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Acquisitions | 6 Months Ended
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Jul. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | ACQUISITIONS On February 6, 2021, we executed a merger agreement to acquire 100% of the issued and outstanding equity securities (the Acquisition) of Scalyr, a leading cloud-native, cloud-scale data analytics platform. This acquisition will allow us to advance our data ingestion, search, and retention capabilities. The Acquisition closed on February 9, 2021 and has been accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. The aggregate consideration transferred was $125.3 million, of which $5.0 million was paid in cash, $106.2 million was comprised of 7,277,214 shares of common stock, and $14.1 million was comprised of assumed options to purchase 2,138,347 shares of common stock. As part of the merger agreement, we entered into non-compete agreements with the founder and the co-founder of Scalyr with a term of three years and a fair value of $0.7 million. The fair value of the non-compete agreements was excluded from the purchase consideration and the net assets acquired, resulting in purchase consideration of $124.6 million. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. The assets acquired and liabilities assumed in connection with the acquisition were recorded at their preliminary fair value on the date of acquisition as follows (in thousands):
| Amount
Cash and cash equivalents | $ | 699 |
Accounts receivable | 3,665 |
Restricted cash | 444 |
Prepaid expense | 277 |
Intangible assets | 17,150 |
Goodwill | 108,193 |
Accounts payable | (412) |
Deferred revenue | (5,041) |
Other liabilities | (347) |
Total purchase consideration | $ | 124,628 |
The excess of the purchase price over the preliminary fair value of net tangible and intangible assets acquired has been assigned to goodwill. Goodwill represents the future benefits as a result of the acquisition that will enhance our product available to both new and existing customers and increase our competitive position. Goodwill is not deductible for tax purposes. The following table sets forth the preliminary amounts allocated to the intangible assets identified and their estimated useful lives as of the date of acquisition:
| Fair Value |  | Useful Life
| (in thousands) |  | (in years)
Developed technology | $ | 15,500 |  |  | 7
Customer relationships | 1,500 |  |  | 2
Trademarks | 150 |  |  | 2
Total intangible assets acquired | $ | 17,150 |  |  |
The preliminary fair value assigned to the developed technology was determined using the multi-period excess earnings method of the income approach. The preliminary fair value assigned to the customer relationships was determined using the distributor method under the income approach, which includes estimates of customer attrition rates. The intangible assets acquired are expected to be amortized over their useful lives on a straight-line basis. As part of the consideration transferred, we withheld 1,317,079 shares of our common stock with a fair value of $14.59 per share at the time of grant (Holdback Shares) and $0.4 million of cash related to certain obligations, including indemnification for potential breach of general representations and warranties of the sellers. The Holdback Shares and cash are expected to be released 18 months from the Acquisition closing date, subject to claims for any obligations. In connection with the Acquisition, we granted 1,315,099 shares of restricted common stock that vest over a period of two years contingent on continued employment, for which stock-based compensation expense will be recognized ratably over the vesting period. There was no other contingent consideration or cash consideration expected to be paid out subsequent to the Acquisition. The results of operations of Scalyr have been included in our condensed consolidated financial statements from the date of Acquisition. We have incurred zero and $1.0 million of transaction costs in connection with the Acquisition during the three and six months ended July 31, 2021, respectively.These costs were recorded as general and administrative expenses in the condensed consolidated statements of operations. The followin g unaudited pro forma financial information summarizes the results of operations of SentinelOne and Scalyr as if the Acquisition occurred on February 1, 2020 (in thousands):
| Three Months Ended July 31, |  | Six Months Ended July 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue | $ | 45,749 |  |  | $ | 22,920 |  |  | $ | 83,219 |  |  | $ | 42,555 |
Net loss | $ | (60,952) |  |  | $ | (32,761) |  |  | $ | (125,944) |  |  | $ | (74,314) |
Our consolidated statements of operations from the acquisition date to the period ended July 31, 2021 includes revenue and net loss of Scalyr of $5.0 million and $0.9 million, respective ly. The pro forma results reflect certain adjustments for the amortization of acquired intangible assets, adjustments to revenue resulting from the fair value adjustment to deferred revenue, recognition of stock-based compensation, and acquisition-related costs. Such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the Acquisition been completed on the date indicated, nor is it indicative of our future operating results.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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