C3ai Inc

Previous wording

We generate revenue primarily from the sale of subscriptions, which accounted for 86% and 91% of our total revenue in the three months ended October 31, 2024 and 2023, respectively, and 85% and 88% of our total revenue in the six months ended October 31, 2024 and 2023, respectively. Our cloud-native software offerings allow us to manage, update, and monitor the software regardless of whether the software is deployed in our public cloud environment, in our customers’ self-managed private or public cloud environments, or in a hybrid environment.

Current wording

We generate revenue primarily from the sale of subscriptions, which accounted for 87% and 90% of our total revenue in the three months ended January 31, 2025 and 2024, respectively, and 86% and 88% of our total revenue in the nine months ended January 31, 2025 and 2024, respectively. Our cloud-native software offerings allow us to manage, update, and monitor the software regardless of whether the software is deployed in our public cloud environment, in our customers’ self-managed private or public cloud environments, or in a hybrid environment.

Previous wording

We also generate revenue from professional services, which primarily include service fees and prioritized engineering services. Professional services revenue represented 14% and 9% of our total revenue for the three months ended October 31, 2024 and 2023, respectively, and 15% and 12% of our total revenue in the six months ended October 31, 2024 and 2023, respectively. Service fees include revenue from services such as consulting, training, and paid implementation services. For service fees, revenue is typically recognized over time as the services are performed.

Current wording

We also generate revenue from professional services, which primarily include service fees and prioritized engineering services. Professional services revenue represented 13% and 10% of our total revenue for the three months ended January 31, 2025 and 2024, respectively, and 14% and 12% of our total revenue in the nine months ended January 31, 2025 and 2024, respectively. Service fees include revenue from services such as consulting, training, and paid implementation services. For service fees, revenue is typically recognized over time as the services are performed.

Previous wording

Prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in our future product roadmap. When we agree to this, we negotiate an agreed upon fee to accelerate the development of the software as well as other terms, such as relevant specifications. When the software feature is delivered, it becomes integrated to our core product offering, is available to all subscribers of the underlying software product, and enhances the operation of that product going forward. Such prioritized engineering services result in production-level computer software – compiled code that enhances the functionality of our production products – which is available for our customers to use over the life of their software licenses. Prioritized engineering services revenue is recognized as professional services over the period in which the software development is completed. Prioritized engineering services revenue accounted for 73% and 72% of total professional services revenue for the three months ended October 31, 2024 and 2023, respectively, and 75% and 74% of total professional services revenue for the six months ended October 31, 2024 and 2023, respectively.

Current wording

Prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in our future product roadmap. When we agree to this, we negotiate an agreed upon fee to accelerate the development of the software as well as other terms, such as relevant specifications. When the software feature is delivered, it becomes integrated to our core product offering, is available to all subscribers of the underlying software product, and enhances the operation of that product going forward. Such prioritized engineering services result in production-level computer software – compiled code that enhances the functionality of our production products – which is available for our customers to use over the life of their software licenses. Prioritized engineering services revenue is recognized as professional services over the period in which the software development is completed. Prioritized engineering services revenue accounted for 43% and 89% of total professional services revenue for the three months ended January 31, 2025 and 2024, respectively, and 65% and 78% of total professional services revenue for the nine months ended January 31, 2025 and 2024, respectively.

Previous wording

Our total revenue was $94.3 million and $181.6 million for the three and six months ended October 31, 2024, representing a 29% and 25% increase, compared to the same period last year. Our subscription revenue grew to $81.2 million and $154.6 million for the three and six months ended October 31, 2024, representing a 22% and 21% increase, compared to the same period last year.

Current wording

Our total revenue was $98.8 million and $280.3 million for the three and nine months ended January 31, 2025, representing a 26% and 25% increase, compared to the same period last year. Our subscription revenue grew to $85.7 million and $240.3 million for the three and nine months ended January 31, 2025, representing a 22% and 21% increase, compared to the same period last year.

Previous wording

As it relates to our legacy subscription-based pricing agreements, we monitor remaining performance obligations, or RPO. RPO is not necessarily indicative of future revenue growth because it is not applicable to pay-as-you-go consumption pricing agreements. Moreover, RPO is influenced by several factors, including the timing of renewals, the timing of purchases of additional capacity, average contract terms, and seasonality. Due to these factors, it is important to review RPO in conjunction with revenue and other financial metrics disclosed elsewhere in this Quarterly Report on Form 10-Q. RPO was $260.5 million as of October 31, 2024, which includes $87.8 million of non-cancellable commitments where actual product selection and quantities of specific products or services will be determined at a later date. RPO was $244.3 million as of April 30, 2024.

Current wording

As it relates to our legacy subscription-based pricing agreements, we monitor remaining performance obligations, or RPO. RPO is not necessarily indicative of future revenue growth because it is not applicable to pay-as-you-go consumption pricing agreements. Moreover, RPO is influenced by several factors, including the timing of renewals, the timing of purchases of additional capacity, average contract terms, and seasonality. Due to these factors, it is important to review RPO in conjunction with revenue and other financial metrics disclosed elsewhere in this Quarterly Report on Form 10-Q. RPO was $208.2 million as of January 31, 2025, which includes $74.6 million of non-cancellable commitments where actual product selection and quantities of specific products or services will be determined at a later date. RPO was $244.3 million as of April 30, 2024.

Previous wording

RPO represents the amount of our contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods. Our RPO as of October 31, 2024 is comprised of $35.8 million related to deferred revenue and $224.7 million of commitments from non-cancellable contracts. Our RPO as of April 30, 2024 was comprised of $39.0 million related to deferred revenue and $205.3 million of commitments from non-cancellable contracts.

Current wording

RPO represents the amount of our contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancellable contracted amounts that will be invoiced and recognized as revenue in future periods. Our RPO as of January 31, 2025 is comprised of $33.0 million related to deferred revenue and $175.2 million of commitments from non-cancellable contracts. Our RPO as of April 30, 2024 was comprised of $39.0 million related to deferred revenue and $205.3 million of commitments from non-cancellable contracts.

Previous wording

We executed 36 and 36 pilots and trials during the quarter ended October 31, 2024 and 2023, respectively.

Current wording

We executed 50 and 29 pilots and trials during the quarter ended January 31, 2025 and 2024, respectively.

Previous wording

The international market opportunity for Enterprise AI software is large and growing, and we believe there is a significant opportunity to continue to grow our international customer base. We believe that the demand for our C3 AI Software will continue growing as international awareness of the benefits of digital transformation and Enterprise AI software grows. We plan to continue to make investments to expand geographically by increasing our direct sales team in international markets and supplementing the direct sales effort with strategic partners to significantly expand our reach and market coverage. We derived approximately 13% and 17% of our total revenue for the three months ended October 31, 2024 and 2023, respectively, and from 13% and 16% of our total revenue for the six months ended October 31, 2024 and 2023, respectively, from international customers.

Current wording

The international market opportunity for Enterprise AI software is large and growing, and we believe there is a significant opportunity to continue to grow our international customer base. We believe that the demand for our C3 AI Software will continue growing as international awareness of the benefits of digital transformation and Enterprise AI software grows. We plan to continue to make investments to expand geographically by increasing our direct sales team in international markets and supplementing the direct sales effort with strategic partners to significantly expand our reach and market coverage. We derived approximately 14% and 14% of our total revenue for the three months ended January 31, 2025 and 2024, respectively, and from 13% and 15% of our total revenue for the nine months ended January 31, 2025 and 2024, respectively, from international customers.

Previous wording

Subscription Revenue. Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, pilots and trials of our C3 AI Applications or Generative AI, and hosting charges. Sales of our software licenses grant our customers the right to use our software, either on their own cloud instances or their internal hardware infrastructures, during the contractual term. We also offer a premium stand ready service through our COE. Sales of our software-as-a-service offerings include a right to use our software during the contract term. In addition, customers pay a usage-based runtime fee for our C3 AI Software for specified levels of guaranteed minimum consumption. Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term. For a significant majority of our offerings, our software subscriptions and maintenance and support services are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract. We currently have a small number of customers that license our offerings under a perpetual license model, and we expect that may continue for the foreseeable future for certain customers due to their specific contracting requirements.

Current wording

Subscription Revenue. Our subscription revenue is primarily comprised of software licenses, software-as-a-service offerings, stand-ready COE support services, pilots and trials of our C3 AI Applications or Generative AI, and hosting charges. Sales of our software licenses grant our customers the right to use our software, either on their own cloud instances or their internal hardware infrastructures, during the contractual term. We also offer a premium stand ready service through our COE. Sales of our software-as-a-service offerings include a right to use our software during the contract term. In addition, customers pay a usage-based runtime fee for our C3 AI Software for specified levels of guaranteed minimum consumption. Our subscriptions also include our maintenance and support services, which include critical and continuous updates to the software that are integral to maintaining the intended utility of the software over the contractual term. For a significant majority of our offerings, our software subscriptions and maintenance and support services are highly interdependent and interrelated and represent a single distinct performance obligation within the context of the contract. We also sell software licenses that do not require maintenance and support services. We currently have a small number of customers that license our offerings under a perpetual license model, and we expect that may continue for the foreseeable future for certain customers due to their specific contracting requirements.

Previous wording

Professional Services Revenue. Our professional services revenue primarily includes implementation services, training and prioritized engineering services. We offer a complete range of professional service support both onsite and remotely, including training, application design, project management, system design, data modeling, data integration, application design, development support, data science, and application and C3 AI Software administration support. Professional services fees are based on the level of effort required to perform the specified tasks and are typically a fixed-fee engagement with defined deliverables and a duration of less than 12 months. In certain cases, customers seeking increased utility from their C3 AI Suite or C3 AI Application subscriptions can procure prioritized engineering services to develop and modify software features, which are typically part of our product roadmap, but on an accelerated basis.

Current wording

Professional Services Revenue. Our professional services revenue primarily includes consulting, training, paid implementation services and prioritized engineering services. We offer a complete range of professional service support both onsite and remotely, including training, application design, project management, system design, data modeling, data integration, application design, development support, data science, and application and C3 AI Software administration support. Professional services fees are based on the level of effort required to perform the specified tasks and are typically a fixed-fee engagement with defined deliverables and a duration of less than 12 months. In certain cases, customers seeking increased utility from their C3 AI Platform or C3 AI Application subscriptions can procure prioritized engineering services to develop and modify software features, which are typically part of our product roadmap, but on an accelerated basis.

Previous wording

Other income (expense), net consists primarily of foreign currency exchange gains and losses, losses from impairment of marketable securities, and realized gains and losses on sales of available-for-sale marketable securities. Our foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Current wording

Other (expense) income, net consists primarily of foreign currency exchange gains and losses, losses from impairment of marketable securities, and realized gains and losses on sales of available-for-sale marketable securities. Our foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Previous wording

Comparison of the Three and Six Months Ended October 31, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended January 31, 2025 and 2024

Previous wording

Subscription revenue accounted for 86% and 91% of our total revenue for the three months ended October 31, 2024 and 2023, respectively. Subscription revenue increased by $14.7 million, or 22%, for the three months ended October 31, 2024, compared to the same period last year. Approximately 24% and 24%, respectively, of the total subscription revenue was attributable to revenue from new customers, and the remaining 76% and 76%, respectively, was attributable to revenue from existing customers for the three months ended October 31, 2024 and 2023, respectively.

Current wording

Subscription revenue accounted for 87% and 90% of our total revenue for the three months ended January 31, 2025 and 2024, respectively. Subscription revenue increased by $15.3 million, or 22%, for the three months ended January 31, 2025, compared to the same period last year. Approximately 22% and 29%, respectively, of the total subscription revenue was attributable to revenue from new customers, and the remaining 78% and 71%, respectively, was attributable to revenue from existing customers for the three months ended January 31, 2025 and 2024, respectively.

Previous wording

Subscription revenue accounted for 85% and 88% of our total revenue for the six months ended October 31, 2024 and 2023, respectively. Subscription revenue increased by $26.8 million, or 21%, for the six months ended October 31, 2024, compared to the same period last year. Approximately 19% and 18%, respectively, of the total subscription revenue was attributable to revenue from new customers, and the remaining 81% and 82%, respectively, was attributable to revenue from existing customers for the six months ended October 31, 2024 and 2023, respectively.

Current wording

Subscription revenue accounted for 86% and 88% of our total revenue for the nine months ended January 31, 2025 and 2024, respectively. Subscription revenue increased by $42.1 million, or 21%, for the nine months ended January 31, 2025, compared to the same period last year. Approximately 15% and 19%, respectively, of the total subscription revenue was attributable to revenue from new customers, and the remaining 85% and 81%, respectively, was attributable to revenue from existing customers for the nine months ended January 31, 2025 and 2024, respectively.

Previous wording

Professional services revenue increased by $9.1 million, or 51%, for the six months ended October 31, 2024, compared to the same period last year, predominantly due to an increase in prioritized engineering services of $7.2 million and an increase in professional services of $1.9 million as a result of an increase in the number of service projects for C3 AI Platform and C3 AI Application customers.

Current wording

Professional services revenue increased by $5.1 million, or 64%, for the three months ended January 31, 2025, compared to the same period last year, predominantly due to an increase in professional services of $6.5 million as a result of an increase in the number of consulting projects for C3 AI Platform and C3 AI Application customers, offset by a decrease in prioritized engineering services of $1.4 million.

Previous wording

Professional services revenue increased by $6.4 million, or 94%, for the three months ended October 31, 2024, compared to the same period last year, predominantly due to an increase in prioritized engineering services of $4.8 million and an increase in professional services of $1.6 million as a result of an increase in the number of service projects for C3 AI Platform and C3 AI Application customers.

Current wording

Professional services revenue increased by $14.2 million, or 55%, for the nine months ended January 31, 2025, compared to the same period last year, predominantly due to an increase in professional services of $8.5 million as a result of an increase in the number of service, consulting, and training projects for C3 AI Platform and C3 AI Application customers and an increase in prioritized engineering services of $5.8 million.

Previous wording

The increase in cost of professional services revenue for the six months ended October 31, 2024 compared to the same period last year was primarily due to higher third-party outsourcing costs of $0.3 million and higher other service costs of $0.2 million.

Current wording

The increase in cost of professional services revenue for the nine months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll and contractor costs of $2.0 million, and higher other service costs of $0.2 million.

Previous wording

The increase in total gross margins for the three months ended October 31, 2024 compared to the same period last year was driven by an increase in both subscription margin and professional services margin. The subscription margin for the three months ended October 31, 2024 increased due to lower personnel-related costs, compared to the same period last year. The professional service margin was increased for the three months ended October 31, 2024 due to an increase in prioritized engineering services revenue, which generally have higher margins, compared to the same period last year.

Current wording

The increase in total gross margins for the three months ended January 31, 2025 compared to the same period last year was driven by an increase in subscription margin, offset by a decrease in professional services margin. The subscription margin for the three months ended January 31, 2025 increased as a result of the growth of subscription revenue slightly outpacing the cost of subscription revenue growth and higher mix of revenue from demonstration licenses. The professional service margin decreased for the three months ended January 31, 2025 due to higher personnel-related costs as a result of an increase in the number of service projects for C3 AI Platform and C3 AI Application customers, compared to the same period last year.

Previous wording

The increase in total gross margins for the six months ended October 31, 2024 compared to the same period last year was driven by an increase in both subscription margin and professional services margin. The subscription margin for the six months ended October 31, 2024 increased due to lower personnel-related costs, compared to the same period last year. The professional service margin for the six months ended October 31, 2024 increased primarily due to an increase in prioritized engineering services revenue, which generally have higher margins, compared to the same period last year.

Current wording

The increase in total gross margins for the nine months ended January 31, 2025 compared to the same period last year was driven by an increase in subscription margin, offset by a decrease in professional services margin. The subscription margin for the nine months ended January 31, 2025 increased as a result of the growth of subscription revenue slightly outpacing the cost of subscription revenue growth and higher mix of revenue from demonstration licenses. The professional service margin for the nine months ended January 31, 2025 decreased primarily due to higher personnel-related costs as a result of an increase in the number of service projects for C3 AI Platform and C3 AI Application customers, offset an increase in prioritized engineering services revenue, compared to the same period last year.

Previous wording

Sales and Marketing. The increase in sales and marketing expense for the three months ended October 31, 2024 compared to the same period last year was primarily due to higher personnel-related costs of $3.8 million as a result of additional headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher advertising spend of $3.0 million, higher recruiting expenses of $0.5 million, higher marketing event costs of $0.5 million, higher travel and entertainment expense of $0.5 million, higher professional services costs of $0.4 million and higher data center costs of $0.3 million, partially offset by lower marketing costs of $3.8 million.

Current wording

Sales and Marketing. The increase in sales and marketing expense for the three months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll costs of $6.3 million as a result of additional headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher marketing event costs of $1.4 million, higher recruiting expenses of $0.6 million, and higher professional services costs of $0.4 million, partially offset by lower marketing costs of $4.4 million.

Previous wording

The increase in sales and marketing expense for the six months ended October 31, 2024 compared to the same period last year was primarily due to higher advertising spend of $8.7 million, higher personnel-related costs of $7.6 million as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher recruiting expenses of $1.2 million, higher data center costs of $0.8 million, higher professional services of $0.8 million, higher travel and entertainment expenses of $0.7 million and higher marketing event costs of $0.5 million, partially offset by lower marketing costs of $7.2 million.

Current wording

The increase in sales and marketing expense for the nine months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll costs of $13.9 million as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher advertising spend of $8.4 million, higher marketing event costs of $1.9 million, higher professional services of $1.2 million, higher travel and entertainment expenses of $1.0 million, and higher data center costs of $0.8 million, partially offset by lower marketing costs of $11.7 million.

Previous wording

Research and Development. The increase in research and development expense for the three months ended October 31, 2024 compared to the same period last year was primarily due to higher professional services costs of $6.8 million, higher facilities costs of $0.3 million, partially offset by lower personnel-related costs of $0.7 million and lower data center costs of $1.0 million.

Current wording

Research and Development. The increase in research and development expense for the three months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll and contractor costs of $8.2 million, and higher data center costs of $1.0 million.

Previous wording

The increase in research and development expense for the six months ended October 31, 2024 compared to the same period last year was primarily due to higher professional services costs of $11.4, partially offset by lower personnel-related costs of $2.6 million and lower data center costs of $1.1 million.

Current wording

The increase in research and development expense for the nine months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll and contractor costs of $16.9 million.

Previous wording

General and Administrative. The increase in general and administrative expense for the three months ended October 31, 2024 compared to the same period last year was primarily due to higher personnel-related costs of $0.8 million as a result of additional headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees and higher professional services costs of $0.6 million.

Current wording

General and Administrative. The increase in general and administrative expense for the three months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll costs of $2.4 million as a result of additional headcount and overall costs to support the growth in our business and increased stock-based compensation primarily related to additional equity awards granted to current and new employees, higher professional services costs of $0.2 million and higher other general and administrative costs.

Previous wording

The increase in general and administrative expense for the six months ended October 31, 2024 compared to the same period last year was primarily due to higher personnel-related costs of $1.2 million as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees and higher facilities costs of $1.1 million, partially offset by lower corporate insurance costs of $0.9 million.

Current wording

The increase in general and administrative expense for the nine months ended January 31, 2025 compared to the same period last year was primarily due to higher payroll costs of $3.7 million as a result of increased headcount and overall costs to support the growth in our business, and increased stock-based compensation primarily related to additional equity awards granted to current and new employees and higher other general and administrative costs, partially offset by lower corporate insurance costs of $1.3 million.

Previous wording

The decrease in interest income for the three months ended October 31, 2024 compared to the same period last year was primarily due to higher prevailing interest rates on our marketable securities portfolio in the three months ended October 31, 2023, partially offset by an increase in volume of investments.

Current wording

The decrease in interest income for the three months ended January 31, 2025 compared to the same period last year was primarily due to higher prevailing interest rates on our marketable securities portfolio and higher volume of investments in the three months ended January 31, 2024.

Previous wording

The decrease in interest income for the six months ended October 31, 2024 compared to the same period last year due to higher prevailing interest rates on our marketable securities portfolio in the six months ended October 31, 2023, partially offset by an increase in volume of investments.

Current wording

The decrease in interest income for the nine months ended January 31, 2025 compared to the same period last year due to higher prevailing interest rates on our marketable securities portfolio and higher volume of investments in the nine months ended January 31, 2024.

Previous wording

The increase in other income (expense), net for the three months ended October 31, 2024 compared to the same period last year was primarily due to higher foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances, in the three months ended October 31, 2023.

Current wording

The decrease in other (expense) income, net for the three months ended January 31, 2025 compared to the same period last year was primarily due to higher foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances, in the three months ended January 31, 2025.

Previous wording

The increase in other income (expense), net for the six months ended October 31, 2024 compared to the same period last year was primarily due to foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances, in the six months ended October 31, 2023.

Current wording

The increase in other (expense) income, net for the nine months ended January 31, 2025 compared to the same period last year was primarily due to foreign currency losses on the remeasurement of Euro-denominated cash and accounts receivable balances, in the nine months ended January 31, 2025.

Previous wording

The change in provision for income taxes for the three and six months ended October 31, 2024 compared with the same period last year was primarily related to foreign and state tax expense.

Current wording

The change in provision for income taxes for the three and nine months ended January 31, 2025 compared with the same period last year was primarily related to foreign and state tax expense.

Previous wording

Since inception, we have financed operations primarily through sales generated from our customers and sales of equity securities. As of October 31, 2024 and April 30, 2024, we had $121.3 million and $167.1 million of cash and cash equivalents and $609.1 million and $583.2 million of marketable securities, respectively, which are available for use in current operations. Our marketable securities generally consist of high-grade U.S. treasury securities, certificates of deposit, U.S. government agency securities, commercial paper and corporate debt securities. We have generated operating losses from our operations as reflected in our accumulated deficit of $1.2 billion as of October 31, 2024. We expect to continue to incur operating losses and generate negative cash flows from operations in the next few quarters due to the investments we intend to make in our business, and as a result we may require additional capital to execute on our strategic initiatives to grow the business.

Current wording

Since inception, we have financed operations primarily through sales generated from our customers and sales of equity securities. As of January 31, 2025 and April 30, 2024, we had $125.1 million and $167.1 million of cash and cash equivalents and $599.2 million and $583.2 million of marketable securities, respectively, which are available for use in current operations. Our marketable securities generally consist of high-grade U.S. treasury securities, certificates of deposit, U.S. government agency securities, commercial paper and corporate debt securities. We have generated operating losses from our operations as reflected in our accumulated deficit of $1.3 billion as of January 31, 2025. We expect to continue to incur operating losses and generate negative cash flows from operations in the next few quarters due to the investments we intend to make in our business, and as a result we may require additional capital to execute on our strategic initiatives to grow the business.

Previous wording

Operating Activities. Net cash used by operating activities of $30.7 million for the six months ended October 31, 2024 was due to our net loss of $128.8 million adjusted for certain non-cash items, primarily consisting of stock-based compensation of $111.7 million, accretion of discounts on marketable securities of $7.6 million, depreciation and amortization of $6.1 million, and $12.7 million of cash outflows related to changes in operating assets and liabilities. The $12.7 million of cash outflows related to changes in operating assets and liabilities was primarily attributable to an increase in accounts receivable of $30.1 million, a decrease in accrued compensation of $4.8 million, a decrease to deferred revenue of $3.2 million, an increase in prepaid expenses, other current assets of $2.0 million and a decrease in lease liabilities of $1.2 million. This was partially offset by cash inflows related to an increase in other liabilities of $19.3 million and an increase in accounts payable of $9.3 million.

Current wording

Operating Activities. Net cash used in operating activities of $52.7 million for the nine months ended January 31, 2025 was due to our net loss of $209.0 million adjusted for certain non-cash items, primarily consisting of stock-based compensation of $174.4 million, cash outflows related to changes in operating assets and liabilities of $19.0 million, accretion of discounts on marketable securities of $10.7 million, and depreciation and amortization of $9.2 million. The $19.0 million of cash outflows related to changes in operating assets and liabilities was primarily attributable to an increase in accounts receivable of $52.0 million and a decrease to deferred revenue of $6.0 million. This was partially offset by an increase in accounts payable of $16.9 million, an increase in other liabilities of $12.5 million, an increase in accrued compensation of $7.6 million, an increase in lease liabilities of $1.4 million, and a decrease in prepaid expenses, other current assets and other assets of $0.6 million.

Previous wording

Net cash used in operating activities of $44.7 million for the six months ended October 31, 2023 was due to net loss of $134.1 million adjusted for certain non-cash items, primarily consisting of stock-based compensation of $104.0 million, depreciation and amortization of $6.2 million, and $12.5 million cash outflows related to changes in operating assets and liabilities. The $12.5 million cash outflows related to changes in operating assets and liabilities was primarily attributable to an increase in accounts receivable of $8.6 million, a decrease to deferred revenue of $7.3 million, a decrease in accounts payable of $2.9 million, a decrease in accrued compensation and employee benefits of $2.6 million. This was partially offset by cash inflows related to an increase in lease liabilities of $7.8 million and an increase in other liabilities of $1.7 million.

Current wording

Net cash used in operating activities of $83.7 million for the nine months ended January 31, 2024 was due to net loss of $206.8 million adjusted for certain non-cash items, primarily consisting of stock-based compensation of $159.0 million, cash outflows related to changes in operating assets and liabilities of $33.0 million, accretion of discounts on marketable securities of $13.2 million, and depreciation and amortization of $9.5 million. The $33.0 million of cash outflows related to changes in operating assets and liabilities was primarily attributable to an increase in accounts receivable of $38.9 million, a decrease to deferred revenue of $6.5 million, a decrease in accounts payable of $4.9 million, and an increase in prepaid expenses, other current assets and other assets of $3.4 million. This was partially offset by cash inflows related to an increase in lease liabilities of $14.3 million, and an increase in other liabilities of $6.3 million.

Previous wording

Net cash used in investing activities of $96.7 million for the six months ended October 31, 2023 was primarily attributable to purchases of investments of $489.9 million and capital expenditures of $19.4 million mainly related to the leasehold improvements associated with the new leased space, partially offset by maturities and sales of investments of $412.6 million.

Current wording

Investing Activities. Net cash used in investing activities of $6.5 million for the nine months ended January 31, 2025 was attributable to purchases of marketable securities of $518.8 million and capital expenditures of $2.1 million mainly related to the computer equipment and servers, offset by maturities and sales of marketable securities of $514.4 million.

Previous wording

Investing Activities. Net cash used in investing activities of $18.9 million for the six months ended October 31, 2024 was attributable to purchases of marketable securities of $365.9 million and capital expenditures of $1.7 million mainly related to the leasehold improvements associated with the new leased space, offset by maturities and sales of marketable securities of $348.8 million.

Current wording

Net cash used in investing activities of $92.6 million for the nine months ended January 31, 2024 was attributable to purchases of marketable securities of $657.4 million and capital expenditures of $25.5 million mainly related to the leasehold improvements associated with the new leased space, offset by maturities and sales of marketable securities of $590.3 million.

Previous wording

Financing Activities. Net cash provided by financing activities of $3.7 million during the six months ended October 31, 2024 was due to $5.0 million of proceeds from issuance of Class A common stock under the 2020 ESPP and $4.5 million of proceeds from the exercise of stock options for Class A common stock, partially offset by $5.8 million of taxes paid related to net share settlement of equity awards.

Current wording

Financing Activities. Net cash provided by financing activities of $17.2 million during the nine months ended January 31, 2025 was due to $19.6 million of proceeds from the exercise of stock options for Class A common stock, $5.0 million of proceeds from issuance of Class A common stock under the 2020 ESPP, partially offset by $7.5 million of taxes paid related to net share settlement of equity awards.

Previous wording

Net cash provided by financing activities of $5.5 million during the six months ended October 31, 2023 was due to $10.2 million of proceeds from the exercise of stock options for Class A common stock and $5.1 million of proceeds from issuance of Class A common stock under the 2020 ESPP, offset by $9.7 million of taxes paid related to net share settlement of equity awards.

Current wording

Net cash provided by financing activities of $6.0 million during the nine months ended January 31, 2024 was due to $11.4 million of proceeds from the exercise of stock options for Class A common stock and $5.1 million of proceeds from the issuance of Class A common stock under the ESPP, offset by $10.4 million of taxes paid related to net share settlement of equity awards.

Previous wording

Our contractual obligations and commitments primarily consist of operating lease commitments for our facilities and non-cancellable purchase commitments related to third-party cloud hosting services.

Current wording

Our contractual obligations and commitments primarily consist of operating lease commitments for our facilities and non-cancellable purchase commitments related to third-party cloud hosting and professional services.