of the Company’s current and former directors in the U.S. District Courts for the District of Delaware and the Northern District of California. The case filed in the Northern District of California was dismissed and re-filed in the U.S. District Court for the District of Delaware. The derivative cases were consolidated in June 2020, and the operative complaint was designated in August 2020. The complaint alleges breaches of fiduciary duty in connection with the Company’s Registration Statement, and seeks the award of unspecified damages to the Company, and certain reforms to the Company’s governance policies. The Company moved to dismiss the case in September 2020. At approximately the same time, the plaintiff in the lawsuit brought pursuant to Delaware General Corporation Law Section 220 (discussed below) sought to intervene and stay the case. On that basis, the plaintiffs in the purported derivative lawsuit elected not to file an opposition to the motion to dismiss. The motions remain pending. In June 2020, a lawsuit was filed by a stockholder against the Company in the Delaware Court of Chancery pursuant to Delaware General Corporation Law Section 220 seeking an order permitting inspection and copying of certain of the Company’s books and records. The Company answered the complaint in October 2020. The Company believes these lawsuits are without merit and intends to vigorously defend them. Based on the preliminary nature of the proceedings in these cases, the outcomes of these matters remain uncertain. 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 outcomes of these matters, the Company believes that none of these ordinary course legal proceedings will have a material adverse effect on its condensed consolidated financial statements. Indemnification Agreements |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Oct. 31, 2020 | |
Equity [Abstract] | |
Stockholders Equity | Stockholders' Equity Common Stock The Company’s amended and restated certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of October 31, 2020, the Company had authorized 5.0 billion shares of Class A common stock and 700.0 million shares of Class B common stock, each at par value of $0.0001. As of October 31, 2020, 488.0 million shares of Class A common stock and 87.1 million shares of Class B common stock were issued and outstanding. Preferred Stock The Company’s board of directors has the authority, without further action by the Company’s stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. Equity Incentive Plans The Company maintains two equity incentive plans: the 2009 Stock Plan (the “2009 Plan”) and the 2019 Stock Option and Incentive Plan (the “2019 Plan”). All shares that remain available for future grants are under the 2019 Plan. In addition, the Company offers the 2019 Employee Stock Purchase Plan (the “2019 ESPP”) to eligible employees. Stock Options A summary of stock option activity under the 2009 Plan and 2019 Plan is as follows (in thousands, except years and per share data): Number of shares Weighted-average exercise price per share Weighted-average remaining contractual term (In years) Aggregate intrinsic value Outstanding at January 31, 2020 8,425 $ 4.68 6.27 $ 135,224 Granted 1,678 24.31 Exercised (2,460) 4.23 Cancelled (239) 10.52 Outstanding at October 31, 2020 7,404 $ 9.09 6.72 $ 122,108 Stock options vested and exercisable at October 31, 2020 3,726 $ 2.68 4.75 $ 85,318 Stock options vested and expected to vest at October 31, 2020 7,404 $ 9.09 6.72 $ 122,108 As of October 31, 2020, there was $28.1 million of total unrecognized stock-based compensation related to outstanding stock options, which will be recognized over a weighted average period of 3.9 years. Restricted Stock Units and Restricted Stock Awards A summary of RSUs and Restricted Stock Awards (“RSAs”) activity under the 2009 Plan and 2019 Plan is as follows (in thousands, except per share data): Restricted stock units Restricted stock awards Number of shares Weighted-average grant date fair value Number of shares Weighted-average grant date fair value Unvested at January 31, 2020 42,002 $ 12.48 1,579 $ 8.91 Granted 14,016 26.56 — — Released (14,231) 11.65 (361) 8.94 Cancelled (3,349) 14.06 — — Unvested at October 31, 2020 38,438 $ 17.78 1,218 $ 8.90 As of October 31, 2020, there was $486.0 million of total unrecognized stock-based compensation related to unvested RSUs, which will be recognized over a weighted average period of 2.0 years. As of October 31, 2020, there was $10.3 million of total unrecognized stock-based compensation related to unvested RSAs, which will be recognized over a weighted average period of 3.1 years. 2019 Employee Stock Purchase Plan For the three months ended October 31, 2020, 626,002 shares of Class A common stock were issued under the 2019 ESPP. For the nine months ended October 31, 2020, 1,446,377 shares of Class A common stock were issued under the 2019 ESPP. The Company selected the Black-Scholes option-pricing model as the method for determining the estimated fair value for the Company’s 2019 ESPP. As of October 31, 2020, total unrecognized compensation cost related to the 2019 ESPP was $5.1 million which will be amortized over a weighted average period of 0.4 years. Stock-Based Compensation The Company recorded the total stock-based compensation expense as follows (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Cost of revenue $ 2,645 $ 2,673 $ 7,543 $ 13,671 Research and development 29,129 40,077 85,705 193,117 Sales and marketing 15,703 17,638 44,695 82,792 General and administrative 11,123 13,473 31,656 73,707 Total $ 58,600 $ 73,861 $ 169,599 $ 363,287 |
Interest Income and Other Incom
Interest Income and Other Income, Net | 9 Months Ended |
Oct. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Interest Income and Other Income, Net | Interest Income and Other Income, Net Interest income and other income, net consist of the following (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Interest income $ 1,073 $ 4,130 $ 6,035 $ 13,306 Unrealized gains (losses) on foreign exchange (762) 44 339 (1,066) Transaction gains (losses) on foreign exchange 65 41 (156) (807) Change in fair value of strategic investments 12,268 2,906 18,088 5,791 Other non-operating income (expense), net — 272 (2) 678 Interest income and other income, net $ 12,644 $ 7,393 $ 24,304 $ 17,902 |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company computes its provision (benefit) for income taxes by applying the estimated annual effective tax rate to pretax income or loss and adjusts the provision for discrete tax items recorded in the period. For the three months ended October 31, 2020 and 2019, the Company recorded a tax benefit of $1.2 million and $0.1 million on pretax losses of $64.8 million and $87.9 million, respectively. The effective tax rates for the three months ended October 31, 2020 and 2019 were 1.8% and 0.1%, respectively. For the three months ended October 31, 2020, the Company maintained a full valuation allowance on its U.S. federal, state, and certain foreign jurisdictions net deferred tax assets as it was more likely than not that those deferred tax assets would not be realized. For the nine months ended October 31, 2020 and 2019, the Company recorded a tax benefit of $1.1 million and $0.5 million on pretax losses of $212.3 million and $479.8 million, respectively. The effective tax rates for the nine months ended October 31, 2020 and 2019 were 0.5% and 0.1%, respectively. For the nine months ended October 31, 2020, the Company maintained a full valuation allowance on its U.S. federal, state, and certain foreign jurisdictions net deferred tax assets as it was more likely than not that those deferred tax assets would not be realized. In March 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, since the Company has recorded a full valuation allowance against its deferred tax assets, these changes to U.S. tax law do not have a material impact on the Company’s provision for income taxes in its condensed consolidated financial statements. In addition, although many countries in which the Company operates have also issued some form of COVID-19 related income tax guidance, this guidance does not have material impact on provision for income taxes in its condensed consolidated financial statements as of October 31, 2020. In July 2015, the U.S. Tax Court issued an opinion favorable to Altera Corporation (“Altera”) with respect to the exclusion of stock-based compensation from its intercompany cost-sharing arrangement. In June 2019, the U.S. Court of Appeals reversed the 2015 decision of the U.S. Tax Court. In July 2019, Altera petitioned the Ninth Circuit for a rehearing of a larger panel of eleven Ninth Circuit judges. Altera’s petition for rehearing was denied in November, 2019. In February 2020, Altera filed a petition for writ of certiorari to the U.S. Supreme Court. In June 2020, the U.S. Supreme Court declined the writ of certiorari. The Company has considered the impact on its condensed consolidated financial statements which is not material after considering the valuation allowance and will continue to monitor the future developments in this case. |
Net Loss per Share Attributable
Net Loss per Share Attributable to Slack Common Stockholders | 9 Months Ended |
Oct. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss per Share Attributable to Slack Common Stockholders | Net Loss per Share Attributable to Slack Common Stockholders Basic net loss per share attributable to Slack common stockholders is computed by dividing the net loss attributable to Slack common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is the same as basic loss per share for all years presented because the effects of potentially dilutive items were antidilutive given the Company’s net loss in each period presented. The following table presents the calculation of basic and diluted net loss per share attributable to Slack common stockholders (in thousands, except per share data): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Numerator: Net loss attributable to Slack $ (68,402) $ (89,161) $ (218,461) $ (482,055) Denominator: Weighted average common shares outstanding 570,374 544,057 564,095 348,580 Net loss per share attributable to Slack common stockholders, basic and diluted $ (0.12) $ (0.16) $ (0.39) $ (1.38) Since the Company was in a loss position for all periods presented, basic net loss per share attributable to Slack common stockholders is the same as diluted net loss per share attributable to Slack common stockholders as the inclusion of all potential common shares outstanding would have been antidilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands): As of October 31, 2020 October 31, 2019 Shares related to convertible senior notes — — Stock options 7,404 10,179 Unvested early exercised stock options 123 23 Restricted stock units 38,438 46,356 Restricted stock awards 1,218 2,136 Restricted stock 695 — Employee stock purchase plan 782 767 Total antidilutive securities 48,660 59,461 The Company had 373.4 million shares of preferred stock outstanding that were converted to shares of Class B common stock in connection with the direct listing of the Company’s Class A common stock on the New York Stock Exchange. These securities were potentially dilutive, as outstanding shares of preferred stock, through the date of conversion of June 7, 2019. The Notes will not have an impact on the Company’s diluted earnings per share until the average market price of the Company’s Class A common stock exceeds the initial conversion price of approximately $31.00 per share, as the Company intends and has the ability to settle the principal amount of the Notes in cash upon conversion. The Company is required under the treasury stock method to compute the potentially dilutive shares of Class A common stock related to the Notes for periods the Company reports net income. However, upon conversion, there will be no economic dilution from the Notes until the average market price of the Company’s Class A common stock exceeds the cap price of $48.62 per share, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive under the treasury stock method. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On December 1, 2020, the Company entered into the Merger Agreement. The Merger Agreement provides for the merger of Merger Sub I with and into the Company, with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Salesforce, immediately followed by a second merger of the surviving corporation into either Merger Sub II or Salesforce, with either Merger Sub II or Salesforce continuing as the surviving company. Under the terms of the Merger Agreement, all of the Company’s issued and outstanding shares of Class A common stock and Class B common stock will be converted into the right to receive (a) 0.0776 shares of Salesforce common stock and (b) $26.79 in cash, without interest. The Mergers are intended to be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). As a result of the Mergers, the Company will cease to be a publicly traded company. The Merger Agreement contains customary representations, warranties, and covenants. The consummation of the Mergers is conditioned on the receipt of the approval of the Company’s stockholders, as well as the satisfaction of other customary closing conditions, including domestic and foreign regulatory approvals and performance in all material respects by each party of its obligations under the Merger Agreement. Consummation of the Mergers is not subject to a financing condition. The Mergers are anticipated to close in the second quarter of the Company’s fiscal year 2022 (the quarter ending July 31, 2021), subject to Company stockholder approval, receipt of required regulatory approvals, and other customary closing conditions. The Company cannot predict with certainty, however, whether and when all of the required closing conditions will be satisfied or if the Mergers will close. The Merger Agreement contains certain customary termination rights for the Company and Salesforce, including if the First Merger is not consummated by August 1, 2021, subject to two extensions of up to three months each in order to obtain required regulatory approvals. If the Merger Agreement is terminated under certain specified circumstances, including (i) a termination by the Company to enter into a superior proposal, (ii) a termination by Salesforce following a change or withdrawal of the Company’s board of directors’ recommendation of the Mergers to the Company’s stockholders, or (iii) a termination by Salesforce as a result of a material breach of the Company’s non-solicitation obligations under the Merger Agreement, then the Company will be obligated to pay to Salesforce a termination fee equal to $900.0 million in cash. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 31, 2020 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on January 31. References to fiscal year 2021, for example, refer to the fiscal year ended January 31, 2021. |
Basis of Presentation | Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority-owned subsidiaries and the ownership interest of minority investors is recorded as noncontrolling interest. The unaudited condensed consolidated balance sheet as of January 31, 2020 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2020. |
Consolidation | Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority-owned subsidiaries and the ownership interest of minority investors is recorded as noncontrolling interest. The unaudited condensed consolidated balance sheet as of January 31, 2020 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2020. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions; however, actual results could materially differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment related to the outbreak of the novel coronavirus pandemic (“COVID-19”). |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. For cash, cash equivalents, restricted cash, and marketable securities, the Company is exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the accompanying condensed consolidated balance sheets that are in excess of federal insurance limits. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the accompanying condensed consolidated balance sheets. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. |
Summary of Significant Accounting Policies and Recently Adopted Accounting Standards | Summary of Significant Accounting Policies The Company’s significant accounting policies are discussed in “Index to Consolidated Financial Statements–Note 1. Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K filed with the SEC on March 12, 2020. There have been no significant changes to these policies during the nine months ended October 31, 2020, except for the accounting policy for the Notes issued in April 2020. Convertible Senior Notes The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options . Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values. Recently Adopted Accounting Standards In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments , which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The CECL model is expected to result in more timely recognition of credit losses. This guidance also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. The Company adopted Topic 326 as of February 1, 2020. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners, and external market factors. The Company will continue to actively monitor the impact of the COVID-19 on expected credit losses. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. The Company adopted ASU No. 2018-15 as of February 1, 2020 using a prospective transition approach. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which simplifies the accounting for income taxes by removing certain exceptions to the general principles of income taxes and reducing the cost and complexity in accounting for income taxes. The Company early adopted ASU No. 2019-12 as of February 1, 2020 using the prospective transition approach. The adoption of this new standard did not have a material impact on the accompanying condensed consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU No. 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU No. 2020-06 is effective for public companies for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures. |
Net Loss per Share Attributable to Slack Common Stockholders | Net Loss per Share Attributable to Slack Common StockholdersBasic net loss per share attributable to Slack common stockholders is computed by dividing the net loss attributable to Slack common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is the same as basic loss per share for all years presented because the effects of potentially dilutive items were antidilutive given the Company’s net loss in each period presented. |
Revenue and Contract Costs (Tab
Revenue and Contract Costs (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Liabilities | Contract liabilities consist of deferred revenue. The changes in deferred revenue were as follows (in thousands): Three Months Ended October 31, 2020 Nine Months Ended October 31, 2020 Balance, beginning of period $ 383,407 $ 376,714 Billings 252,371 675,588 Deferred revenue assumed in the Rimeto acquisition — 990 Revenue (234,498) (652,012) Balance, end of period $ 401,280 $ 401,280 |
Schedule of Revenues by Geographical Area | The following table shows the Company’s revenue by geographic areas, as determined based on the billing address of its customers (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 United States $ 143,518 $ 105,775 $ 403,119 $ 280,838 International 90,980 62,950 248,893 167,681 Total $ 234,498 $ 168,725 $ 652,012 $ 448,519 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Instruments Measured at Fair Value on a Recurring Basis | The following tables provide the financial instruments measured at fair value on a recurring basis, within the fair value hierarchy (in thousands): As of October 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 707,678 $ — $ — $ 707,678 Certificates of deposit — 75,406 — 75,406 Total cash equivalents $ 707,678 $ 75,406 $ — $ 783,084 Marketable securities: Certificates of deposit $ — $ 6,048 $ — $ 6,048 U.S. agency securities — 143,023 — 143,023 U.S. government securities — 237,376 — 237,376 Corporate bonds — 89,243 — 89,243 Total marketable securities $ — $ 475,690 $ — $ 475,690 Noncurrent assets: Strategic investments $ — $ — $ 63,132 $ 63,132 As of January 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 357,524 $ — $ — $ 357,524 Commercial paper — 69,882 — 69,882 Total cash equivalents $ 357,524 $ 69,882 $ — $ 427,406 Marketable securities: Commercial paper $ — $ 19,795 $ — $ 19,795 U.S. agency securities — 29,515 — 29,515 U.S. government securities — 97,172 — 97,172 International government securities — 8,115 — 8,115 Corporate bonds — 114,996 — 114,996 Total marketable securities $ — $ 269,593 $ — $ 269,593 Noncurrent assets: Strategic investments $ — $ — $ 28,814 $ 28,814 |
Schedule of Level 3 Assets Measured at Fair Value on Recurring Basis | The following table presents additional information about Level 3 assets measured at fair value on a recurring basis (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Balance at beginning of period $ 42,826 $ 17,496 $ 28,814 $ 12,334 Purchases 8,040 3,813 17,065 9,283 Proceeds from liquidation (2) — (835) (3,193) Realized net gains (losses) 2 (466) 186 2,227 Unrealized net gains relating to investments still held at reporting date 12,266 3,372 17,902 3,564 Balance at end of period $ 63,132 $ 24,215 $ 63,132 $ 24,215 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The acquisition date fair value of the purchase price was $40.1 million, which consisted of the following (in thousands): Fair Value Cash $ 653 Fair value of Class A common stock transferred 28,060 Fair value of the pre-combination service portion of restricted stock 11,435 Total purchase price $ 40,148 The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of October 31, 2020 (in thousands): Fair Value Cash and cash equivalents $ 7,224 Accounts receivable and other assets 732 Operating lease right-of-use assets 616 Intangible assets 7,000 Goodwill 27,606 Accounts payable and other liabilities (464) Operating lease liability (637) Deferred revenue (990) Deferred tax liability (939) Total purchase price $ 40,148 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands): Fair Value Useful Life Developed technology $ 4,900 3 years Customer relationships 2,100 3 years Total identifiable intangible assets $ 7,000 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents and Marketable Securities | The following tables summarize the amortized cost, unrealized gains and losses, and estimated fair value of cash, cash equivalents, and marketable securities consisting of the following (in thousands): As of October 31, 2020 Amortized Unrealized Unrealized Fair value Cash and cash equivalents: Cash $ 316,723 $ — $ — $ 316,723 Money market funds 707,678 — — 707,678 Certificates of deposit 75,406 — — 75,406 Total cash and cash equivalents 1,099,807 — — 1,099,807 Marketable securities: Certificates of deposit 6,000 48 — 6,048 U.S. agency securities 142,932 149 (58) 143,023 U.S. government securities 237,345 91 (60) 237,376 Corporate bonds 88,799 444 — 89,243 Total marketable securities 475,076 732 (118) 475,690 Total cash, cash equivalents and marketable securities $ 1,574,883 $ 732 $ (118) $ 1,575,497 As of January 31, 2020 Amortized Unrealized Unrealized Fair value Cash and cash equivalents: Cash $ 71,593 $ — $ — $ 71,593 Money market funds 357,524 — — 357,524 Commercial paper 69,891 — (9) 69,882 Total cash and cash equivalents 499,008 — (9) 498,999 Marketable securities: Commercial paper 19,799 4 (8) 19,795 U.S. agency securities 29,460 55 — 29,515 U.S. government securities 97,071 102 (1) 97,172 International government securities 8,109 6 — 8,115 Corporate bonds 114,871 139 (14) 114,996 Total marketable securities 269,310 306 (23) 269,593 Total cash, cash equivalents and marketable securities $ 768,318 $ 306 $ (32) $ 768,592 |
Schedule of Marketable Securities by Contractual Maturity | The following table classifies marketable securities by contractual maturities (in thousands): As of October 31, 2020 January 31, 2020 Due in one year $ 323,724 $ 190,344 Due in one to two years 151,966 79,249 Total $ 475,690 $ 269,593 |
Schedule of Property and Equipment by Category | The following is a summary of the Company’s property and equipment by category (in thousands): As of October 31, 2020 January 31, 2020 Leasehold improvements $ 105,790 $ 98,770 Furniture and fixtures 28,519 27,384 Capitalized internal-use software costs 4,241 4,241 Computer equipment 3,847 3,183 Construction in progress 4,900 10,345 Property and equipment, gross 147,297 143,923 Less: accumulated depreciation and amortization (53,756) (41,583) Property and equipment, net $ 93,541 $ 102,340 |
Schedule of Intangible Assets | Intangible assets consist of the following (in thousands): October 31, 2020 Weighted-average Gross carrying Accumulated Net carrying Customer relationships 4.2 years $ 11,200 $ 3,213 $ 7,987 Developed technology 2.1 years 13,427 7,195 6,232 Patents and Licenses 5.8 years 5,875 497 5,378 Assembled workforce 0.0 years 1,198 1,198 — Total $ 31,700 $ 12,103 $ 19,597 January 31, 2020 Weighted-average Gross carrying Accumulated Net carrying Customer relationships 5.5 years $ 9,100 $ 2,004 $ 7,096 Developed technology 1.6 years 8,527 4,976 3,551 Patents 4.9 years 2,500 42 2,458 Assembled workforce 0.7 years 1,198 773 425 Total $ 21,325 $ 7,795 $ 13,530 |
Schedule of Expected Amortization Expense Related to Intangible Assets | As of October 31, 2020, expected amortization expense relating to intangible assets for each of the next five fiscal years and thereafter is as follows (in thousands): Year ending January 31, 2021 (3 months remaining) $ 1,712 2022 5,934 2023 4,615 2024 3,254 2025 2,240 Thereafter 1,842 Total $ 19,597 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Leases [Abstract] | |
Schedule of Operating Leases, Other Information | The following table sets forth a summary of and other information pertaining to the Company’s operating leases (dollars in thousands): Nine Months Ended October 31, 2020 Operating cash flows used for operating leases $ 17,921 Operating lease liabilities arising from obtaining ROU assets $ 61,685 Weighted average remaining terms 8.3 years Weighted average discount rate 5.2 % |
Schedule of Maturities of Operating Lease Liabilities | Future minimum lease payments under non-cancelable operating leases with initial lease terms in excess of one year as of October 31, 2020 as follows (in thousands): Year ending January 31, 2021 (3 months remaining) $ 6,979 2022 38,705 2023 51,628 2024 50,261 2025 52,716 Thereafter 262,180 Gross lease payments 462,469 Less: Imputed interest (74,609) Less: Tenant improvement receivables (24,258) Less: Leases executed but not yet commenced (99,488) Present value of lease liabilities $ 264,114 |
Debt and Financing Arrangemen_2
Debt and Financing Arrangements (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Debt | As of October 31, 2020, the net carrying amount of the liability component of the Notes was as follows (in thousands): Principal $ 862,500 Less: unamortized discount (207,394) Less: unamortized issuance costs (14,339) Net carrying amount $ 640,767 As of October 31, 2020, the net carrying amount of the equity component of the Notes was as follows (in thousands): Proceeds allocated to the conversion options (debt discount) $ 229,249 Less: issuance costs (5,627) Carrying amount of the equity component $ 223,622 The following table sets forth the interest expense recognized related to the Notes (in thousands): Three Months Ended October 31, 2020 Nine Months Ended October 31, 2020 Contractual interest expense $ 1,078 $ 2,408 Amortization of debt discount 9,887 21,854 Amortization of debt issuance costs 553 1,205 Total interest expense related to the Notes $ 11,518 $ 25,467 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Equity [Abstract] | |
Schedule of Stock Options Activity | A summary of stock option activity under the 2009 Plan and 2019 Plan is as follows (in thousands, except years and per share data): Number of shares Weighted-average exercise price per share Weighted-average remaining contractual term (In years) Aggregate intrinsic value Outstanding at January 31, 2020 8,425 $ 4.68 6.27 $ 135,224 Granted 1,678 24.31 Exercised (2,460) 4.23 Cancelled (239) 10.52 Outstanding at October 31, 2020 7,404 $ 9.09 6.72 $ 122,108 Stock options vested and exercisable at October 31, 2020 3,726 $ 2.68 4.75 $ 85,318 Stock options vested and expected to vest at October 31, 2020 7,404 $ 9.09 6.72 $ 122,108 |
Schedule of Restricted Stock Units and Restricted Stock Activity | A summary of RSUs and Restricted Stock Awards (“RSAs”) activity under the 2009 Plan and 2019 Plan is as follows (in thousands, except per share data): Restricted stock units Restricted stock awards Number of shares Weighted-average grant date fair value Number of shares Weighted-average grant date fair value Unvested at January 31, 2020 42,002 $ 12.48 1,579 $ 8.91 Granted 14,016 26.56 — — Released (14,231) 11.65 (361) 8.94 Cancelled (3,349) 14.06 — — Unvested at October 31, 2020 38,438 $ 17.78 1,218 $ 8.90 |
Schedule of Stock-Based Compensation Expense | The Company recorded the total stock-based compensation expense as follows (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Cost of revenue $ 2,645 $ 2,673 $ 7,543 $ 13,671 Research and development 29,129 40,077 85,705 193,117 Sales and marketing 15,703 17,638 44,695 82,792 General and administrative 11,123 13,473 31,656 73,707 Total $ 58,600 $ 73,861 $ 169,599 $ 363,287 |
Interest Income and Other Inc_2
Interest Income and Other Income, Net (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of Interest Income and Other Income, Net | Interest income and other income, net consist of the following (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Interest income $ 1,073 $ 4,130 $ 6,035 $ 13,306 Unrealized gains (losses) on foreign exchange (762) 44 339 (1,066) Transaction gains (losses) on foreign exchange 65 41 (156) (807) Change in fair value of strategic investments 12,268 2,906 18,088 5,791 Other non-operating income (expense), net — 272 (2) 678 Interest income and other income, net $ 12,644 $ 7,393 $ 24,304 $ 17,902 |
Net Loss per Share Attributab_2
Net Loss per Share Attributable to Slack Common Stockholders (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule Calculation of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share attributable to Slack common stockholders (in thousands, except per share data): Three Months Ended October 31, Nine Months Ended October 31, 2020 2019 2020 2019 Numerator: Net loss attributable to Slack $ (68,402) $ (89,161) $ (218,461) $ (482,055) Denominator: Weighted average common shares outstanding 570,374 544,057 564,095 348,580 Net loss per share attributable to Slack common stockholders, basic and diluted $ (0.12) $ (0.16) $ (0.39) $ (1.38) |
Schedule of Potentially Dilutive Securities Excluded from Diluted Per Share Calculations | Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands): As of October 31, 2020 October 31, 2019 Shares related to convertible senior notes — — Stock options 7,404 10,179 Unvested early exercised stock options 123 23 Restricted stock units 38,438 46,356 Restricted stock awards 1,218 2,136 Restricted stock 695 — Employee stock purchase plan 782 767 Total antidilutive securities 48,660 59,461 |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Details) - Convertible Debt $ in Millions | Apr. 09, 2020USD ($) |
Debt Instrument [Line Items] | |
Aggregate principal amount | $ 862.5 |
Stated interest percentage | 0.50% |
Revenue and Contract Costs - Sc
Revenue and Contract Costs - Schedule of Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Oct. 31, 2020 | Oct. 31, 2020 | |
Contract With Customer, Liability [Roll Forward] | ||
Balance, beginning of period | $ 383,407 | $ 376,714 |
Billings | 252,371 | 675,588 |
Deferred revenue assumed in the Rimeto acquisition | 0 | 990 |
Revenue | (234,498) | (652,012) |
Balance, end of period | $ 401,280 | $ 401,280 |
Revenue and Contract Costs - Na
Revenue and Contract Costs - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |||||
Deferred incremental costs of obtaining a contract | $ 6,100,000 | $ 6,300,000 | $ 24,100,000 | $ 17,100,000 | |
Deferred commissions, net included in prepaid expenses and other current assets | 17,000,000 | 17,000,000 | $ 11,200,000 | ||
Deferred commissions, net included in other assets | 28,700,000 | 28,700,000 | $ 21,400,000 | ||
Amortization of deferred contract acquisition costs | 4,100,000 | 2,200,000 | 11,044,000 | 5,522,000 | |
Impairment loss related to deferred costs | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue and Contract Costs - Re
Revenue and Contract Costs - Remaining Performance Obligations (Details) $ in Millions | Oct. 31, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Future estimated revenue related to unsatisfied or partially satisfied performance obligations | $ 444.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations expected to be recognized (as a percent) | 54.00% |
Performance obligations expected to be satisfied, expected timing | 12 months |
Revenue and Contract Costs - _2
Revenue and Contract Costs - Schedule of Revenue by Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 234,498 | $ 168,725 | $ 652,012 | $ 448,519 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 143,518 | 105,775 | 403,119 | 280,838 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 90,980 | $ 62,950 | $ 248,893 | $ 167,681 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 475,690 | $ 269,593 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 707,678 | 357,524 |
Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 75,406 | |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 69,882 | |
Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 783,084 | 427,406 |
Marketable securities | 475,690 | 269,593 |
Strategic investments | 63,132 | 28,814 |
Fair Value, Recurring | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 6,048 | |
Fair Value, Recurring | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 19,795 | |
Fair Value, Recurring | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 143,023 | 29,515 |
Fair Value, Recurring | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 237,376 | 97,172 |
Fair Value, Recurring | International government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 8,115 | |
Fair Value, Recurring | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 89,243 | 114,996 |
Fair Value, Recurring | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 707,678 | 357,524 |
Fair Value, Recurring | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 75,406 | |
Fair Value, Recurring | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 69,882 | |
Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 707,678 | 357,524 |
Marketable securities | 0 | 0 |
Strategic investments | 0 | 0 |
Fair Value, Recurring | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 1 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 1 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 1 | International government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 707,678 | 357,524 |
Fair Value, Recurring | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Fair Value, Recurring | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 75,406 | 69,882 |
Marketable securities | 475,690 | 269,593 |
Strategic investments | 0 | 0 |
Fair Value, Recurring | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 6,048 | |
Fair Value, Recurring | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 19,795 | |
Fair Value, Recurring | Level 2 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 143,023 | 29,515 |
Fair Value, Recurring | Level 2 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 237,376 | 97,172 |
Fair Value, Recurring | Level 2 | International government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 8,115 | |
Fair Value, Recurring | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 89,243 | 114,996 |
Fair Value, Recurring | Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Fair Value, Recurring | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 75,406 | |
Fair Value, Recurring | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 69,882 | |
Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Marketable securities | 0 | 0 |
Strategic investments | 63,132 | 28,814 |
Fair Value, Recurring | Level 3 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 3 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 3 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 3 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 3 | International government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | |
Fair Value, Recurring | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Recurring | Level 3 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Fair Value, Recurring | Level 3 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 | |
Fair Value, Recurring | Level 3 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Level 3 Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | $ 42,826 | $ 17,496 | $ 28,814 | $ 12,334 |
Purchases | 8,040 | 3,813 | 17,065 | 9,283 |
Proceeds from liquidation | (2) | 0 | (835) | (3,193) |
Realized net gains (losses) | 2 | (466) | 186 | 2,227 |
Unrealized net gains relating to investments still held at reporting date | 12,266 | 3,372 | 17,902 | 3,564 |
Balance at end of period | $ 63,132 | $ 24,215 | $ 63,132 | $ 24,215 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | Oct. 31, 2020USD ($) |
Shares related to convertible senior notes | Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of convertible senior notes | $ 990 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - Rimeto - USD ($) $ in Thousands | Jun. 29, 2020 | Oct. 31, 2020 |
Business Acquisition [Line Items] | ||
Post-combination stock based compensation | $ 11,400 | |
Total purchase price | $ 40,148 | |
General and administrative | ||
Business Acquisition [Line Items] | ||
Acquisition related costs | $ 1,500 | |
Restricted stock units | ||
Business Acquisition [Line Items] | ||
Award vesting period (in years) | 4 years | |
Post-combination stock based compensation | $ 19,000 | |
Restricted stock | ||
Business Acquisition [Line Items] | ||
Award vesting period (in years) | 4 years | |
Common Stock | ||
Business Acquisition [Line Items] | ||
Shares issued during period (in shares) | 1,659,715 | |
Shares subject to re-vesting restriction (in shares) | 740,837 |
Business Combination - Fair Val
Business Combination - Fair Value of Consideration Transferred (Details) - Rimeto $ in Thousands | Jun. 29, 2020USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 653 |
Fair value of Class A common stock transferred | 28,060 |
Fair value of the pre-combination service portion of restricted stock | 11,435 |
Total purchase price | $ 40,148 |
Business Combination - Prelimin
Business Combination - Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Business Acquisition [Line Items] | ||
Goodwill | $ 76,204 | $ 48,598 |
Rimeto | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | 7,224 | |
Accounts receivable and other assets | 732 | |
Operating lease right-of-use assets | 616 | |
Intangible assets | 7,000 | |
Goodwill | 27,606 | |
Accounts payable and other liabilities | (464) | |
Operating lease liability | (637) | |
Deferred revenue | (990) | |
Deferred tax liability | (939) | |
Total purchase price | $ 40,148 |
Business Combination - Identifi
Business Combination - Identifiable Intangible Assets Acquired (Details) - Rimeto $ in Thousands | 9 Months Ended |
Oct. 31, 2020USD ($) | |
Business Acquisition [Line Items] | |
Fair Value | $ 7,000 |
Developed technology | |
Business Acquisition [Line Items] | |
Fair Value | $ 4,900 |
Useful Life | 3 years |
Customer relationships | |
Business Acquisition [Line Items] | |
Fair Value | $ 2,100 |
Useful Life | 3 years |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Cash and Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | $ 1,099,807 | $ 498,999 |
Marketable securities, amortized cost | 475,076 | 269,310 |
Marketable securities, unrealized gains | 732 | 306 |
Marketable securities, unrealized losses | (118) | (23) |
Marketable securities, fair value | 475,690 | 269,593 |
Total cash, cash equivalents and marketable securities, amortized cost | 1,574,883 | 768,318 |
Total cash, cash equivalents and marketable securities, unrealized gains | 732 | 306 |
Total cash, cash equivalents and marketable securities, unrealized losses | (118) | (32) |
Total cash, cash equivalents and marketable securities, fair value | 1,575,497 | 768,592 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 6,000 | |
Marketable securities, unrealized gains | 48 | |
Marketable securities, unrealized losses | 0 | |
Marketable securities, fair value | 6,048 | |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 19,799 | |
Marketable securities, unrealized gains | 4 | |
Marketable securities, unrealized losses | (8) | |
Marketable securities, fair value | 19,795 | |
U.S. agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 142,932 | 29,460 |
Marketable securities, unrealized gains | 149 | 55 |
Marketable securities, unrealized losses | (58) | 0 |
Marketable securities, fair value | 143,023 | 29,515 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 237,345 | 97,071 |
Marketable securities, unrealized gains | 91 | 102 |
Marketable securities, unrealized losses | (60) | (1) |
Marketable securities, fair value | 237,376 | 97,172 |
International government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 8,109 | |
Marketable securities, unrealized gains | 6 | |
Marketable securities, unrealized losses | 0 | |
Marketable securities, fair value | 8,115 | |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Marketable securities, amortized cost | 88,799 | 114,871 |
Marketable securities, unrealized gains | 444 | 139 |
Marketable securities, unrealized losses | 0 | (14) |
Marketable securities, fair value | 89,243 | 114,996 |
Total cash and cash equivalents | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | 1,099,807 | 499,008 |
Cash and cash equivalents, unrealized gains | 0 | 0 |
Cash and cash equivalents, unrealized losses | 0 | (9) |
Cash and cash equivalents, fair value | 1,099,807 | 498,999 |
Cash | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | 316,723 | 71,593 |
Cash and cash equivalents, fair value | 316,723 | 71,593 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | 707,678 | 357,524 |
Cash and cash equivalents, fair value | 707,678 | 357,524 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | 75,406 | |
Cash and cash equivalents, fair value | $ 75,406 | |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents, amortized cost | 69,891 | |
Cash and cash equivalents, unrealized gains | 0 | |
Cash and cash equivalents, unrealized losses | (9) | |
Cash and cash equivalents, fair value | $ 69,882 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Marketable Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Due in one year | $ 323,724 | $ 190,344 |
Due in one to two years | 151,966 | 79,249 |
Total | $ 475,690 | $ 269,593 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of Property and Equipment by Category (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 147,297 | $ 143,923 |
Less: accumulated depreciation and amortization | (53,756) | (41,583) |
Property and equipment, net | 93,541 | 102,340 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 105,790 | 98,770 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 28,519 | 27,384 |
Capitalized internal-use software costs | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,241 | 4,241 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,847 | 3,183 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,900 | $ 10,345 |
Balance Sheet Components - Narr
Balance Sheet Components - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Depreciation | $ 5,800,000 | $ 6,700,000 | $ 16,900,000 | $ 17,300,000 | |
Goodwill | 76,204,000 | 76,204,000 | $ 48,598,000 | ||
Amortization expense of intangible assets | 1,800,000 | 1,000,000 | 4,300,000 | 3,100,000 | |
Goodwill impairment | 0 | $ 0 | 0 | $ 0 | |
Rimeto | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 27,606,000 | $ 27,606,000 |
Balance Sheet Components - Sc_4
Balance Sheet Components - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended | |
Jul. 31, 2020 | Oct. 31, 2020 | Jan. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 31,700 | $ 21,325 | |
Accumulated amortization | 12,103 | 7,795 | |
Net carrying amount | 19,597 | 13,530 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 11,200 | 9,100 | |
Accumulated amortization | 3,213 | 2,004 | |
Net carrying amount | 7,987 | 7,096 | |
Developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 13,427 | 8,527 | |
Accumulated amortization | 7,195 | 4,976 | |
Net carrying amount | 6,232 | 3,551 | |
Patents and Licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 5,875 | 2,500 | |
Accumulated amortization | 497 | 42 | |
Net carrying amount | 5,378 | 2,458 | |
Assembled workforce | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 1,198 | 1,198 | |
Accumulated amortization | 1,198 | 773 | |
Net carrying amount | $ 0 | $ 425 | |
Weighted Average | Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average remaining amortization period | 5 years 6 months | 4 years 2 months 12 days | |
Weighted Average | Developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average remaining amortization period | 1 year 7 months 6 days | 2 years 1 month 6 days | |
Weighted Average | Patents and Licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average remaining amortization period | 4 years 10 months 24 days | 5 years 9 months 18 days | |
Weighted Average | Assembled workforce | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average remaining amortization period | 8 months 12 days | 0 years |
Balance Sheet Components - Sc_5
Balance Sheet Components - Schedule of Expected Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 31, 2020 | Jan. 31, 2020 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2021 (3 months remaining) | $ 1,712 | |
2022 | 5,934 | |
2023 | 4,615 | |
2024 | 3,254 | |
2025 | 2,240 | |
Thereafter | 1,842 | |
Net carrying amount | $ 19,597 | $ 13,530 |
Operating Leases - Narrative (D
Operating Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Leases [Abstract] | ||||
Operating lease costs | $ 12,400 | $ 34,200 | ||
Variable lease costs | 1,900 | 4,800 | ||
Short-term lease costs | 600 | 2,100 | ||
Rent expense, net of sublease income | $ 9,300 | $ 26,300 | ||
Commitments for operating leases that have not yet commenced | $ 99,488 | $ 99,488 | ||
Operating leases that have not yet commenced, term of lease | 12 years | 12 years |
Operating Leases - Schedule of
Operating Leases - Schedule of Operating Lease Costs (Details) $ in Thousands | 9 Months Ended |
Oct. 31, 2020USD ($) | |
Leases [Abstract] | |
Operating cash flows used for operating leases | $ 17,921 |
Operating lease liabilities arising from obtaining ROU assets | $ 61,685 |
Weighted average remaining terms | 8 years 3 months 18 days |
Weighted average discount rate | 5.20% |
Operating Leases - Schedule o_2
Operating Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands | Oct. 31, 2020USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2021 (3 months remaining) | $ 6,979 |
2022 | 38,705 |
2023 | 51,628 |
2024 | 50,261 |
2025 | 52,716 |
Thereafter | 262,180 |
Gross lease payments | 462,469 |
Less: Imputed interest | (74,609) |
Less: Tenant improvement receivables | (24,258) |
Less: Leases executed but not yet commenced | (99,488) |
Present value of lease liabilities | $ 264,114 |
Debt and Financing Arrangemen_3
Debt and Financing Arrangements - Narrative (Details) $ / shares in Units, shares in Millions | Apr. 09, 2020USD ($)day$ / sharesshares | May 30, 2019USD ($) | Oct. 31, 2020USD ($) |
Convertible Debt | |||
Line of Credit Facility [Line Items] | |||
Aggregate principal amount | $ 862,500,000 | ||
Additional amount available for purchase | 112,500,000 | ||
Total net proceeds from debt offering | $ 841,300,000 | ||
Stated interest percentage | 0.50% | ||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | ||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | ||
Threshold percentage of stock price trigger | 130.00% | ||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||
Conversion rate | 0.032263 | ||
Conversion price (in dollars per share) | $ / shares | $ 31 | ||
Redemption price percentage | 100.00% | ||
Percentage of aggregate principal amount | 25.00% | ||
Carrying amount of equity component | $ 229,200,000 | $ 229,249,000 | |
Initial cap price (in dollars per share) | $ / shares | $ 48.62 | ||
Number of shares covered in capped call transaction | shares | 27.8 | ||
Net cost incurred to purchase capped call transactions | $ 105,600,000 | ||
Convertible Debt | Discount Rate | |||
Line of Credit Facility [Line Items] | |||
Measurement input | 0.0685 | ||
Line of Credit | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 215,000,000 | ||
Potential increase in limit of aggregate commitments | $ 200,000,000 | ||
Potential increase in limit of aggregate commitments, as a percentage of adjusted EBITDA | 100.00% | ||
Commitment fee percentage | 0.10% | ||
Annual fee percentage | 1.25% | ||
Fronting fee percentage | 0.125% | ||
Letter of credit amount issued | 0 | ||
Remaining borrowing capacity | $ 215,000,000 | ||
Line of Credit | Prime Rate | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.25% | ||
Line of Credit | LIBOR | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.25% |
Debt and Financing Arrangemen_4
Debt and Financing Arrangements - Schedule of Net Carrying Amount of Liability Component (Details) - Convertible Debt $ in Thousands | Oct. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
Principal | $ 862,500 |
Less: unamortized discount | (207,394) |
Less: unamortized issuance costs | (14,339) |
Net carrying amount | $ 640,767 |
Debt and Financing Arrangemen_5
Debt and Financing Arrangements - Schedule of Carrying Amount of Equity Component (Details) - Convertible Debt - USD ($) $ in Thousands | Oct. 31, 2020 | Apr. 09, 2020 |
Debt Instrument [Line Items] | ||
Proceeds allocated to the conversion options (debt discount) | $ 229,249 | $ 229,200 |
Less: issuance costs | (5,627) | |
Carrying amount of the equity component | $ 223,622 |
Debt and Financing Arrangemen_6
Debt and Financing Arrangements - Schedule of Interest Expense Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | $ 23,059 | $ 0 | ||
Total interest expense related to the Notes | $ 11,742 | $ 258 | 26,136 | $ 579 |
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 1,078 | 2,408 | ||
Amortization of debt discount | 9,887 | 21,854 | ||
Amortization of debt issuance costs | 553 | 1,205 | ||
Total interest expense related to the Notes | $ 11,518 | $ 25,467 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) | Apr. 30, 2020 | Oct. 31, 2020 |
Long-term Purchase Commitment [Line Items] | ||
Letter of credit amount outstanding | $ 38,500,000 | |
Hosting Commitments | ||
Long-term Purchase Commitment [Line Items] | ||
Minimum annual commitment amount under hosting commitments | $ 75,000,000 | |
Increase in annual commitment amount under hosting commitments | 5,000,000 | |
Total minimum commitment amount under hosting commitments | $ 425,000,000 | |
Remaining payment obligation | $ 392,500,000 |
Stockholders Equity - Narrative
Stockholders Equity - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Oct. 31, 2020USD ($)$ / sharesshares | Oct. 31, 2020USD ($)plan$ / sharesshares | |
Class of Stock [Line Items] | ||
Preferred stock, number of shares authorized (in shares) | 100,000,000 | 100,000,000 |
Number of equity incentive plans | plan | 2 | |
Unrecognized stock based compensation expense related to options | $ | $ 28.1 | $ 28.1 |
Stock options | ||
Class of Stock [Line Items] | ||
Unrecognized stock based compensation expense related to options, weighted average period of recognition | 3 years 10 months 24 days | |
Restricted stock units | ||
Class of Stock [Line Items] | ||
Unrecognized stock based compensation expense related to options, weighted average period of recognition | 2 years | |
Unrecognized stock based compensation expense | $ | 486 | $ 486 |
Restricted stock | ||
Class of Stock [Line Items] | ||
Unrecognized stock based compensation expense related to options, weighted average period of recognition | 3 years 1 month 6 days | |
Unrecognized stock based compensation expense | $ | $ 10.3 | $ 10.3 |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares authorized for issuance (in shares) | 5,000,000,000 | 5,000,000,000 |
Par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Number of shares issued (in shares) | 488,000,000 | 488,000,000 |
Number of shares outstanding (in shares) | 488,000,000 | 488,000,000 |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares authorized for issuance (in shares) | 700,000,000 | 700,000,000 |
Par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Number of shares issued (in shares) | 87,100,000 | 87,100,000 |
Number of shares outstanding (in shares) | 87,100,000 | 87,100,000 |
2019 Employee Stock Purchase Plan | Class A Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares issued under employee stock purchase plan (in shares) | 626,002 | 1,446,377 |
2019 Employee Stock Purchase Plan | Class A Common Stock | Employee stock purchase plan | ||
Class of Stock [Line Items] | ||
Unrecognized stock based compensation expense related to options, weighted average period of recognition | 4 months 24 days | |
Unrecognized stock based compensation expense | $ | $ 5.1 | $ 5.1 |
Stockholders Equity - Schedule
Stockholders Equity - Schedule of Stock Options (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Oct. 31, 2020USD ($)$ / sharesshares | Jan. 31, 2020USD ($)$ / sharesshares | |
Number of shares | ||
Outstanding at beginning of period (in shares) | shares | 8,425 | |
Granted (in shares) | shares | 1,678 | |
Exercised (in shares) | shares | (2,460) | |
Cancelled (in shares) | shares | (239) | |
Outstanding at end of period (in shares) | shares | 7,404 | 8,425 |
Stock options vested and exercisable at end of period, number of shares (in shares) | shares | 3,726 | |
Stock options vested and expected to vest at end of period, number of shares (in shares) | shares | 7,404 | |
Weighted-average exercise price per share | ||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 4.68 | |
Granted (in dollars per share) | $ / shares | 24.31 | |
Exercised (in dollars per share) | $ / shares | 4.23 | |
Cancelled (in dollars per share) | $ / shares | 10.52 | |
Outstanding at end of period (in dollars per share) | $ / shares | 9.09 | $ 4.68 |
Stock options vested and exercisable at end of period, weighted-average exercise price per share (in dollars per share) | $ / shares | 2.68 | |
Stock options vested and expected to vest at end of period, weighted-average exercise price per share (in dollars per share) | $ / shares | $ 9.09 | |
Weighted-average remaining contractual term (In years) | ||
Outstanding, weighted-average remaining contractual term | 6 years 8 months 19 days | 6 years 3 months 7 days |
Stock options vested and exercisable, weighted-average remaining contractual term | 4 years 9 months | |
Stock options vested and expected to vest, weighted-average remaining contractual term | 6 years 8 months 19 days | |
Aggregate intrinsic value | ||
Outstanding, aggregate intrinsic value | $ | $ 122,108 | $ 135,224 |
Stock options vested and exercisable, aggregate intrinsic value | $ | 85,318 | |
Stock options vested and expected to vest, aggregate intrinsic value | $ | $ 122,108 |
Stockholders Equity - Schedul_2
Stockholders Equity - Schedule of Restricted Stock Units and Restricted Stock Awards (Details) shares in Thousands | 9 Months Ended |
Oct. 31, 2020$ / sharesshares | |
Restricted stock units | |
Number of shares | |
Unvested at beginning of period (in shares) | shares | 42,002 |
Granted (in shares) | shares | 14,016 |
Released (in shares) | shares | (14,231) |
Cancelled (in shares) | shares | (3,349) |
Unvested at end of period (in shares) | shares | 38,438 |
Weighted-average grant date fair value per share | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 12.48 |
Granted (in dollars per share) | $ / shares | 26.56 |
Released (in dollars per share) | $ / shares | 11.65 |
Cancelled (in dollars per share) | $ / shares | 14.06 |
Unvested at end of period (in dollars per share) | $ / shares | $ 17.78 |
Restricted stock | |
Number of shares | |
Unvested at beginning of period (in shares) | shares | 1,579 |
Granted (in shares) | shares | 0 |
Released (in shares) | shares | (361) |
Cancelled (in shares) | shares | 0 |
Unvested at end of period (in shares) | shares | 1,218 |
Weighted-average grant date fair value per share | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 8.91 |
Granted (in dollars per share) | $ / shares | 0 |
Released (in dollars per share) | $ / shares | 8.94 |
Cancelled (in dollars per share) | $ / shares | 0 |
Unvested at end of period (in dollars per share) | $ / shares | $ 8.90 |
Stockholders Equity - Schedul_3
Stockholders Equity - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 58,600 | $ 73,861 | $ 169,599 | $ 363,287 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 2,645 | 2,673 | 7,543 | 13,671 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 29,129 | 40,077 | 85,705 | 193,117 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 15,703 | 17,638 | 44,695 | 82,792 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 11,123 | $ 13,473 | $ 31,656 | $ 73,707 |
Interest Income and Other Inc_3
Interest Income and Other Income, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ 1,073 | $ 4,130 | $ 6,035 | $ 13,306 |
Unrealized gains (losses) on foreign exchange | (762) | 44 | 339 | (1,066) |
Transaction gains (losses) on foreign exchange | 65 | 41 | (156) | (807) |
Change in fair value of strategic investments | 12,268 | 2,906 | 18,088 | 5,791 |
Other non-operating income (expense), net | 0 | 272 | (2) | 678 |
Interest income and other income, net | $ 12,644 | $ 7,393 | $ 24,304 | $ 17,902 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Benefit for income taxes | $ 1,162 | $ 101 | $ 1,101 | $ 504 |
Pretax losses | $ 64,765 | $ 87,867 | $ 212,284 | $ 479,767 |
Effective tax rate | 1.80% | 0.10% | 0.50% | 0.10% |
Net Loss per Share Attributab_3
Net Loss per Share Attributable to Slack Common Stockholders - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | |
Numerator: | ||||
Net loss attributable to Slack | $ (68,402) | $ (89,161) | $ (218,461) | $ (482,055) |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 570,374 | 544,057 | 564,095 | 348,580 |
Net loss per share attributable to Slack common stockholders, basic and diluted (in dollars per share) | $ (0.12) | $ (0.16) | $ (0.39) | $ (1.38) |
Net Loss per Share Attributab_4
Net Loss per Share Attributable to Slack Common Stockholders - Potentially Dilutive Securities Excluded from Diluted Per Share Calculations (Details) - shares shares in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 48,660 | 59,461 |
Shares related to convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 0 | 0 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 7,404 | 10,179 |
Unvested early exercised stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 123 | 23 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 38,438 | 46,356 |
Restricted stock awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 1,218 | 2,136 |
Restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 695 | 0 |
Employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 782 | 767 |
Net Loss per Share Attributab_5
Net Loss per Share Attributable to Slack Common Stockholders - Narrative (Details) - $ / shares shares in Thousands | Jun. 07, 2019 | Oct. 31, 2020 | Oct. 31, 2019 | Apr. 09, 2020 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities converted from convertible preferred stock to common stock (in shares) | 48,660 | 59,461 | ||
Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Conversion price (in dollars per share) | $ 31 | |||
Initial cap price (in dollars per share) | $ 48.62 | |||
Convertible Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities converted from convertible preferred stock to common stock (in shares) | 373,400 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - Salesforce $ / shares in Units, $ in Millions | Dec. 01, 2020USD ($)extension$ / sharesshares |
Subsequent Event [Line Items] | |
Number of shares received upon conversion of issued and outstanding common stock (in shares) | shares | 0.0776 |
Value of cash received upon conversion (in dollars per share) | $ / shares | $ 26.79 |
Number of potential extensions | extension | 2 |
Term of potential extensions | 3 months |
Potential fees owed upon termination of merger agreement | $ | $ 900 |