Revenue, Deferred Revenue and Remaining Performance Obligations

9 Months Ended

Oct. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue, Deferred Revenue and Remaining Performance Obligations

Revenue, Deferred Revenue and Remaining Performance ObligationsThe following table summarizes the revenue from contracts by type of customer (in thousands, except percentages):

	Three Months Ended October 31,								Nine Months Ended October 31,
	2021				2020				2021				2020
	Amount		% Revenue		Amount		% Revenue		Amount		% Revenue		Amount		% Revenue
Channel Partners	$	282,774	74	%	$	175,837	76	%	$	761,597	75	%	$	459,529	75	%
Direct Customers	97,277		26	%	56,623		24	%	258,987		25	%	149,980		25	%
Total revenue	$	380,051	100	%	$	232,460	100	%	$	1,020,584	100	%	$	609,509	100	%

The Company uses channel partners to complement direct sales and marketing efforts. The partners place an order with the Company after negotiating the order directly with an end customer. The partners negotiate pricing with the end customer and in some rare instances are responsible for certain support levels directly with the end customer. The Company’s contract is with the partner and payment to the Company is not contingent on the receipt of payment from the end customer. The Company recognizes the contractual amount charged to the partners as revenue ratably over the term of the arrangement once access to the Company’s solution has been provided to the end customer.

The Company also uses referral partners who refer customers in exchange for a referral fee. The Company negotiates pricing and contracts directly with the end customer. The Company recognizes revenue from the sales to the end customers ratably over the term of the contract once access to the Company’s solution has been provided to the end customer.

The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use the Company’s platform or service (in thousands, except percentages):

	Three Months Ended October 31,								Nine Months Ended October 31,
	2021				2020				2021				2020
	Amount		% Revenue		Amount		% Revenue		Amount		% Revenue		Amount		% Revenue
United States	$	276,698	73	%	$	167,741	72	%	$	741,168	73	%	$	438,955	72	%
Europe, Middle East, and Africa	50,721		13	%	33,192		14	%	138,920		14	%	86,785		14	%
Asia Pacific	37,265		10	%	20,551		9	%	99,263		9	%	53,186		9	%
Other	15,367		4	%	10,976		5	%	41,233		4	%	30,583		5	%
Total revenue	$	380,051	100	%	$	232,460	100	%	$	1,020,584	100	%	$	609,509	100	%

No single country other than the United States represented 10% or more of the Company’s total revenue during the three and nine months ended October 31, 2021 and October 31, 2020.

Contract Balances

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. The Company recognized revenue of $316.2 million and $185.7 million for the three months ended October 31, 2021 and October 31, 2020, respectively, and $598.8 million and $354.5 million for the nine months ended October 31, 2021 and October 31, 2020, respectively, that were included in the corresponding contract liability balance at the beginning of the period.

The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 - 60 days. Contract assets include amounts related to the contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced.

Changes in deferred revenue were as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2021		2020		2021		2020
	Carrying Amount
Beginning Balance	$	1,164,357	$	689,840	$	911,895	$	571,168
Additions to deferred revenue	503,890		305,294		1,396,885		801,015
Recognition of deferred revenue	(380,051)		(232,460)		(1,020,584)		(609,509)
Ending Balance	$	1,288,196	$	762,674	$	1,288,196	$	762,674

Remaining Performance Obligations

The Company’s subscription contracts with its customers have a typical term of one to three years and most subscription contracts are non-cancelable. Customers typically have the right to terminate their contracts for cause as a result of the Company’s failure to perform. As of October 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.9 billion. The Company expects to recognize 71% of the remaining performance obligations in the next 12 months and 28% between 13 to 36 months, with the remainder to be recognized thereafter.

Costs to Obtain a Contract

The Company capitalizes referral fees paid to partners and sales commission and associated payroll taxes paid to internal sales personnel, contractors or sales agents that are incremental to the acquisition of channel partner and direct customer contracts and would not have occurred absent the customer contract. These costs are recorded as deferred contract acquisition costs, current and deferred contract acquisition costs, noncurrent on the condensed consolidated balance sheets.

Sales commissions for renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial contract or follow-on upsell given the substantive difference in commission rates in proportion to their respective contract values. Commissions, including referral fees paid to channel partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of 4 years while commissions earned for renewal contracts are amortized over the contractual term of the renewals. Sales commissions associated with professional service contracts are amortized ratably over an estimated period of benefit of six months and included in sales and marketing expense in the condensed consolidated statements of operations. In determining the period of benefit for commissions paid for the acquisition of the initial contract, the Company took into consideration the expected subscription term and expected renewals of customer contracts, the historical duration of relationships with customers, customer retention data, and the life of the developed technology. The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did not recognize any material impairment losses of deferred contract acquisition costs during the three and nine months ended October 31, 2021 and October 31, 2020.

The following table summarizes the activity of deferred contract acquisition costs (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
	2021		2020		2021		2020
Beginning balance	$	235,913	$	135,023	$	198,756	$	114,206
Capitalization of contract acquisition costs	64,325		35,753		151,901		84,741
Amortization of deferred contract acquisition costs	(29,293)		(16,769)		(79,712)		(44,940)
Ending balance	$	270,945	$	154,007	$	270,945	$	154,007
Deferred contract acquisition costs, current	$	108,636	$	62,422	$	108,636	$	62,422
Deferred contract acquisition costs, noncurrent	162,309		91,585		162,309		91,585
Total deferred contract acquisition costs	$	270,945	$	154,007	$	270,945	$	154,007