Rubrik Inc

Note 1 – Description of Business

Rubrik, Inc. (“Rubrik” or the “Company”) is on a mission to secure the world’s data. Rubrik offers data security solutions to organizations ranging from the largest companies worldwide to mid-sized smaller customers. The Company was incorporated in December 2013 as ScaleData, Inc., a Delaware corporation, and changed its name to Rubrik, Inc. in October 2014. The Company is headquartered in Palo Alto, California.

Initial Public Offering

In April 2024, the Company completed its initial public offering ("IPO") in which it issued and sold 23,500,000 shares of its Class A common stock at the public offering price of $32.00 per share (the "IPO Price"). The Company received net proceeds of approximately $700.0 million after deducting underwriting discounts and commissions, as well as offering costs.

Immediately prior to the completion of the IPO, all 74,182,559 shares of the Company’s then-outstanding redeemable convertible preferred stock automatically converted into an equal number of shares of Class B common stock, and all 5,400,000 shares of the Company’s then-outstanding convertible founder stock automatically converted into an equal number of shares of Class B common stock.

Prior to the IPO, deferred offering costs, which consist of direct incremental legal, accounting, and other fees relating to the IPO, were capitalized in other assets, noncurrent on the condensed consolidated balance sheets. Upon the consummation of the IPO, $10.3 million of deferred offering costs, net of reimbursement received from the underwriters, were reclassified into stockholders’ equity as an offset against the IPO proceeds.

Prior to the IPO, the Company granted restricted stock units (“RSUs”) with both service-based and liquidity event-related performance-based vesting conditions ("IPO Vesting RSUs"). Upon the consummation of the IPO, the Company recognized stock-based compensation expense for those IPO Vesting RSUs that had met or partially met the service-based vesting condition as the performance-based vesting condition was satisfied. To meet the related tax withholding requirements related to these IPO Vesting RSUs, the Company withheld 12,859,902 shares of Class A common stock subject to the vesting of the IPO Vesting RSUs with a value of $411.5 million to remit to the relevant tax authorities in cash to satisfy such tax obligations as well as any income tax withholding obligations arising as a result of settlement of such shares.

In May 2024, the underwriters exercised their option to purchase an additional 3,472,252 shares of Class A common stock at the IPO Price of $32.00 per share. The Company received net proceeds of approximately $105.1 million after deducting underwriters’ discounts and commissions, as well as offering costs.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Fiscal Year

The Company's fiscal year ends on January 31. For example, references to fiscal 2025 and 2024 refer to the fiscal years ending January 31, 2025 and January 31, 2024, respectively.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the SEC) regarding interim financial reporting. The unaudited condensed consolidated financial statements and notes include the Company and its wholly-owned subsidiaries and reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s final prospectus dated April 24, 2024 and filed with the SEC pursuant to Rule 424(b)(4) on April 26, 2024 ("Final Prospectus").

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the estimation of standalone selling prices for performance obligations, the estimates for material rights, the application of a portfolio approach for capitalization of deferred commissions, the determination of the period of benefit for deferred commissions, the determination of fair value of the Company’s common stock prior to the completion of the IPO, the valuation of stock-based awards, the valuation and assessment of recoverability of intangible assets and their estimated useful lives, the assessment of goodwill impairment, the incremental borrowing rate used to value operating lease liabilities, the valuation of deferred income tax assets and uncertain tax positions, and contingencies. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. Actual results could differ materially from these estimates.

Revenue Recognition

The Company generates revenue primarily from the sale of subscriptions and typically invoices customers at the inception of the contract. The Company’s contracts with customers have a typical stated duration ranging fromone tofive years, with the majority of contracts having a stated duration ofthree years. The Company’s contracts with customers are generally non-cancelable and non-refundable. The Company primarily sells products and services to end users through distributors and resellers (“Channel Partners”). Channel Partners are the Company’s customers. The Company offers rebates to its Channel Partners calculated as a fixed percentage of the total selling price of a revenue contract. The Company accounts for rebates as consideration payable to a customer and records the amounts as a reduction to revenue.

The Company determines revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, the Company satisfies a performance obligation.

Payment terms of the Company’s contracts range from 30 days to 60 days after fulfillment or service commencement date, except for certain contracts, which are billed in installments over the contract term.

The Company determines its transaction price based on the expected amount it is entitled to receive in exchange for transferring promised products and services to the customer.

The Company’s contracts with customers can include multiple products and services. The Company determines performance obligations in a customer contract by assessing whether products and services are capable of being distinct and distinct in the context of the contract, including customer options that are determined to be material rights. The transaction price is allocated to the separate performance obligations based on the relative standalone selling price basis. The standalone selling price is determined based on the price at which the performance obligation either is sold separately or, if not observable through past transactions, is estimated taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. For performance obligations that are not sold separately, standalone selling price is determined based on observable inputs, overall pricing trends, market conditions and other factors, such as the price charged by the Company’s competitors for similar products and services with any necessary or appropriate adjustments.

Subscription revenue

Subscription revenue consists of software-as-a-service (“SaaS”) subscriptions and subscription term-based licenses with related support services.

SaaS subscriptions include standalone sales of SaaS subscription products as well as sales of Rubrik Security Cloud (“RSC”). RSC is a fully-hosted subscription in the case of protection of cloud, SaaS, and unstructured data applications. When RSC is securing enterprise applications, it is a hybrid cloud subscription which includes software hosted from the cloud (as a service) and on-premise software licenses. RSC is accounted for as a single performance obligation because the software hosted from the cloud (as a service) and the on-premise software licenses are not separately identifiable and serve together to fulfill the Company’s promise to RSC customers, which is to provide a single, unified data security solution. The Company’s subscription capabilities are primarily sold as editions which bundle multiple products and include the Foundation Edition, Business Edition, Enterprise Edition, and Enterprise Proactive Edition. Subscription revenue related to SaaS is recognized ratably over the subscription period.

Subscription term-based licenses provide customers with a right to use the software for a fixed term commencing upon delivery of the license to the customers. Support services are bundled with each subscription term-based license for the term of the subscription. Subscription revenue related to subscription term-based licenses includes upfront revenue recognized at the later of the start date of the subscription term-based license and the date when the subscription term-based license is delivered. The remainder of the revenue is recognized ratably over the subscription period for support services, commencing on the date the service is made available to customers. The Company does not recognize software revenue related to the renewal of subscription term-based licenses earlier than the beginning of the related renewal period. The Company also sells Rubrik-branded commodity servers ("Rubrik-branded Appliances") support which is recognized ratably over the support period.

Maintenance revenue

Maintenance revenue represents fees earned from software updates on a when-and-if-available basis, telephone support, integrated web-based support, and Rubrik-branded Appliance support relating to the Company’s perpetual licenses. Maintenance revenue is recognized ratably over the term of the service period.

Other revenue

Other revenue represents fees earned from the sale of Rubrik-branded Appliances and professional services.

The Company has determined the Rubrik-branded Appliances and software licenses are separate performance obligations because the Rubrik-branded Appliances and software licenses are not highly interdependent or interrelated and the customer can benefit from the Rubrik-branded Appliances and software licenses separately. The Company does not customize its software licenses and installation services are not required for the software to function.

Rubrik-branded Appliance revenue is recognized when shipped to the customer. The Company’s shipping term is free on board shipping point, which means the control of the Rubrik-branded Appliance is transferred to customers upon shipment. When the Company sells software licenses with Rubrik-branded Appliances, revenue related to both the Rubrik-branded Appliances and software licenses are recognized at the same time.

Revenue related to professional services is typically recognized as the services are performed.

Amounts billed to customers for shipping and handling costs are classified as other revenue, and the Company’s shipping and handling costs are classified as cost of revenue.

Judgments

The Company identifies performance obligations in a customer contract by assessing whether products and services are capable of being distinct and distinct in the context of the contract. The determination of the performance obligations for RSC when offered as a hybrid cloud subscription requires significant judgment due to the ongoing interaction between the software hosted from the cloud (as a service) and the on-premise software licenses. The Company has concluded that the software hosted from the cloud (as a service) and software licenses are not distinct from each other in the context of the contract such that revenue from the combined offering should be recognized ratably over the subscription period for which the software hosted from the cloud (as a service) is provided. In reaching this conclusion, the Company considered the nature of its promise to customers with a RSC hybrid cloud subscription, which is to provide a single, unified data security solution that operates seamlessly across multiple data sources and teams, and to give customers the ability to manage all their data sources consistently and/or in a manner they dictate. The Company only fulfills this multi-faceted promise by providing access to an integrated solution comprised of both cloud-based and on-premise software. The cloud-based software and on-premise software work together to provide features and functionalities necessary to fulfill that promise, which neither the software hosted from the cloud (as a service) nor the software licenses could provide on their own or together with third-party resources.

The Company had offered subscription credits for RSC to qualified customers with Refresh Rights (as defined below) in exchange for relinquishing their existing rights to next-generation Rubrik-branded Appliances at no cost (“Refresh Rights”). These are customer options that are accounted for as material rights.

The Company’s contracts with customers may include customer options that are material rights. The determination of the likelihood of customers exercising their options requires significant judgment. Management estimates the likelihood of customers exercising their options by taking into account available information such as the number and timing of options exercised or forfeited, and considers other factors such as customer churn that may impact the options that have yet to be exercised or forfeited. Depending on the type of customer option exercised, the amount of consideration allocated to the material rights will be recognized into revenue at a point in time or over time beginning on the date the customer accepts the option. Deferred revenue associated with customer options that are subsequently forfeited will be released into revenue at the time the options are forfeited.

Timing of revenue recognition (in thousands)

Contract assets

The Company invoices its customers in accordance with contractual billing terms established in each contract. As the Company performs under customer contracts, its right to consideration that is unconditional is classified as accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenue the Company has recognized in excess of the amount it has billed to the customer is classified as a contract asset. Contract assets are included in prepaid expenses and other current assets and other assets, noncurrent in the condensed consolidated balance sheets. There were $8.5 million and $9.0 million of contract assets as of July 31, 2024 and January 31, 2024, respectively. The decrease is due to a decrease in certain contracts with customers where the timing of revenue recognition differs from the timing of invoicing to the customers. The current and noncurrent contract assets balances as of July 31, 2024 were $5.2 million and $3.3 million, respectively, and as of January 31, 2024 were $6.4 million and $2.6 million, respectively.

Deferred revenue

Deferred revenue, which are contract liabilities, are amounts received or due from customers in advance of the Company’s performance. The current portion of deferred revenue represents the amount that is expected to be recognized as revenue within one year of the condensed consolidated balance sheet date. The Company invoices customers upfront for the majority of contracts, and the increase in the Company’s deferred revenue corresponds to an increase in revenue contracts that include SaaS and support in which the Company satisfies its performance obligations typically over the contractual service period. During the three and six months ended July 31, 2024, the Company recognized revenue of approximately $170.4 million and $290.0 million, respectively, pertaining to amounts deferred as of April 30, 2024 and January 31, 2024, respectively.

Transaction price allocated to the remaining performance obligations

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue for contracts that have been invoiced and will be recognized as revenue in future periods.

As of July 31, 2024, total remaining non-cancellable performance obligations under the Company’s contracts with customers was approximately $1,513.0 million. The Company expects to recognize 48% of this amount as revenue over the next 12 months, with the remaining balance to be recognized as revenue thereafter.

Concentration of Risk

Credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, and accounts receivable. Cash and cash equivalents and short-term investments are primarily held intwo financial institutions and, at times, may exceed federally insured limits. The Company grants credit to customers in a wide variety of industries worldwide and generally does not require collateral. The Company has not experienced any credit losses as of July 31, 2024.

Concentration of revenue and accounts receivable

The following customers individually accounted for 10% or more of total revenue and 10% or more of accounts receivable, net:

Vendor risk

The Company uses third-party vendors for delivering its SaaS. While these services are highly available and designed to be resilient to failure of infrastructure, the Company’s services could be significantly impacted if the third-party vendors’ services experience certain types of interruptions.

The Company relies on a limited number of suppliers for its contract manufacturing and certain raw material components. In instances where suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time.

Recently Announced Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is assessing the timing and impact of adopting this standard.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to provide consistent categories and greater disaggregation of information in the rate reconciliation as well as income tax paid disaggregated by jurisdiction to improve the transparency of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. The Company is assessing the timing and impact of adopting this standard.

Note 3 – Revenue by Geography

The geographic regions are the Americas, EMEA (Europe, the Middle East, and Africa) and APAC (Asia Pacific). The Company operates asone segment. The following table sets forth revenue by geographic area based on ship to address (in thousands):

For the three months ended July 31, 2024 and 2023, United States accounted for $141.3 million and $104.8 million, respectively, or 69% and 69%, respectively, of consolidated total revenue. For the six months ended July 31, 2024 and 2023, United States accounted for $270.5 million and $193.6 million, respectively, or 69% and 67%, respectively, of consolidated total revenue.

Note 4 – Business Combinations

In August 2023, the Company acquired all outstanding stock of Laminar Technologies, Inc. (“Laminar”), a data security posture management platform. The Company accounted for this transaction as a business combination. The acquisition date fair value of the purchase consideration was $104.9 million, of which $90.8 million was paid in cash and the remainder in common stock. The cash consideration of $90.8 million excludes $23.8 million held back by the Company, which is subject to service-based vesting and will be recorded as expense over the period the services are provided. The acquisition of Laminar is to support Rubrik’s leadership position as a data security platform provider and help accelerate the Company’s cyber posture offerings. The Company recorded $11.0 million as an acquired developed technology intangible asset with an estimated useful life ofthree years and $96.1 million of goodwill which is primarily attributed to assembled workforce as well as the integration of Laminar’s technology with the Company’s technology. The goodwill is not deductible for tax purposes. The remaining assets acquired and liabilities assumed on the acquisition date were not material.

Pro forma results of operations for the business combination have not been presented, as they were not material to the condensed consolidated statements of operations. Acquisition-related costs for the business combination were expensed as incurred within general and administrative expense in the condensed consolidated statements of operations and were not material.

The Company recognized $0.9 million andzero amortization expense in acquired intangible assets for the three months ended July 31, 2024 and 2023, respectively, and $1.8 million andzero for the six months ended July 31, 2024 and 2023, respectively.

Note 5 – Financial Instruments

The Company classifies its financial instruments within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. Three levels of input may be used to measure fair value:

•Level 1 – Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs are quoted for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

•Level 3 – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These inputs will be based on the Company’s own assumptions and will require significant management judgement or estimation.

The Company did not have any level 3 investments as of July 31, 2024 and January 31, 2024. The following table summarizes the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value by significant investment category reported as cash and cash equivalents or short-term investments (in thousands):

The following table summarizes the estimated fair value of the Company’s investments by their remaining contractual maturity dates (in thousands):

For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis, and (iii) the decline in the fair value of the investment is due to credit or non-credit related factors. Based on this evaluation, the Company determined that for its short-term investments there wereno material credit or non-credit related impairments as of July 31, 2024 and January 31, 2024.

Note 6 – Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Depreciation expense related to the Company’s property and equipment, which did not include amortization expense related to capitalized internal-use software, was $4.3 million and $4.2 million for the three months ended July 31, 2024 and 2023, respectively, and $8.8 million and $8.2 million for the six months ended July 31, 2024 and 2023, respectively.

Amortization expense relating to capitalized internal-use software was $1.7 million and $1.8 million for the three months ended July 31, 2024 and 2023, respectively, and $3.5 million and $3.4 million for the six months ended July 31, 2024 and 2023, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

Note 7 – Debt

Term Loan

In June 2022, the Company entered into a credit agreement with a consortium of lenders for a total $195.0 million revolving credit facility (the “Prior Credit Facility”) consisting of a $175.0 million term loan (the “Prior Closing Date Term Loan”) and $20.0 million in committed delayed-draw term loans (the “Prior Delayed Draw Term Loans”) with a maturity date of June 10, 2027. The proceeds of the Prior Delayed Draw Term Loans were to be used to pay accrued interest relating to the Prior Credit Facility. The Company also had the option to request incremental Delayed Draw Term Loan commitments (the “Prior Supplemental Delayed Draw Term Loans” and, together with the Prior Delayed Draw Term Loans and the Prior Closing Date Term Loan, collectively, the “Prior Loans”). The terms of the Prior Supplemental Delayed Draw Term Loans were identical to the Prior Delayed Draw Term Loans. The Company borrowed the full $175.0 million Prior Closing Date Term Loan with a closing date of June 10, 2022 and incurred $4.3 million debt discount and issuance costs.

Under the Prior Credit Facility, interest accrued on the Prior Loans, at the Company’s election made at the time of borrowing, at either the Alternate Base Rate (“ABR”) or Secured Overnight Financing Rate (“SOFR”). The Company also had the option to convert all or a portion of the outstanding principal amount to/from a SOFR-based loan to/from an ABR-based loan after the initial election. ABR loans had an annual interest rate equal to ABR plus 5.5%. ABR is a fluctuating interest rate per annum equal to the highest of: (i) prime rate, (ii) federal funds rate plus 0.5%, or (iii) Term SOFR for one month plus 1.0%. SOFR loans had an annual interest rate equal to Term SOFR plus 6.5%. Term SOFR is a rate per annum equal to the greater of: (i) the floor of 1.0% or (ii) the sum of Term SOFR Reference Rate plus Term SOFR Adjustment applicable to the comparable Interest Period (as defined in the June 2022 credit agreement). The Company had the option to elect an Interest Period ofone, three, orsix months on the SOFR loans as long as the election did not extend beyond the maturity date of June 10, 2027. The annual interest rate was subject to a 0.5% increase and separately, a 0.5% decrease depending on certain actions by the Company.

Interest on ABR loans was payable quarterly in arrears. Interest on SOFR loans was payable on the last day of each Interest Period, but if the interest period was more than three months, interest was payable on the last day of each three-month interval after the first day of such Interest Period.

In August 2023, the Company executed an amended and restated credit agreement with a consortium of lenders for a total $330.0 million revolving credit facility (the “Amended Credit Facility”) consisting of a $289.5 million term loan (the “Amended Term Loan”) and $40.5 million in committed delayed draw term loan (the “Amended Delayed Draw Term Loan”) with a maturity date of August 17, 2028. The Amended Credit Facility replaced the Prior Credit Facility. Immediately prior to the closing date of the Amended Credit Facility, the Company had an outstanding balance under the Prior Credit Facility of $193.6 million which consisted of $189.5 million of the Prior Loans and $4.1 million of unpaid interest under the Prior Credit Facility. The Company borrowed the full $289.5 million Amended Term Loan and used a portion to replace and refinance the full $189.5 million of the Prior Loans. The Company borrowed $4.1 million under the Amended Delayed Draw Term Loan to fund the unpaid interest under the Prior Credit Facility. The Company incurred $3.5 million debt discount costs in relation to the Amended Credit Facility.

The interest terms under the Amended Credit Facility are identical to the interest terms under the Prior Credit Facility except the ABR loan has an annual interest rate equal to ABR plus 6.0%, the SOFR loan has an annual interest rate equal to Term SOFR plus 7.0%, and the maturity date is August 17, 2028.

Under the Amended Credit Facility, the prepayment starts at 1.5% and reduces tozero beginning on the third anniversary from the closing date. Any amounts drawn and repaid or prepaid under the Amended Credit Facility may not be reborrowed.

The Company will have the option to fund up to 100.0% of cash interest with the proceeds of the Amended Delayed Draw Term Loan, subject to a 0.5% increase in the annual interest rate effective from the date of funding for 90 days, or 180 days if the Interest Period for such Amended Delayed Draw Term Loan issix months from the date of funding (the “Amended DDTL Utilization Interest Increase”).

Under the Amended Credit Facility, the annual interest rate on all outstanding principal amounts will be reduced by 0.5% if the Company’s Annualized Subscription Recurring Revenue (as defined in the amended credit agreement, "ASRR") is at least $500.0 million and the Company delivers a compliance certificate in accordance with the amended credit agreement (the “Amended ASRR Interest Decrease”).

The amended credit agreement contains certain covenants that require the Company, among other things, to maintain a specified minimum liquidity amount and minimum ASRR amount. Failure to comply with these covenants, along with other non-financial covenants, could result in an event of default, which may lead to acceleration of the amounts owed and/or the enforcement of other remedies by the lenders.

The Company had $6.9 million of debt discount and issuance costs on the $293.6 million Amended Term Loan and Amended Delayed Draw Term Loan as of August 17, 2023. The debt discount and issuance costs were recorded as a direct deduction from the long-term debt liability and are amortized into interest expense over the contractual term of the Amended Credit Facility.

Under the Amended Delayed Draw Term Loan, the Company borrowed $9.5 million and $6.0 million for the three months ended July 31, 2024 and 2023, respectively, and $19.2 million and $6.0 million for the six months ended July 31, 2024 and 2023, respectively.

As of July 31, 2024 and January 31, 2024, the Company was in compliance with all of its debt covenants.

Bridge Notes

In April 2024, the Company entered into a purchase agreement with Goldman Sachs & Co. LLC and Barclays Capital Inc. (collectively, the “Purchasers”) for the Company to issue senior notes (the “Bridge Notes”) to the Purchasers for up to $450.0 million. The Company issued the Bridge Notes and received the funding from the Purchasers on April 25, 2024 (the “Funding Date”) in an aggregate amount of $321.4 million to fund a portion of the tax withholding and remittance obligations related to the settlement of RSUs in connection with the IPO. The Bridge Notes matured on April 29, 2024 (the “IPO Settlement Date”) and carried an annual interest rate of 7.0% starting from the Funding Date up to but excluding the date of repayment.

The Company incurred $0.6 million of discount and issuance costs in connection with the issuance of Bridge Notes and recorded it as a direct deduction from the Bridge Notes liability on the date of issuance.

On April 29, 2024, the Company repaid the outstanding principal amount of the Bridge Notes, including $0.2 million of accrued and unpaid interest which was recorded as interest expense. The aggregate unamortized amount of discount and issuance costs was fully amortized into interest expense for the three months ended April 30, 2024.

Note 8 – Commitments and Contingencies

Purchase Commitments

As of July 31, 2024, there were no significant changes outside the ordinary course of business to the Company's commitments and purchase obligations since January 31, 2024.

Litigation

From time to time, the Company receives inquiries and/or claims or is involved in legal disputes and/or matters. In the opinion of management, any liabilities resulting from these claims will not have a material adverse effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations, or condensed consolidated statements of cash flows.

Warranties and Indemnifications

The Company provides to qualifying customers a services warranty program for recovery of certain expenses related to data recovery and restoration in the event that data backed up using the Company’s solutions cannot be recovered following a ransomware attack. To date, costs relating to the warranty program have not been material.

The Company typically provides indemnification to customers for certain losses suffered or expenses incurred as a result of third-party claims arising from the Company’s infringement of a third-party’s intellectual property. Certain of these indemnification provisions survive termination or the expiration of the applicable agreement. The Company has not incurred a material liability relating to these indemnification provisions, and therefore, has not recorded a liability during any period for these indemnification provisions.

Note 9 – Redeemable Convertible Preferred Stock

Immediately prior to the closing of the IPO, all 74,182,559 shares of the Company's redeemable convertible preferred stock outstanding were automatically converted into an equivalent number of shares of Class B common stock on aone-to-one basis, and their carrying value of $714.7 million was reclassified into stockholders' equity. As of July 31, 2024, there were no shares of redeemable convertible preferred stock issued and outstanding.

Note 10 – Stockholders’ Deficit

Preferred Stock

In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 20,000,000 shares of undesignated preferred stock with a par value of $0.000025 per share with rights and preferences, including voting rights, designated from time to time by the board of directors.

Common Stock

The Company hastwo classes of common stock – Class A common stock and Class B common stock. In connection with the IPO, the Company’s amended and restated certificate of incorporation authorized the issuance of 1,070,000,000 shares of Class A common stock and 210,000,000 shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled toone vote. Each share of Class B common stock is entitled to 20 votes. Class A and Class B common stock have a par value of $0.000025 per share, and are referred to collectively as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors.

Each share of Class B common stock is convertible at any time at the option of the holder intoone share of Class A common stock. Any holder’s shares of Class B common stock will convert automatically to Class A common stock, on aone-to-one basis, upon the earliest to occur following the Company's IPO: (i) sale or transfer of such share of Class B common stock, except for permitted transfers as described in the amended and restated certificate of incorporation; (ii) the death or incapacity of the Class B common stockholder (or 180 days following the date of the death or incapacity if the stockholder is one of the Company’s founders); and (iii) on the final conversion date, defined as the earliest of (a) the date fixed by the Company's board of directors that is no less than 61 days and no more than 180 days following the date on which the outstanding shares of Class B common stock represent less than 5% of the then outstanding shares of Class A and Class B common stock; (b) the last trading day of the fiscal year following the tenth anniversary of the effectiveness of the registration statement in connection with the Company’s IPO; (c) the date fixed by the Company’s board of directors that is no less than 61 days and no more than 180 days following the date that Bipul Sinha is no longer providing services to the Company as an officer, employee, or director; (d) the date fixed by the board of directors that is no less than 61 days and no more than 180 days following the death or incapacity of Mr. Sinha; or (e) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock.

Immediately prior to the closing of the IPO, all 5,400,000 shares of the Company’s convertible founder stock outstanding were automatically converted into an equal number of shares of Class B common stock. As of July 31, 2024, there were no shares of convertible founder stock issued and outstanding.

Equity Incentive Plan

In January 2014, the Company adopted the 2014 Stock Option and Grant Plan, as amended (the “2014 Plan”). The 2014 Plan permits the grant of incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock awards, or RSU awards based on, or related to, shares of the Company’s common stock. The 2014 Plan was terminated in April 2024 in connection with the IPO, but continues to govern the terms of outstanding awards that were granted prior to the termination of the 2014 Plan. No further equity awards will be granted under the 2014 Plan. With the establishment of the 2024 Equity Incentive Plan (the “2024 Plan”), upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class B common stock underlying outstanding equity awards granted under the 2014 Plan, an equal number of shares of Class A common stock will become available for grant under the 2024 Plan. As of July 31, 2024,36,650,654 shares of Class B common stock granted under the 2014 Plan remain outstanding.

In March 2024, the Company's board of directors adopted, and in April 2024, the Company's stockholders approved, the 2024 Plan, which became effective in connection with the Company’s IPO. The 2024 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, performance-based awards, and other forms of awards to employees, non-employee directors and consultants, and employees and consultants of the Company's affiliates. A total of 46,073,027 shares of the Company’s Class A common stock have been reserved for future issuance under the 2024 Plan in addition to (i) shares underlying outstanding equity awards granted under the 2014 Plan that expire, or are forfeited, cancelled, or reacquired, as described above, and (ii) any automatic increases in the number of shares of Class A common stock reserved for future issuance under this plan. As of July 31, 2024,60,704,198 shares were available for future issuance under the 2024 Plan.

In March 2024, the board of directors adopted, and in April 2024, the stockholders approved, the 2024 Employee Stock Purchase Plan (the “2024 ESPP” or the "ESPP"), which became effective in connection with the Company’s IPO. The 2024 ESPP authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. A total of 4,607,303 shares of the Company’s Class A common stock have been reserved for future issuance under the 2024 ESPP, in addition to any automatic increases in the number of shares of Class A common stock reserved for future issuance under this plan.

Stock Options

Options issued under the Company's 2014 Plan and 2024 Plan generally are exercisable for periods not to exceed 10 years and generally vest over four years with 25% vesting afterone year and the remainder vesting monthly thereafter in equal installments.

A summary of the stock option activity and related information is as follows:

There wereno options with only a service-based vesting condition granted during the six months ended July 31, 2024 and 2023.

The intrinsic value of the options exercised represents the difference between the estimated fair market value of the Company’s common stock on the date of exercise and the exercise price of each option.

As of July 31, 2024, there was approximately $125.7 million of unrecognized stock-based compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.7 years.

CEO Performance Award

In June 2022, the Company’s board of directors approved the grant of a stock option under the 2014 Plan to the Company's CEO, Mr. Sinha, to purchase up to 8,000,000 of Class B common stock, contingent and effective upon a listing event, which includes the Company's IPO (the “CEO Performance Award” or "the Award"). The CEO Performance Award was granted upon the Company's IPO in April 2024.

The CEO Performance Award consists of 10 tranches that may be earned as specified in the table below, subject to both 1) a service-based condition and 2) the achievement of Target Stock Value prior to the applicable Option Valuation Expiration Date. Stock price measurement will not commence until the expiration of any lock-up period. Target Stock Value with respect to the Award is based on the percentage of the IPO Price and will be achieved on the date when the volume-weighted average price of the Company's Class A common stock over a period of 90 consecutive days equals or exceeds the applicable Target Stock Value. The exercise price per share of the Award is the IPO Price. Each tranche of the Award will vest on the first date following satisfaction of both the service-based condition and the Target Stock Value subject to Mr. Sinha's continued service with the Company. The shares underlying each tranche will satisfy the service-based condition in 20 equal quarterly installments beginning in January 2022 and will expire in 10 years after the grant date.

The Company calculated the grant date fair value of the CEO Performance Award based on multiple stock price paths developed through the use of a Monte Carlo simulation model. A Monte Carlo simulation model also calculates a derived service period for each of the 10 vesting tranches, which is the measure of the expected time to achieve each Target Stock value under the scenarios where the Target Stock Value is in fact achieved prior to the Option Valuation Expiration Date. A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, and the risk-free interest rate as of the valuation date, corresponding to the time to expiration of the options, and expected dividend yield. The weighted-average grant date fair value of the CEO Performance Award was $17.37 per share. The Company will recognize total stock-based compensation expense of $139.0 million over the derived service period of each tranche, which is between 1.2 to 4.5 years, using the accelerated attribution method as long as the CEO satisfies the service-based vesting condition. If the Target Stock Value is met sooner than the derived service period, the Company will adjust its stock-based compensation to reflect the cumulative expense associated with the vested awards. Provided that Mr. Sinha continues to be the Company's CEO, the Company will recognize stock-based compensation expense over the requisite service period, regardless of whether the Target Stock Values are achieved.

Restricted Stock Units

The Company grants service-based condition RSUs, service- and performance-based conditions RSUs, and service-, market-, and performance-based conditions RSUs. RSUs issued under the 2014 Plan typically have an expiry period ofseven years from the grant date.

A summary of the RSU activity and related information is as follows:

In February 2024, we modified an existing service- performance-, and market-based condition equity award of 1,158,082 RSUs by extending the expiration date from May 2, 2025 to May 2, 2028. The performance-based condition related to the occurrence of a qualifying event was satisfied at the completion of the Company's IPO. The total incremental fair value resulting from the modification was $24.1 million and the total stock-based compensation expense of the equity award of $30.4 million is recorded over the requisite service period. For the six months ended July 31, 2024, the Company recognized $20.3 million of stock-based compensation expense for this equity award.

For the six months ended July 31, 2024 and 2023, the total grant date fair value of vested RSUs was $446.0 million andzero, respectively.

As of July 31, 2024, there was approximately $376.8 million of unrecognized stock-based compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of 1.9 years.

2024 Employee Stock Purchase Plan

In April 2024, the Company's 2024 ESPP became effective. A total of 4,607,303 shares of Class A common stock were initially reserved for issuance under the ESPP. The number of shares of Class A common stock reserved for issuance under the 2024 ESPP will automatically increase on February 1 of each fiscal year, beginning on February 1, 2025 and ending on and including February 1, 2034, by the lesser of (1) one percent (1%) of the aggregate number of shares of common stock of all classes issued and outstanding on January 31 of the preceding fiscal year, (2)9,214,605 shares, or (3) a lesser number of shares determined by the Company's board of directors.

The 2024 ESPP allows eligible employees to purchase shares of Class A common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2024 ESPP provides for 24-month offering periods beginning March 21 and September 21 of each year, and each offering period will consist offour six-month purchase periods. The initial offering period began April 24, 2024, and will end on March 20, 2026.

On each purchase date, eligible employees will purchase Class A common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the Class A common stock on the offering date, or (2) the fair market value of the Class A common stock on the purchase date. For the first offering period, which began on April 24, 2024, the fair market value of the Class A common stock on the offering date was $32.00, the price at which the Company's common stock was first sold to the public in the IPO, as specified in the final prospectus filed with the SEC on April 26, 2024, pursuant to Rule 424(b). As of July 31, 2024, no shares of the Company's Class A common stock have been purchased under the ESPP.

No stock-based compensation expense related to the ESPP was recognized during the three months ended April 30, 2024 as the grant date of the Company’s first ESPP offering was in May 2024. The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option-pricing model with the following assumptions:

These assumptions and estimates were determined in accordance with the Company’s stock-based compensation expense policy within Note 2, Summary of Significant Accounting Policies in the notes to the consolidated financial statements in the Company’s Final Prospectus except as follows:

•Fair Value of common stock – After the completion of the Company’s IPO, the fair value of each share of the underlying common stock is based on the closing price of our Class A common stock as reported on the New York Stock Exchange on the date of the grant.

•Expected term – The ESPP purchase is made every six months during the 24-months offering period and the expected term coincides with the length of each purchase period.

As of July 31, 2024, there was approximately $22.5 million of unrecognized stock-based compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 1.1 years.

Stock-Based Compensation Expense

Total stock-based compensation expense included in the Company’s condensed consolidated statements of operations was as follows (in thousands):

Note 11 – Net Loss Per Share

The Company computes net loss per share of common stock in conformity with the two-class method required for participating securities and multiple classes of common stock. Prior to the automatic conversion of all of the Company's redeemable convertible preferred stock outstanding into Class B common stock upon the completion of the IPO, the Company considered all series of its redeemable convertible preferred stock to be participating securities as the holders of the redeemable convertible preferred stock were entitled to receive a non-cumulative dividend on a pari passu basis in the event that a dividend is paid on the common stock. Under the two-class method, the net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the preferred stockholders did not have a contractual obligation to share in the Company’s losses.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including redeemable convertible preferred stock, issued and outstanding common stock options, unvested RSUs issued and outstanding, and ESPP, to the extent they are dilutive.

The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both individual and combined basis.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share amounts):

The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive (in thousands):

Note 12 – Income Taxes

The Company recorded a tax expense of $4.2 million and $3.0 million for the three months ended July 31, 2024 and 2023, respectively, and $3.2 million and $4.3 million for the six months ended July 31, 2024 and 2023, respectively. For the three months ended July 31, 2024 and 2023, the income tax provision consisted of taxes on the income of the Company's foreign subsidiaries, foreign withholding taxes, and U.S. state taxes. For the six months ended July 31, 2024, the income tax provision consisted of a U.S. federal & state tax benefit as a result of several of the Company's foreign subsidiaries making an election in the current year to be treated as U.S. branches for federal income tax purposes effective in fiscal year ended January 31, 2024, partially offset by taxes on the income of the Company’s foreign subsidiaries, foreign withholding taxes, and U.S. state taxes. For the six months ended July 31, 2023, the income tax provision consisted of taxes on the income of the Company's foreign subsidiaries, foreign withholding taxes, and U.S. state taxes.

As of July 31, 2024, the Company maintained a full valuation allowance on its U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized.