v3.20.1
Fair Value Measurements and Marketable Securities
 12 Months Ended
Jan. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Marketable Securities Fair Value Measurements and Marketable Securities
The Company follows ASC 820, Fair Value Measurements, with respect to marketable securities that are measured at fair value on a recurring basis. Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.
The hierarchy is broken down into three levels as follows:
Level 1  Assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in active markets
Level 2  Assets and liabilities whose values are based on quoted prices in markets that are not active or inputs that are observable for substantially the full term of the asset or liability
Level 3  Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement
Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows:
January 31, 2020
Level 1Level 2Level 3Total
(in thousands) 
Assets
Cash equivalents(1)
Money market funds$205,379  $—  $—  $205,379  
Corporate debt securities—  39,940  —  39,940  
Total cash equivalents205,379  39,940  —  245,319  
Marketable securities
Corporate debt securities—  495,022  —  495,022  
US Treasury securities84,431  —  —  84,431  
Asset backed securities—  67,813  —  67,813  
Total marketable securities84,431  562,835  —  647,266  
Total assets$289,810  $602,775  $—  $892,585  
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(1)Included in “Cash and cash equivalents” on the consolidated balance sheets.
January 31, 2019
Level 1Level 2Level 3Total
(in thousands)
Assets
Cash equivalents(1)
Money market funds$42,132  $—  $—  $42,132  
Corporate debt securities—  27,941  —  27,941  
Total cash equivalents42,132  27,941  —  70,073  
Marketable securities
Corporate debt securities—  91,796  —  91,796  
U.S. treasury securities11,451  —  —  11,451  
Total marketable securities11,451  91,796  —  103,247  
Total assets$53,583  $119,737  $—  $173,320  
Liability
Contingent consideration related to business combinations(2)
$—  $—  $474  $474  
Redeemable convertible preferred stock warrant liability(3)
—  —  4,537  4,537  
Total liabilities$—  $—  $5,011  $5,011  
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(1)Included in “Cash and cash equivalents” on the consolidated balance sheets.
(2)The contingent consideration consists of development milestone payments. The fair value of the contingent consideration was estimated by developing the risk-adjusted discounted value as well as discounted probability-weighted expected payments. That measure is based on Level 3 inputs which are significant inputs that are not observable in the market. Key assumptions at the acquisition date included (a) a discount rate range of 3%-3.02% and (b) three probability-adjusted milestone payments, each $0.2 million. As of January 31, 2019, the first milestone payment of $0.2 million had been made. During the year ended January 31, 2020, the remaining milestones were deemed not probable of being paid and the remaining contingent consideration of $0.5 million was written off to Other income (expense), net.
(3)Immediately prior to the closing of the IPO on June 14, 2019, the redeemable convertible preferred stock warrants converted into 336,386 warrants to purchase Class B common stock on a one-to-one basis. The redeemable convertible preferred stock warrant liability was reclassified to additional paid-in capital. Within the same month, the Company received notice from the holders of 336,386 warrants as to their intentions to exercise the warrants for shares of common stock of the Company. Such shares were settled via net settlement method, which was elected by the holders to reduce the number of shares issued upon exercise to reflect net settlement of the exercise price, resulting in the issuance of 322,278 shares of the Company’s common stock.
There were no transfers between the levels of the fair value hierarchy during the years ended January 31, 2020 or January 31, 2019.
At January 31, 2020 and January 31, 2019, the amortized cost of the Company’s cash equivalents and marketable securities approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate. In addition, the securities that had been in continuous unrealized loss position per security type and in aggregate are not material as of January 31, 2020 and January 31, 2019. There were no impairments considered “other-than-temporary” as it is more likely than not the Company will hold the securities until maturity or a recovery of the cost basis.
The following table presents the contractual maturities of marketable securities as of January 31, 2020:
Amortized costFair value
(in thousands) 
Due in one year or less$377,722  $378,408  
Due after one year through five years266,670  267,728  
Due after five years through nineteen years1,127  1,130  
$645,519  $647,266  
The following summarizes the changes in strategic investments:
Year Ended January 31
2020
(in thousands)
Total initial cost$1,000  
Cumulative gain—  
Carrying value$1,000  
There was no unrealized gain and loss included as an adjustment to the carrying value related to non-marketable securities as of January 31, 2020.
The following summarizes the changes in the redeemable convertible preferred stock warrant liability, which is classified as a Level 3 instrument:
Year Ended January 31
202020192018
(in thousands)
Balance at beginning of period$4,537  $961  $568  
Additions—  —  129  
Adjustment resulting from change in fair value recognized in the consolidated statement of operations6,022  3,576  264  
Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital upon IPO(10,559) —  —  
Balance at end of period$—  $4,537  $961  
The fair value of the redeemable convertible preferred stock warrant liability was estimated using the Black-Scholes option-pricing model and was based on significant inputs not observable in the market, and therefore was classified as a Level 3 instrument. The inputs include the Company’s preferred stock price, expected stock price volatility, risk-free interest rate, and contractual term. A loss of $6.0 million, $3.6 million, and $0.3 million was recorded as a component of Other income (expense), net, because of the remeasurement of the redeemable convertible preferred stock warrant liability during the years ended January 31, 2020, January 31, 2019, and January 31, 2018, respectively.