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Stockholders’ Equity and Employee Incentive Plans | 6 Months Ended
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Jul. 31, 2023
Equity And Compensation Related Costs Share Based Payments [Abstract] |
Stockholders’ Equity and Employee Incentive Plans | Stockholders’ Equity and Employee Incentive Plans Redeemable Convertible Preferred Stock As of July 31, 2023, there were no shares of redeemable convertible preferred stock issued and outstanding. The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 200,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors. Common Stock The Company’s Amended and Restated Certificate of Incorporation authorized the Company to issue 1,000,000,000 shares of common stock at a par value of $0.00001 as of July 31, 2023 and January 31, 2023. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. As of July 31, 2023 and January 31, 2023, no dividends had been declared. As of July 31, 2023, the Company has reserved common stock for future issuance as follows:
| Number of Shares
Stock options outstanding | 6,961,108 |
Restricted stock units issued and outstanding | 6,125,102 |
Remaining shares available for issuance under the 2021 Plan | 2,234,791 |
Shares available for issuance under the 2023 Inducement Plan | 1,079,006 |
ESPP | 1,334,366 |
Common stock warrants | 105,350 |
Total | 17,839,723 |
Stock Plans The Company has four equity incentive plans: the 2008 Equity Incentive Plan (the “2008 Plan”), 2018 Equity Incentive Plan (the “2018 Plan”), 2021 Equity Incentive Plan (the “2021 Plan”) and 2023 Inducement Equity Incentive Plan (the "2023 Inducement Plan"), collectively (the “Stock Plans”). In connection with the Company’s IPO in July 2021, the 2008 Plan and the 2018 Plan were terminated and replaced by the 2021 Plan and all shares that remained available for issuance under the 2018 Plan at that time were reserved for issuance under the 2021 Plan. The number of shares of common stock available for issuance under the 2021 Plan will be increased by any shares of common stock subject to awards outstanding under the 2008 Plan and the 2018 Plan that expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations or are forfeited to or repurchased by the Company due to failure to vest. The Company has issued stock options to employees, directors, consultants and advisors pursuant to the 2018 Plan and restricted stock units (“RSUs”) under the 2021 Plan. Equity awards permitted under the 2021 Plan may be stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares. Stock option grants may be either Incentive Stock Options (“ISO”) or Non-Qualified Stock Options (“NSO”). ISO may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees, consultants, and nonemployee directors. Employee stock options are granted with an exercise price no less than the fair value of the underlying common stock on the grant date. Options granted under the 2021 Plan expire ten years from the date of grant and generally vest over four years at a rate of 25% upon the first anniversary of the issuance date and 1/48 per month thereafter. As of July 31, 2023, there were 2.2 million shares available for grant under the 2021 Plan. The 2021 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2022, by an amount equal to the least of (i) 4,120,000 shares, (ii) five-percent (5%) of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator of the 2021 Plan no later than the last day of the immediately preceding Fiscal Year. During the fiscal year ended January 31, 2023, the Company adopted the 2023 Inducement Equity Incentive Plan (the “2023 Inducement Plan”), pursuant to which the Company reserved 1,300,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The maximum number of shares of our common stock that may be issued under the 2023 Inducement Plan will not exceed 1,300,000 shares. The 2023 Inducement Plan was approved by the Company’s Board of Directors without stockholder approval in accordance with such rule. As of July 31, 2023, there were 1.1 million shares available for grant under the 2023 Inducement Plan. Employee Stock Purchase Plan In July 2021, the Company established an Employee Stock Purchase Plan (“ESPP”) in which eligible employees may contribute up to 15% of their base compensation to purchase shares of common stock at a price equal to 85% of the lower of (1) the fair market value of a share of the Company’s common stock at the beginning of the offering period and (2) the fair market value of a share of the Company’s common stock on the purchase date. Participants are permitted to purchase a maximum of shares during each offering period and, initially, no participant may purchase more than 1,000 shares during any offering period. Starting with the offering period beginning September 21, 2023, participants may purchase up to 1,500 shares during any offering period. Except for the initial offering period, the ESPP provides for 24-month offering periods beginning March 21 and September 21 of each year, and each offering period will consist of four six-month purchase periods. The initial offering period began on July 22, 2021 and will end on September 20, 2023. The initial offering period consists of four purchase periods with the first purchase date on March 21, 2022, and the final purchase period ending on September 20, 2023. The Company recognized stock-based compensation expense related to the ESPP of $0.3 million and $0.5 million during the three months ended July 31, 2023 and 2022, respectively, and $0.7 million and $1.3 million during the six months ended July 31, 2023 and 2022, respectively. As of July 31, 2023, accrued ESPP employee payroll contributions of $1.2 million are included within accrued compensation and benefits in the consolidated balance sheet. ESPP payroll contributions used to purchase shares are reclassified to stockholders’ equity on the purchase date. As of July 31, 2023, $0.5 million of unrecognized stock-based compensation expense related to the ESPP is expected to be recognized over a weighted-average vesting period of 0.6 years. During the six months ended July 31, 2023, 74,113 shares of common stock were issued under the ESPP. Stock Options The following table summarizes stock option activity under the Stock Plans for the six months ended July 31, 2023 (aggregate intrinsic value in thousands):
| Options Outstanding |  | Weighted- Average Contractual Term |  | Aggregate Intrinsic Value
Number of Options |  | Weighted- Average Exercise Price |  |
Balances as of January 31, 2023 | 7,819,480 |  |  | $ | 9.78 |  |  | 5.21 |  | $ | 51,606 |
Options exercised | (767,552) |  |  | $ | 6.06 |  |  |  |  |
Options granted | — |  |  | $ | — |  |  |  |  |
Options cancelled | (90,820) |  |  | $ | 19.94 |  |  |  |  |
Balances as of July 31, 2023 | 6,961,108 |  |  | $ | 10.06 |  |  | 4.97 |  | $ | 55,070 |
Options vested and expected to vest as of July 31, 2023 | 6,961,108 |  |  | $ | 10.06 |  |  | 4.97 |  | $ | 55,070 |
Options vested and exercisable as of July 31, 2023 | 6,110,028 |  |  | $ | 8.88 |  |  | 4.66 |  | $ | 53,060 |
No stock options were granted during the six months ended July 31, 2023 and 2022. The aggregate intrinsic value of options exercised during the three months ended July 31, 2023 and 2022 was $4.5 million and $1.0 million, respectively, and $8.7 million and $7.7 million during the six months ended July 31, 2023 and 2022, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock. The Company recognized stock-based compensation expense related to stock options of $1.2 million and $2.4 million during the three and six months ended July 31, 2023, respectively. As of July 31, 2023, there was $6.1 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.3 years. Service-Based RSUs During the year ended January 31, 2022, the Company began granting RSUs to its employees. RSUs granted had service-based vesting conditions. The service-based vesting condition for these awards is generally satisfied by rendering continuous service over two to four years, depending on the award, during which time the grants will vest quarterly. The following table is a summary of service-based RSU activity for the six months ended July 31, 2023:
| RSUs Outstanding
Number of RSUs |  | Weighted Average Grant Date Fair Value Per Share
Balances as of January 31, 2023 | 3,442,982 |  |  | $ | 18.39 |
RSUs granted | 2,628,090 |  |  | $ | 16.59 |
RSUs vested | (790,220) |  |  | $ | 18.34 |
RSUs forfeited | (277,750) |  |  | $ | 17.80 |
Balances as of July 31, 2023 | 5,003,102 |  |  | $ | 17.48 |
The aggregate fair value of the RSU awards granted was $4.3 million and $14.6 million during the three months ended July 31, 2023 and 2022, respectively, and $43.6 million and $64.3 million during the six months ended July 31, 2023 and 2022, respectively. This represents the fair value of the common stock on the date the service-based vesting awards were granted. We recognized $8.5 million and $4.0 million in stock-based compensation expense related to service vesting-based RSUs during the three months ended July 31, 2023 and 2022, respectively, and $15.4 million and $6.4 million during the six months ended July 31, 2023 and 2022, respectively. As of July 31, 2023, there was $79.7 million of unrecognized compensation expense related to service-based RSUs expected to be recognized over a weighted-average vesting period of 2.5 years. Performance-based and Market-based Awards Modification of Market-Based Awards On March 20, 2023, the Board of Directors approved a modification of the Company’s 1,060,000 outstanding Market-based RSUs granted to certain executive officers and members of senior management. This resulted in 840,000 of the awards modified to performance-based vesting and the other 220,000 remained market-based vesting with modified stock price targets and requisite service periods. Performance-based Awards The 840,000 awards granted to certain executive officers were modified from market-based vesting conditions to performance-based vesting conditions and will vest based on the Company achieving certain financial metrics over revised service periods. For the portion of the awards where the expectation of the achievement of performance conditions remained probable prior to and post modification, the Company accounted for this change as a Type I modification under ASC 718, Compensation—Stock Compensation. For the portion of the awards where the expectation of the achievement of performance conditions changed from probable prior to the modification to improbable post-modification, the Company accounted for this change as a Type II modification. The Company recognizes expense for performance-based RSUs ("PSUs") over the requisite service period based on management's expectation of the number of PSUs expected to vest. For any change in the expectation of the number of PSUs that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made. The incremental stock-based compensation expense related to these modified awards was $6.0 million. During the six months ended July 31, 2023, the Company granted 70,000 PSUs to an executive officer pursuant to the 2021 Plan with vesting conditions identical to the modified awards discussed above. The grant date fair value of the award was $0.7 million. We recognized a total of $1.7 million and $2.5 million in stock-based compensation expense related to PSUs during the three and six months ended July 31, 2023, respectively. As of July 31, 2023, there were 910,000 awards outstanding and a total of $8.2 million of unrecognized compensation expense related to PSUs expected to be recognized over an average vesting period of 1.3 years. Market-based Awards The 220,000 awards granted to certain members of senior management were modified to revise the 60-trading day stock price target of the Company’s common stock and the requisite service periods. The incremental stock-based compensation expense related to these modified awards was not material. As of July 31, 2023, there were 212,000 awards outstanding and a total of $1.7 million of unrecognized compensation expense related to market-based RSUs expected to be recognized over an average vesting period of 1.3 years. Determination of Fair Value The Company estimates the fair value of stock options and purchase rights issued to employees under the ESPP using the Black-Scholes option-pricing model, which is dependent upon several variables, such as the fair value of the Company’s common stock, the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield. Expected term—The expected term represents the weighted-average period the stock options are expected to remain outstanding and is calculated using the simplified method, as the Company did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method calculates the expected term as the midpoint between the vesting date and the contractual expiration date of the option. Expected volatility—The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company does not have sufficient trading history for the Company’s common stock. Risk-free interest rate—The risk-free rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s awards. Dividend yield—The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. Fair value of underlying common stock— Prior to the Company’s IPO, the fair value was determined by the Board of Directors with input from management and contemporaneous independent third-party valuations. Subsequent to the IPO, the fair value of the Company’s common stock is based on the daily average selling price on the Nasdaq Global Select Market. No stock options were granted during the three and six months ended July 31, 2023 or 2022. The fair value of employee stock purchase rights for the offering period under the 2021 ESPP was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
| Six Months Ended July 31, |  |
| 2023 |  | 2022 |  |
Employee Stock Purchase Plan: |  |  |  |  |
Expected term (in years) | 0.8 |  | 1.6 |  |
Expected volatility | 66.9 | % |  | 49.4 | % |  |
Risk-free interest rate | 4.8 | % |  | 0.2 | % |  |
Dividend yield | — |  |  | — |  |  |
Stock-Based Compensation Stock-based compensation expense, net of amounts capitalized was as follows (in thousands):
| Three Months Ended July 31, |  | Six Months Ended July 31,
2023 |  | 2022 |  | 2023 |  | 2022
Cost of revenue—subscription | $ | 236 |  | $ | 141 |  | $ | 429 |  | $ | 263
Cost of revenue—services | 149 |  | 117 |  | 294 |  | 211
Research and development | 3,614 |  | 2,087 |  | 6,382 |  | 3,986
Sales and marketing | 4,032 |  | 2,463 |  | 7,273 |  | 4,450
General and administrative | 4,086 |  | 1,919 |  | 7,014 |  | 3,267
Restructuring | — |  | — |  | 1 |  | —
Total stock-based compensation expense | $ | 12,117 |  |  | $ | 6,727 |  |  | $ | 21,393 |  |  | $ | 12,177 |

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