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Acquisitions | 12 Months Ended
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Jan. 31, 2024
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | ACQUISITIONS KSG On November 8, 2023, we completed our acquisition of Krebs Stamos Group LLC (KSG), a Washington D.C.-based privately held strategic advisory group. The purchase price of $13.9 million for all of the outstanding membership interests of KSG consisted of all cash and has been accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. We recorded $4.8 million of net identifiable assets in our consolidated balance sheet as of the KSG acquisition date, of which $3.2 million was related to intangible assets. The excess of the purchase price over the fair value of net identifiable assets acquired has been assigned to goodwill in the amount of $9.1 million. The goodwill in this transaction is primarily attributable to expected operational synergies and the assembled workforce. The goodwill is expected to be deductible for tax purposes. Intangible assets consist of customer relationships, which will be amortized to sales and marketing expense on a straight-line basis over the estimated useful life of four years. The results of operations of KSG have been included in the consolidated financial statements from the date of acquisition, and would not have had a material impact on our combined results of operation if the acquisition had occurred on February 1, 2022. The estimates and assumptions regarding the fair value of certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes, and goodwill are subject to change as we obtain additional information during the measurement period, which usually lasts for up to one year from the acquisition date. In connection with the acquisition, we also granted PSUs under our 2021 Equity Incentive Plan. For further details, refer to Note 10, Stock-Based Compensation. As the shares are subject to post-acquisition employment, we are accounting for them as post-acquisition compensation expense. Attivo On May 3, 2022, we acquired 100% of the issued and outstanding equity securities of Attivo Networks, Inc. (Attivo), an identity security and lateral movement protection company (the Attivo acquisition). Attivo expands our coverage of critical attack surfaces. Identity is an adjacent security solution that complements our core endpoint solution. The Attivo acquisition closed on May 3, 2022 and has been accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. We had post-combination expense with a fair value of $32.9 million that was not included in the total purchase consideration, which is comprised of 307,396 shares of restricted common stock with an aggregate fair value of $10.0 million, and 378,828 assumed options with an aggregate fair value of $11.5 million. Restricted common stock and assumed options will be recognized as stock-based compensation expense. In addition, in connection with the acquisition, certain employees who were promised compensation related to their previous employment agreements will be paid $11.4 million in cash based on continued employment which will be recognized on a straight-line basis as acquisition-related compensation costs. All post-combination expense is expected to be recognized through May 2026. Post-combination compensation expense is subject to adjustment based on continuing service obligations to us of certain stockholders of Attivo. In connection with the Attivo acquisition, we also granted RSUs and PSUs under our 2021 Equity Incentive Plan. For further details, refer to Note 10, Stock-Based Compensation. The following table presents the allocation of purchase consideration recorded on our consolidated balance sheet as of the acquisition date (in thousands):
| Amount
Consideration: |
Cash | $ | 348,917 |
Common Stock (6,032,231 shares)(1) | 185,885 |
Fair value of total consideration transferred | $ | 534,802 |
Cash and cash equivalents | $ | 8,836 |
Accounts receivable | 4,867 |
Prepaid expense and other current assets | 3,880 |
Operating lease right-of-use assets | 260 |
Intangible assets | 151,900 |
Accrued liabilities | (4,270) |
Accrued payroll and benefits | (1,113) |
Operating lease liabilities | (259) |
Deferred revenue | (51,746) |
Other liabilities | (2,357) |
Deferred tax liability | (7,310) |
Total identifiable net assets | 102,688 |
Goodwill | 432,114 |
Total purchase consideration | $ | 534,802 |
(1) Consideration calculated using the fair value of our common stock The valuation of intangible assets acquired are included in Note 7, Intangible Assets. The excess of the purchase price over the fair value of net tangible and intangible assets acquired has been assigned to goodwill. Goodwill represents the future benefits resulting from the Attivo acquisition that will enhance the value of our product for both new and existing customers and strengthen our competitive position. Goodwill is not deductible for tax purposes. We incurred $5.5 million of transaction expenses in connection with the Attivo acquisition during fiscal 2023. $3.2 million of these costs were recorded as general and administrative expenses in our consolidated statements of operations, with the remainder allocated to purchase price consideration. No transaction expenses in connection with the acquisition were recorded during fiscal 2024. The following unaudited supplemental pro forma financial information is provided for informational purposes only and summarizes our combined results of operations as if the acquisition occurred on February 1, 2021 (in thousands):
| Year Ended January 31, |  |
| 2023 |  | 2022 |  |  |  |
Revenue | $ | 429,683 |  |  | $ | 235,321 |  |  |  |  |
Net loss | $ | (393,773) |  |  | $ | (326,829) |  |  |  |  |
The unaudited supplemental pro forma results reflect certain adjustments for the amortization of acquired intangible assets, recognition of stock-based compensation, acquisition-related transaction expenses, and acquisition-related compensation 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. Scalyr On February 6, 2021, we executed a merger agreement to acquire 100% of the issued and outstanding equity securities of Scalyr, Inc. (Scalyr), a leading cloud-native, cloud-scale data analytics platform. This Scalyr acquisition allows us to advance our data ingestion, search, and retention capabilities. The Scalyr acquisition closed on February 9, 2021. 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 assets acquired and liabilities assumed in connection with the acquisition were recorded at their 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 valuation of intangible assets acquired are included in Note 7, Intangible Assets. The excess of the purchase price over the 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. 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 was 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 consolidated financial statements from the date of acquisition. We incurred $1.4 million of transaction costs in connection with the acquisition during fiscal 2022. These costs were recorded as general and administrative expenses in the consolidated statements of operations. The following 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):
|  |  | Year Ended January 31,
|  |  |  |  | 2022
Revenue |  |  |  |  | $ | 204,874 |
Net loss |  |  |  |  | $ | (262,145) |
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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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