v3.20.2
Fair Value Measurements and Marketable Securities
 6 Months Ended
Jul. 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:
July 31, 2020January 31, 2020
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
(in thousands)(in thousands)
Assets
Cash equivalents (1)
Money market funds$— $— $— $— $205,379 $— $— $205,379 
Corporate debt securities— — — — — 39,940 — 39,940 
Total cash equivalents— — — — 205,379 39,940 — 245,319 
Marketable securities
Corporate debt securities— — — — — 495,022 — 495,022 
U.S. treasury securities— — — — 84,431 — — 84,431 
Asset backed securities— — — — — 67,813 67,813 
Total marketable securities— — — — 84,431 562,835 — 647,266 
Total assets$— $— $— $— $289,810 $602,775 $— $892,585 
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(1)Included in “Cash and cash equivalents” on the condensed consolidated balance sheets.
There were no transfers between the levels of the fair value hierarchy during the three and six months ended July 31, 2020 or July 31, 2019.
As of July 31, 2020, there were no marketable securities held by the Company and there were no securities that had been in continuous unrealized loss position. As of January 31, 2020, 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. 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 as of January 31, 2020.
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:
July 31,January 31,
20202020
(in thousands)
Total initial cost$2,000 $1,000 
Cumulative gain— — 
Carrying value$2,000 $1,000 
There was no unrealized gain and loss included as an adjustment related to the carrying value of non-marketable securities as of July 31, 2020 and January 31, 2020.
The following summarizes the changes in the redeemable convertible preferred stock warrant liability, which is classified as a Level 3 instrument:
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
(in thousands)(in thousands)
Balance at beginning of period$— $5,704 $— $4,537 
Adjustment resulting from change in fair value recognized in the condensed consolidated statement of operations— 4,855 — 6,022 
Reclassification of liability for redeemable convertible preferred stock warrants to additional paid-in capital upon initial public offering— (10,559)— (10,559)
Balance at end of period$— $— $— $— 
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 $4.9 million and $6.0 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 three and six months ended July 31, 2019, respectively. 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 upon the closing of the IPO.