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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2022
 
OR
 
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM              TO
 
COMMISSION FILE NUMBER 001-35498
 ____________________________________________________

splk-20221031_g1.jpg
Splunk Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Delaware 86-1106510
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

270 Brannan Street
San Francisco, California 94107
(Address of principal executive offices)
(Zip Code)
 
(415) 848-8400
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareSPLKThe Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
 
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

There were 163.7 million shares of the Registrant’s Common Stock issued and outstanding as of November 22, 2022.



TABLE OF CONTENTS
 
  Page No.
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 6.
 

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Splunk Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)October 31, 2022January 31, 2022
Assets  
Current assets  
Cash and cash equivalents$832,929 $1,428,691 
Investments, current924,296 286,337 
Accounts receivable, net976,580 1,306,666 
Prepaid expenses and other current assets115,238 152,871 
Deferred commissions, current111,414 102,322 
Total current assets2,960,457 3,276,887 
Investments, non-current41,325 46,431 
Accounts receivable, non-current164,792 242,689 
Operating lease right-of-use assets188,877 229,198 
Property and equipment, net112,976 124,900 
Intangible assets, net122,734 164,769 
Goodwill1,401,628 1,401,628 
Deferred commissions, non-current212,741 200,876 
Other assets45,815 103,497 
Total assets$5,251,345 $5,790,875 
Liabilities and Stockholders’ Equity  
Current liabilities 
Accounts payable$18,433 $59,206 
Accrued compensation248,158 396,952 
Accrued expenses and other liabilities204,736 257,979 
Deferred revenue, current1,187,969 1,384,605 
Debt, current775,233  
Total current liabilities2,434,529 2,098,742 
Debt, non-current3,097,311 3,137,731 
Operating lease liabilities199,118 225,556 
Deferred revenue, non-current68,982 86,584 
Other liabilities, non-current21,053 19,491 
Total non-current liabilities3,386,464 3,469,362 
Total liabilities5,820,993 5,568,104 
Commitments and contingencies (Note 3 and 4)
Stockholders’ equity  
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 163,472,297 shares outstanding at October 31, 2022, and 160,044,675 shares outstanding at January 31, 2022
170 167 
Accumulated other comprehensive loss(11,226)(1,199)
Additional paid-in capital4,496,935 5,032,351 
Treasury stock, at cost: 6,885,414 shares at October 31, 2022 and January 31, 2022
(1,000,000)(1,000,000)
Accumulated deficit(4,055,527)(3,808,548)
Total stockholders’ equity(569,648)222,771 
Total liabilities and stockholders’ equity$5,251,345 $5,790,875 

The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended October 31,Nine Months Ended October 31,
(In thousands, except per share amounts)2022202120222021
Revenues
Cloud services$374,027 $243,042 $1,043,361 $654,422 
License383,584 249,021 851,111 611,902 
Maintenance and services172,158 172,688 508,131 506,221 
Total revenues929,769 664,751 2,402,603 1,772,545 
Cost of revenues (1)
Cloud services119,558 100,210 361,939 286,311 
License1,259 1,229 4,059 7,978 
Maintenance and services 80,948 86,851 244,714 249,314 
Total cost of revenues201,765 188,290 610,712 543,603 
Gross profit728,004 476,461 1,791,891 1,228,942 
Operating expenses (1)
Research and development241,395 265,145 754,143 772,052 
Sales and marketing 388,094 386,932 1,193,929 1,125,169 
General and administrative118,307 112,750 345,396 399,864 
Total operating expenses747,796 764,827 2,293,468 2,297,085 
Operating loss(19,792)(288,366)(501,577)(1,068,143)
Interest and other income (expense), net
Interest income6,700 888 12,919 1,774 
Interest expense(11,228)(50,723)(34,796)(123,326)
Other income (expense), net(3,945)411 (7,548)334 
Total interest and other income (expense), net(8,473)(49,424)(29,425)(121,218)
Loss before income taxes(28,265)(337,790)(531,002)(1,189,361)
Income tax provision4,355 5,532 15,652 8,913 
Net loss$(32,620)$(343,322)$(546,654)$(1,198,274)
Basic and diluted net loss per share$(0.20)$(2.14)$(3.38)$(7.38)
Weighted-average shares used in computing basic and diluted net loss per share163,044 160,202 161,738 162,474 
 _________________________
(1)    Amounts include stock-based compensation expense, as follows:
Cost of revenues$21,842 $21,350 $64,641 $60,729 
Research and development80,126 85,060 251,510 243,107 
Sales and marketing55,610 61,946 186,483 181,568 
General and administrative31,026 35,404 99,111 105,553 


The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
 
 Three Months Ended October 31,Nine Months Ended October 31,
(In thousands)2022202120222021
Net loss$(32,620)$(343,322)$(546,654)$(1,198,274)
Other comprehensive income (loss)
Net unrealized loss on investments (net of tax)(3,486)(73)(10,027)(345)
Total other comprehensive income (loss)(3,486)(73)(10,027)(345)
Comprehensive loss$(36,106)$(343,395)$(556,681)$(1,198,619)

 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Nine Months Ended October 31,
(In thousands)20222021
Cash flows from operating activities  
Net loss$(546,654)$(1,198,274)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization73,446 74,625 
Amortization of deferred commissions81,409 110,105 
Amortization of investment premiums (accretion of discounts), net(2,062)1,088 
Amortization of debt discount and issuance costs7,878 98,958 
Losses on facility exits10,000 52,524 
Non-cash operating lease costs(3,079)(255)
Stock-based compensation601,745 590,957 
Deferred income taxes(1,434)(1,668)
Other97 33 
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net407,983 425,735 
Prepaid expenses and other assets 96,708 16,940 
Deferred commissions(102,366)(136,847)
Accounts payable (40,773)9,526 
Accrued compensation(148,794)15,747 
Accrued expenses and other liabilities(46,224)64,884 
Deferred revenue (214,238)(128,719)
Net cash provided by (used in) operating activities 173,642 (4,641)
Cash flows from investing activities
Purchases of property and equipment(9,229)(9,830)
Capitalized software development costs(5,806)(5,843)
Purchases of marketable securities(988,904)(358,749)
Maturities of marketable securities352,864 124,454 
Purchases of strategic investments(6,359)(15,450)
Acquisition, net of cash acquired (80,333)
Other investment activities1,534 947 
Net cash used in investing activities (655,900)(344,804)
Cash flows from financing activities
Proceeds from the exercise of stock options1,398 1,866 
Proceeds from employee stock purchase plan48,596 48,246 
Proceeds from the issuance of convertible senior notes, net of issuance costs 982,210 
Repurchases of common stock (1,000,000)
Taxes paid related to net share settlement of equity awards(163,498)(149,560)
Net cash used in financing activities (113,504)(117,238)
Net decrease in cash and cash equivalents (595,762)(466,683)
Cash and cash equivalents at beginning of period 1,428,691 1,771,064 
Cash and cash equivalents at end of period $832,929 $1,304,381 
Supplemental disclosures
Cash paid for income taxes$10,692 $9,491 
Cash paid for interest24,452 13,909 
Non-cash investing and financing activities
Increase in accrued purchases of property and equipment2,848 2,906 
Equity consideration for acquisition 939 
Vesting of early exercised options1 87 
Costs related to issuance of convertible senior notes included in accrued expenses and other liabilities 290 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Splunk Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 
Three Months Ended October 31,Nine Months Ended October 31,
(In thousands)2022202120222021
Common stock
Balance, beginning of period$170 $165 $167 $163 
Vesting of restricted and performance stock units 1 2 3 
Issuance of common stock upon ESPP purchase  1  
Balance, end of period$170 $166 $170 $166 
Additional paid-in capital
Balance, beginning of period$4,346,503 $4,689,282 $5,032,351 $4,063,885 
Cumulative-effect adjustment from adoption of Accounting Standards Update (“ASU”) 2020-06  (1,026,611) 
Stock-based compensation188,602 203,760 601,743 590,957 
Capitalized software development costs448 226 2,958 2,116 
Issuance of common stock upon exercise of options266 692 1,398 1,866 
Fair value of replacement equity awards attributable to pre-acquisition service   939 
Vesting of early exercised options 24 1 87 
Taxes paid related to net share settlement of equity awards(38,884)(47,780)(163,500)(149,563)
Issuance of common stock upon ESPP purchase  48,595 48,246 
Equity component of convertible senior notes, net   287,671 
Balance, end of period$4,496,935 $4,846,204 $4,496,935 $4,846,204 
Treasury stock
Balance, beginning of period$(1,000,000)$(229,515)$(1,000,000)$ 
Repurchases of common stock (770,485) (1,000,000)
Balance, end of period$(1,000,000)$(1,000,000)$(1,000,000)$(1,000,000)
Accumulated other comprehensive loss
Balance, beginning of period$(7,740)$(864)$(1,199)$(592)
Unrealized loss from investments (net of tax)(3,486)(73)(10,027)(345)
Balance, end of period$(11,226)$(937)$(11,226)$(937)
Accumulated deficit
Balance, beginning of period$(4,022,907)$(3,324,403)$(3,808,548)$(2,469,451)
Cumulative-effect adjustment from adoption of ASU 2020-06  299,675  
Net loss(32,620)(343,322)(546,654)(1,198,274)
Balance, end of period$(4,055,527)$(3,667,725)$(4,055,527)$(3,667,725)
Total stockholders’ equity$(569,648)$177,708 $(569,648)$177,708 


The accompanying notes are an integral part of these condensed consolidated financial statements.
5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
(1)    Description of the Business and Significant Accounting Policies

Business

Splunk Inc. (“we,” “us,” “our”) provides innovative cloud services and licensed software solutions that deliver and operationalize insights from the data generated by digital systems. Data is produced by nearly every software application and electronic device across an organization and contains a real-time record of various activities, such as business transactions, customer and user behavior, and security threats. This data is growing significantly as a direct result of the prevalence and importance of digital systems used by today’s organizations. Our solutions help users remove barriers between insights derived from this data and actions organizations take to thrive in an era of unprecedented digital transformation. We were incorporated in California in October 2003 and reincorporated in Delaware in May 2006.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal 2023, for example, refer to the fiscal year ended January 31, 2023.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet data as of January 31, 2022 was derived from audited financial statements, but does not include all disclosures required by GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 24, 2022.
 
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2023.

Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods covered by the financial statements and accompanying notes. In particular, we make estimates with respect to the stand-alone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), the period of benefit for deferred commissions, stock-based compensation expense, the fair value of assets acquired and liabilities assumed in business combinations, income taxes, the discount rate used for operating leases, and contingencies. Actual results could differ from those estimates.

Segments

We operate our business as one operating segment: the development and marketing of cloud services and licensed software solutions that enable our customers to gain real-time business insights by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

6

Principles of Consolidation
 
The accompanying unaudited condensed consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Foreign Currency

During fiscal 2022, we reassessed the functional currency of our foreign subsidiaries and determined it was the U.S. Dollar for all our subsidiaries. The impact of this change was not material. Foreign currency transaction gains and losses are included in “Other income (expense), net” on our condensed consolidated statements of operations and were not material for the three and nine months ended October 31, 2022 and 2021.

Revenue Recognition

We generate revenues in the form of cloud services fees, license and related maintenance fees, and other service fees. Cloud services are provided on a subscription basis and give our customers access to our cloud solutions, which include related customer support. Licenses for on-premises software (“licenses”) are typically term licenses and provide the customer with a right to use the software. When a term license is purchased, maintenance is bundled with the license for the term of the license period. Other services include training and professional services that are not integral to the functionality of the cloud services or licenses.

Our contracts with customers often contain multiple performance obligations, which may include a combination of cloud services, licenses, related maintenance and support services, and professional services including training. We apply significant judgment in identifying and accounting for each performance obligation, as a result of evaluating the terms and conditions in contracts. For these contracts, we account for cloud services, licenses, maintenance and support, and other services as separate performance obligations as they are each distinct. Revenue is recognized when the performance obligations are satisfied. We satisfy our cloud service performance obligation over the associated contract term and recognize the associated revenue ratably over the term of the contract once access is provided to the customer, consistent with the pattern of benefit to the customer of such services. We satisfy our obligation and recognize revenue for licenses upon transfer of control of the licenses, which occurs at delivery of the license key to customers, or when the license term commences, if later. We satisfy our maintenance and support performance obligations and recognize revenue ratably over the maintenance and support term, consistent with the pattern of benefit to the customer of such services. Professional services and training are either provided on a time and material basis or over a contract term. We satisfy our professional services and training performance obligations and recognize the associated revenue as services are delivered. With respect to contracts that include customer acceptance provisions, we recognize revenue upon customer acceptance. Our policy is to record revenues net of any applicable sales, use, goods and services, value added, and excise taxes.

Customers can purchase our products under different pricing options. Regardless of the pricing option selected, the consideration for our cloud services and license contracts is fixed and does not result in variable consideration. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. We determine the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers, our discounting practices, and our overall pricing objectives, while maximizing observable inputs. In situations where pricing is highly variable, we estimate the SSP using the residual approach.

Most of our multi-year cloud services and license contracts are invoiced annually. A receivable for multi-year cloud services is generally recorded upon invoicing. A receivable for multi-year license contracts is recorded upon delivery, whether or not invoiced, to the extent we have an unconditional right to receive payment in the future related to those licenses. The non-current portion of these receivables, primarily consisting of unbilled receivables from multi-year license contracts, is included in “Accounts receivable, non-current” on our condensed consolidated balance sheets.

Payment terms and conditions vary by contract type, although our standard payment terms generally require payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of payment, we have determined our contracts do not generally include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing.

7

Deferred revenue is recorded when we invoice a contract or deliver a license prior to recognizing revenue. It is comprised of balances related to cloud services, maintenance, training and professional services invoiced at the beginning of each service period, as well as licenses that were delivered prior to the license term commencing.

Recently Adopted Accounting Standards

StandardDescriptionEffective DateEffect on the Condensed Consolidated Financial Statements
(or Other Significant Matters)
Accounting Standards Update (“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)This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity, which reduces the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments will no longer have to be separated into debt and equity components. Convertible debt instruments will be reported as a single liability and convertible preferred stock will be reported as a single equity instrument. Similarly, the embedded conversion feature will no longer be amortized as interest expense over the life of the instrument. Instead, a convertible debt instrument will be accounted for wholly as debt unless 1) a convertible instrument contains features that require bifurcation as a derivative, or 2) a convertible debt instrument was issued at a substantive premium. Among other potential impacts, this ASU is expected to reduce reported interest expense, decrease reported net loss, and result in a reclassification of certain conversion feature balance sheet amounts from stockholder’s equity to liabilities as it relates to the convertible senior notes. This ASU also simplifies the diluted earnings per share calculations by requiring the use of the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations.We adopted this standard as of February 1, 2022, using the modified retrospective method of transition, under which, financial results reported in periods prior to fiscal 2023 were not adjusted.Under this new standard, the previously recorded equity components of the convertible senior notes outstanding and amortization of the debt discount and issuance costs classified as equity were reclassified from equity to debt through an adjustment to the opening balance of accumulated deficit as of February 1, 2022 which will result in reduced interest expense in future periods. Adoption of the standard resulted in a decrease to accumulated deficit of $299.7 million, decrease to additional paid-in capital of $1 billion and an increase to convertible senior notes, net of $726.9 million.
ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with CustomersThis ASU amends the guidance on accounting related to contract assets and liabilities acquired in business combinations. Entities will be required to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. Prior to this ASU, an acquirer generally recognizes contract assets and contract liabilities at fair value on the acquisition date. The guidance should be applied prospectively to business combinations occurring on or after the effective date of the amendment in this update. We adopted this standard as of February 1, 2022.We will apply the standard to any contract assets and liabilities acquired in any future business combination.

Recently Issued Accounting Pronouncements

There have been no accounting pronouncements or changes in accounting pronouncements that are significant or potentially significant to the Company.

(2)    Investments and Fair Value Measurements
 
The carrying amounts of certain of our financial instruments including cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term maturities.
8

 
Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels that are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:
 
Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
 
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The following table sets forth the fair value of our financial assets that were measured on a recurring basis:
 
 October 31, 2022January 31, 2022
(In thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:        
Money market funds$530,708 $ $ $530,708 $1,056,296 $ $ $1,056,296 
U.S. government and agency securities 758,748  758,748  8,024  8,024 
Corporate bonds 85,407  85,407  131,015  131,015 
Commercial paper 169,322  169,322  160,230  160,230 
Reported as:        
Assets:        
Cash and cash equivalents   $619,889    $1,059,296 
Investments, current924,296 286,337 
Investments, non-current  9,932 
Total   $1,544,185    $1,355,565 

Our investments in money market funds are measured at fair value on a recurring basis. These money market funds are actively traded and reported daily through a variety of sources. The fair value of the money market fund investments is classified as Level 1.

The following table presents our investments in available-for-sale debt securities as of October 31, 2022:
 
(In thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash and cash equivalents:
U.S. government and agency securities$89,181 $ $ $89,181 
Investments, current:
U.S. government and agency securities677,567  (8,000)669,567 
Corporate bonds86,194  (787)85,407 
Commercial paper171,013  (1,691)169,322 
Total available-for-sale investments$1,023,955 $ $(10,478)$1,013,477 

9

The following table presents our investments in available-for-sale debt securities as of January 31, 2022:
 
(In thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash and cash equivalents:
     Commercial paper$3,000 $ $ $3,000 
Investments, current:
     Corporate bonds131,253 2 (240)131,015 
     Commercial paper155,469  (147)155,322 
Investments, non-current:
U.S. government and agency securities8,036  (12)8,024 
     Commercial paper1,914  (6)1,908 
Total available-for-sale investments$299,672 $2 $(405)$299,269 

The following table presents the fair values and unrealized losses related to our investments in available-for-sale debt securities classified by length of time that the securities have been in a continuous unrealized loss position as of October 31, 2022:
 
Less than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. government and agency securities$669,567 $(8,000)$ $ $669,567 $(8,000)
Corporate bonds73,075 (763)12,332 (24)85,407 (787)
Commercial paper169,322 (1,691)  169,322 (1,691)
Total$911,964 $(10,454)$12,332 $(24)$924,296 $(10,478)

The following table presents the fair values and unrealized losses related to our investments in available-for-sale debt securities classified by length of time that the securities have been in a continuous unrealized loss position as of January 31, 2022:

Less than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. government and agency securities$8,024 $(12)$ $ $8,024 $(12)
Corporate bonds130,007 (240)  130,007 (240)
Commercial paper145,231 (153)  145,231 (153)
Total$283,262 $(405)$ $ $283,262 $(405)

The contractual maturities of our investments as of October 31, 2022 are as follows (in thousands):
 
Due within one year$1,013,477 
Total$1,013,477 

Investments with maturities of less than 12 months from the balance sheet date are classified as current assets, which are available for use to fund current operations. Investments with maturities greater than 12 months from the balance sheet date are classified as non-current assets.

Convertible Senior Notes

Refer to Note 7 “Convertible Senior Notes” for details regarding the fair value of our convertible senior notes.

10

Equity Investments

Our equity investments are included in “Investments, non-current” on our condensed consolidated balance sheets. The following table provides a summary of our equity investments:
 
(In thousands)October 31, 2022January 31, 2022
Equity investments without readily determinable fair values$37,994 $33,744 
Equity investments under the equity method of accounting3,331 2,755 
Total$41,325 $36,499 

(3)    Commitments and Contingencies
 
Legal Proceedings
 
A putative class action lawsuit alleging violations of the federal securities laws was filed on December 4, 2020 in the U.S. District Court for the Northern District of California (the “Court”) against us, our former Chief Executive Officer and our former Chief Financial Officer. The initial complaint alleged violations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for allegedly making materially false and misleading statements regarding our financial guidance and asserted a putative class period of October 21, 2020 to December 2, 2020. On March 16, 2021, the Court appointed Louisiana Sheriffs’ Pension & Relief Fund as lead plaintiff and approved its selection of lead plaintiff counsel in the case. On June 7, 2021, the lead plaintiff filed an amended complaint which expanded the putative class period to run from March 26, 2020 to December 2, 2020 and alleges that defendants made materially false and misleading statements regarding our marketing efforts, hiring practices, and retention of personnel. The lead plaintiff seeks unspecified monetary damages and other relief. On July 27, 2021, defendants filed a motion to dismiss the amended complaint. On March 21, 2022, the Court issued a decision granting in part and denying in part defendants’ motion to dismiss. On July 22, 2022, the lead plaintiff filed a motion seeking to certify a class of investors who purchased Company stock between May 21, 2020 and December 2, 2020. Defendants’ response to the motion for class certification is due February 15, 2023.

Several derivative lawsuits related to the securities class action were filed in February, March, and April 2021 and October 2022 in the U.S. District Court for the Northern District of California, California Superior Court, San Francisco County, and the Court of Chancery of the State of Delaware. The lawsuits name our former Chief Executive Officer, our former Chief Financial Officer, and many of our board members as defendants, and the company as a nominal defendant. The lawsuits allege claims for breach of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control, and gross mismanagement against the defendants, and claims for contribution under Sections 10(b) and 21D of the Exchange Act against only our former Chief Executive Officer and former Chief Financial Officer. The plaintiffs seek unspecified monetary damages and other relief on behalf of the Company. The courts have stayed the actions pursuant to stipulation of the parties until after a ruling on the motion for class certification in the federal securities case. On August 9, 2021, we received a demand letter alleging claims similar to those in the derivative lawsuits and requesting that our board of directors launch an investigation on such matters. On May 23, 2022, the board of directors formed a committee to evaluate the stockholder’s demand and make recommendations to the full board of directors. On September 13, 2022, we received a second demand letter alleging claims similar to those in the derivative lawsuits and requesting that our board of directors launch an investigation. This second demand is also being evaluated by the board committee. In April, July and August, 2022, the board of directors received several demands made on behalf of stockholders to inspect the books and records of the Company pursuant to Section 220 of the Delaware General Corporation Law. The demands seek records related to the board and to the allegations at issue in the underlying putative class action.

We are also subject to certain routine legal and regulatory proceedings, as well as demands and claims that arise in the normal course of our business. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our condensed consolidated results of operations, cash flows or financial position, nor is it possible to provide an estimated amount of any such loss. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect our future financial position, results of operations or cash flows, or all, in a particular period.

11

Indemnification Arrangements
 
During the ordinary course of business, we may indemnify, hold harmless and agree to reimburse for losses suffered or incurred, our customers, vendors, and each of their affiliates for certain intellectual property infringement and other claims by third parties with respect to our offerings, in connection with our commercial license arrangements or related to general business dealings with those parties.

As permitted under Delaware law, we have entered into indemnification agreements with our officers, directors and certain employees, indemnifying them for certain events or occurrences in connection with their service as our officers or directors or those of our direct and indirect subsidiaries.
 
Claims and reimbursements under indemnification arrangements have not been material to our condensed consolidated financial statements; and there is no accrual of such amounts as of October 31, 2022 and January 31, 2022.

(4)    Leases
 
In April 2021, we entered into an agreement to terminate our lease of certain office space located in San Jose, CA and ceased use of the space as of April 30, 2021. As a result, the related right-of-use asset and leasehold improvements balances were written off and we have no remaining liability. In total, a $55.2 million loss was recognized during the nine months ended October 31, 2021, which included certain termination-related fees. The loss is included in “General and administrative” expenses on our condensed consolidated statements of operations.

(5)    Property and Equipment
 
Property and equipment are stated at cost, net of accumulated depreciation and amortization. These assets are depreciated and amortized using the straight-line method over their estimated useful lives. Property and equipment consisted of the following:
 
(In thousands)October 31, 2022January 31, 2022
Computer equipment and software$81,566 $73,411 
Furniture and fixtures27,080 26,840 
Leasehold and building improvements (1)
143,748 141,496 
Capitalized software development costs (2)
45,459 36,695 
Property and equipment, gross297,853 278,442 
Less: accumulated depreciation and amortization(184,877)(153,542)
Property and equipment, net$112,976 $124,900 
_________________________
(1)    Includes costs related to assets not yet placed into service of $2.0 million and $6.0 million, as of October 31, 2022 and January 31, 2022, respectively.
(2)    Includes costs related to projects still under development of $7.4 million as of January 31, 2022. All projects were placed into service as of October 31, 2022.

Depreciation and amortization expense related to Property and equipment, net was $11.6 million and $9.9 million for the three months ended October 31, 2022 and 2021, respectively, and $31.4 million and $30.8 million for the nine months ended October 31, 2022 and 2021, respectively.

12

Geographic Information
 
The following table presents our long-lived assets, which consist of property and equipment, net of depreciation and amortization, and operating lease right-of-use assets by geographic region:
 
(In thousands)October 31, 2022January 31, 2022
United States$