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What changed in Braze, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Braze, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+309 added−290 removedSource: 10-K (2023-03-31) vs 10-K (2022-03-31)

Top changes in Braze, Inc.'s 2023 10-K

309 paragraphs added · 290 removed · 219 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

138 edited+55 added−23 removed343 unchanged
Biggest changeAdditionally, if our assumptions regarding these risks and uncertainties are incorrect or change, including as a result of the ongoing COVID-19 pandemic, including the emergence of new variant strains of COVID-19, or the ongoing geopolitical instability resulting from the conflict between Russia and Ukraine, or if we do not address these risks successfully, our revenue and results of operations could differ materially from our expectations, and our business, financial condition and results of operations may be adversely affected.
Biggest changeAdditionally, if our assumptions regarding these risks and uncertainties are incorrect or change, including as a result of (1) global and domestic disruptions, such as the COVID-19 pandemic, the emergence of new variant strains of COVID-19 or any future similar pandemic and any uncertainties related to the recovery therefrom, (2) international conflicts that may impact international trade and global economic performance, such as the ongoing conflict between Russia and Ukraine and the related economic sanctions imposed by the United States and its trading partners against Russia and Belarus and (3) other macroeconomic trends, such as instability among financial institutions, international and domestic supply chain risks, inflationary pressure, interest rate increases and declines in consumer confidence, that impact us and our customers, or if we do not address these risks successfully, our revenue and results of operations could differ materially from our expectations, and our business, financial condition and results of operations may be adversely affected.
Any such expansion efforts may reduce revenue or may not bring the benefits we anticipate, and our business, financial condition and results of operations may be adversely affected. Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products.
Any such expansion efforts may reduce revenue or may not bring the benefits we anticipate, and our business, financial condition and results of operations may be adversely affected. Failure to effectively develop our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products.
If consumers choose to use products or platforms that do not support our platforms, or if we do not ensure our platform can work effectively with such products or platforms, our business and growth could be harmed. We also may not be successful in developing or maintaining relationships with key participants in the mobile industry that permit such interoperability.
If consumers choose to use products or platforms that do not support our platform, or if we do not ensure our platform can work effectively with such products or platforms, our business and growth could be harmed. We also may not be successful in developing or maintaining relationships with key participants in the mobile industry that permit such interoperability.
If we are not able to grow in an efficient manner, our business, financial condition and results of operations could be harmed. • Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products. • We are dependent on a single platform, and the failure to achieve continued market acceptance of our platform could cause our results of operations to suffer. • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We may need to reduce prices or change our pricing model to remain competitive. • Our business depends on our ability to send consumer engagement messages, including emails, SMS and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. • We rely upon third-party providers of cloud-based infrastructure, including Amazon Web Services, to host our products.
If we are not able to grow in an efficient manner, our business, financial condition and results of operations could be harmed. • Failure to effectively develop our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products. • We are dependent on a single platform, and the failure to achieve continued market acceptance of our platform could cause our results of operations to suffer. • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We may need to reduce prices or change our pricing model to remain competitive. • Our business depends on our ability to send consumer engagement messages, including email, SMS and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. • We rely upon third-party providers of cloud-based infrastructure, including Amazon Web Services, to host our products.
Our results of operations may fluctuate significantly from period to period due to many factors, many of which are outside of our control, including: • failure to execute on our growth strategies; • the level of demand for our platform; • the rate of renewal of subscriptions with, and extent of sales of additional subscriptions to, existing customers; • the size, timing, duration and pricing, and other terms of our subscription agreements with existing and new customers; • the introduction of new products and product enhancements by existing competitors or new entrants into our market, and changes in pricing for products offered by our competitors; • network outages, security breaches and other cyber-attacks, technical difficulties with or interruptions to our platform; • customers delaying purchasing decisions in anticipation of new developments or enhancements by us or our competitors or otherwise; • changes in customers’ budgets; • seasonal variations related to sales and marketing and other activities, such as expenses related to our customers’ increased usage of our platform and products during the fourth quarter; • our ability to increase, retain and incentivize the strategic partners that market and sell our platform; • the timing of growth of our business, in particular through our hiring of new employees and international expansion; • our ability to control our operating expenses and other costs; • our ability to hire, train and maintain our direct sales team; • unforeseen litigation and inability to enforce, protect or defend our intellectual property, or claims of infringement by third parties; • the timing of our adoption of new or revised accounting pronouncements applicable to us and the impact on our results of operations; • fluctuations in our effective tax rate; and • general economic and political conditions, as well as economic conditions specifically affecting industries in which our customers operate.
Our results of operations may fluctuate significantly from period to period due to many factors, many of which are outside of our control, including: • failure to execute on our growth strategies; • the level of demand for our platform; • the rate of renewal of subscriptions with, and extent of sales of additional subscriptions to, existing customers; • the size, timing, duration and pricing, and other terms of our subscription agreements with existing and new customers; • the introduction of new products and product enhancements by existing competitors or new entrants into our market, and changes in pricing for products offered by our competitors; • network outages, security breaches and other cyber-attacks, technical difficulties with or interruptions to our platform; • customers delaying purchasing decisions in anticipation of new developments or enhancements by us or our competitors or otherwise; • changes in customers’ budgets; 18 Table of Contents • seasonal variations related to sales and marketing and other activities, such as expenses related to our customers’ increased usage of our platform and products during the fourth quarter; • our ability to increase, retain and incentivize the strategic partners that market and sell our platform; • the timing of growth of our business, in particular through our hiring of new employees and international expansion; • our ability to control our operating expenses and other costs; • our ability to hire, train and maintain our direct sales team; • unforeseen litigation and inability to enforce, protect or defend our intellectual property, or claims of infringement by third-parties; • the timing of our adoption of new or revised accounting pronouncements applicable to us and the impact on our results of operations; • fluctuations in our effective tax rate; and • general economic and political conditions, as well as economic conditions specifically affecting industries in which our customers operate.
If we become subject to new data privacy laws at the state level, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals, via a private right of action, and state actors).
If we become subject to further new data privacy laws at the state level, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals, via a private right of action, and state actors).
Overall growth of our revenue depends on several factors, including our ability to: • expand subscriptions for our platform to our existing customers; • expand the products for and functionality of our platform and achieve market acceptance for them; • attract new customers, particularly in verticals and organizations where we have already experienced revenue growth; • succeed in selling our products outside the United States; • continue to partner with existing customers to improve our platform and its products and functionality; • keep pace with technological developments; • price our platform subscriptions effectively; • provide our customers with support that meets their needs; • successfully identify and acquire or invest in businesses, products or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
Overall growth of our revenue depends on several factors, including our ability to: • expand subscriptions for additional functionality within our platform to our existing customers; • expand the products for and functionality of our platform and achieve market acceptance for them; • attract new customers, particularly in verticals and organizations where we have already experienced revenue growth; • succeed in selling our products outside the United States; • continue to partner with existing customers to improve our platform and its products and functionality; • keep pace with technological developments; • price our platform subscriptions effectively; • provide our customers with support that meets their needs; • successfully identify and acquire or invest in businesses, products or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
If we or our third-party service providers suffer, or are perceived to have suffered, a security breach or other security incident, we may experience adverse consequences. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.
If we, our customers or our third-party service providers suffer, or are perceived to have suffered, a security breach or other security incident, we may experience adverse consequences. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.
If we cannot implement a valid compliance mechanism for cross-border privacy and security transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.
If we cannot implement a workable, valid compliance mechanism for cross-border privacy and security transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.
Risks Related to Our Dependence on Third Parties Our business depends on our ability to send consumer engagement messages, including emails, SMS and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. 26 Table of Contents Our brand, reputation and ability to attract new customers depend on the reliable performance of our technology infrastructure and content delivery.
Risks Related to Our Dependence on Third Parties Our business depends on our ability to send consumer engagement messages, including emails, SMS and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. 28 Table of Contents Our brand, reputation and ability to attract new customers depend on the reliable performance of our technology infrastructure and content delivery.
We may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
We may be subject to a variety of evolving threats, including, but not limited to, social-engineering attacks (including through phishing, vishing and hybrid phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. • If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data or our platform, our solution may be perceived as not being secure, our reputation may be harmed, demand for our platform and products may be reduced and we may incur significant liabilities. • Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business. • We employ third-party licensed software for use in or with our platform, and the inability to maintain these licenses or errors or vulnerabilities in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business. • We have identified three material weaknesses in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected. • The dual class structure of our common stock has the effect of concentrating voting control with our executive officers, directors and significant holders of our capital stock, which limits the ability of holders of our Class A common stock to influence the outcome of important transactions.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. • If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data or our platform, our solution may be perceived as not being secure, our reputation may be harmed, demand for our platform and products may be reduced and we may incur significant liabilities. • Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business. • We employ third-party licensed software for use in or with our platform, and the inability to maintain these licenses or errors or vulnerabilities in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business. • We have identified one material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected. • The dual class structure of our common stock has the effect of concentrating voting control with our executive officers, directors and significant holders of our capital stock, which limits the ability of holders of our Class A common stock to influence the outcome of important transactions.
Our customers need to be able to access our platform at any time, without interruption or degradation of performance, and we provide them with service-level commitments with respect to uptime and, occasionally, throughput.
Our customers need to be able to access our platform at any time, without interruption or degradation of performance, and we provide many of them with service-level commitments with respect to uptime and, occasionally, throughput.
Additionally, U.S. embargoes and sanctions can change rapidly and unpredictably in response to international events, such as the recent application of new and broad sanctions against Russia and Belarus in connection with the invasion of Ukraine.
Additionally, U.S. embargoes and sanctions can change rapidly and unpredictably in response to international events, such as the application of new and broad sanctions against Russia and Belarus in connection with the invasion of Ukraine.
Our current international operations and future initiatives involve a variety of risks, including: • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in laws, regulatory requirements, taxes or trade laws; 25 Table of Contents • more stringent regulations relating to privacy and data security and the unauthorized collection, processing, transmission or use of, or access to, commercial and personal information, particularly in Europe; • differing labor regulations, especially in Canada and Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; • increased travel, real estate, infrastructure and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, economic sanctions, terrorist activities, or international conflicts, including the ongoing conflict between Russia and Ukraine, which may impact the operations of our business or the businesses of our customers; • risks related to global health epidemics, such as the COVID-19 pandemic, including the emergence of new variant strains of COVID-19, and related restrictions on our ability and our customers’ ability to travel; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current international operations and future initiatives involve a variety of risks, including: • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in laws, regulatory requirements, taxes or trade laws; • more stringent regulations relating to privacy and data security and the unauthorized collection, processing, transmission or use of, or access to, commercial and personal information, particularly in Europe; • differing labor regulations, especially in regions where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in some of these locations; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; • increased travel, real estate, infrastructure and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, economic sanctions, terrorist activities, or international conflicts, including the ongoing conflict between Russia and Ukraine, which may impact the operations of our business or the businesses of our customers; • risks related to global health epidemics, such as the COVID-19 pandemic, including the emergence of new variant strains of COVID-19, and related restrictions on our ability and our customers’ ability to travel; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Furthermore, if we issue equity securities, our stockholders will experience dilution, and the new equity securities could have rights senior to those of our Class A common stock.
Furthermore, if we issue equity securities, our stockholders will experience dilution, and the new equity securities could have rights senior to those of our Class A common stock and Class B common stock.
We cannot assure you that the measures we have taken to date will be sufficient to remediate the material weaknesses we identified or avoid the identification of additional material weaknesses in the future.
We cannot assure you that the measures we have taken to date will be sufficient to remediate the material weakness we identified or avoid the identification of additional material weaknesses in the future.
Any disruption in the operations of these third-party providers or limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations. 15 Table of Contents • We are subject to stringent and changing laws and regulations, industry standards and contractual obligations related to privacy, data security and data protection.
Any disruption in the operations of these third-party providers or limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations. 16 Table of Contents • We are subject to stringent and changing laws and regulations, industry standards and contractual obligations related to privacy, data security and data protection.
In the event that AWS’s or any other third-party provider’s systems or service abilities are hindered by any of the events 27 Table of Contents discussed above, our ability to operate our platform may be impaired, our customers may be impacted, we may be subject to claims for refunds or terminations under our contracts, and our reputation and brand may be harmed.
In the event that AWS’s or any other third-party provider’s systems or service abilities are hindered 29 Table of Contents by any of the events discussed above, our ability to operate our platform may be impaired, our customers may be impacted, we may be subject to claims for refunds or terminations under our contracts, and our reputation and brand may be harmed.
Any of these security incidents could result in unauthorized access or damage to, or the disablement, encryption, use or misuse, disclosure, modification, destruction or loss of our data or our partners’ data, including personal information, or disrupt our ability to provide our platform or service. Our platform’s continuing and uninterrupted performance is critical to our success.
Any of these security incidents could result in unauthorized access or damage to, or the disablement, encryption, use or misuse, disclosure, modification, destruction or loss of our data or our partners’ data, including personal information, or disrupt our ability to provide our platform or services. Our platform’s continuing and uninterrupted performance is critical to our success.
Our amended and restated certificate of incorporation as currently in effect provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware be the sole and exclusive forum for: • any derivative claim or cause of action brought on our behalf; • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the DGCL; • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation as currently in effect provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware be the sole and exclusive forum for: • any derivative claim or cause of action brought on our behalf; 42 Table of Contents • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the DGCL; • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; • our ability to meet with customers in person during a sales cycle; • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; 22 Table of Contents • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; • our ability to meet with customers in person during a sales cycle; • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
Under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater. Further, individuals may initiate litigation related to our processing of their personal data.
Under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater. Furthermore, individuals may initiate litigation related to our processing of their personal data.
If the steps we take do not remediate the material weaknesses in a timely manner, there could continue to be a reasonable possibility that our internal control deficiencies or others could result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis.
If the steps we take do not remediate the material weakness in a timely manner, there could continue to be a reasonable possibility that our internal control deficiencies or others could result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis.
It is important that we maintain a high level of customer services, integration services, technical support and satisfaction as we expand our business. As our customer base continues to grow and as our penetration with existing customers expands, we will need to expand our account management, customer service and other personnel.
It is important that we maintain a high level of customer services, integration services, technical support and satisfaction as we expand our business. As our customer base continues to grow and as our penetration within existing customers expands, we will need to expand our account management, customer service and other personnel.
As a result, the holders of our Class B common stock, and in particular our executive officers, directors and holders of 5% or more of our common stock, will be able to exercise considerable influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets, even if their stock holdings represent less than 50% of the outstanding shares of our capital stock.
As a result, the holders of our Class B common stock, and in particular our executive officers, directors and holders of 5% or more of our common stock (by voting power), will be able to exercise considerable influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets, even if their stock holdings represent less than 50% of the outstanding shares of our capital stock.
For instance, the SEC has recently indicated that it may increase regulatory focus on the use of customer engagement tools in the financial services industry, and we cannot predict if other regulators will take similar actions in other markets in the future.
For instance, the SEC has previously indicated that it may increase regulatory focus on the use of customer engagement tools in the financial services industry, and we cannot predict if other regulators will take similar actions in other markets in the future.
Further, the emergence of new variant strains of COVID-19 could also adversely affect workforces, economies and financial markets globally, potentially leading to an economic downturn and a reduction in customer spending on our products or an inability for our customers, partners, suppliers or vendors or other parties with whom we do business to meet their contractual obligations.
Further, the emergence of new variant strains of COVID-19 or other highly infectious diseases could also adversely affect workforces, economies and financial markets globally, potentially leading to an economic downturn and a reduction in customer spending on our products or an inability for our customers, partners, suppliers or vendors or other parties with whom we do business to meet their contractual obligations.
Natural catastrophic events and human-made problems such as power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business. We rely heavily on our network infrastructure and information technology systems for our business operations.
Natural catastrophic events and human-made problems such as climate change, power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business. We rely heavily on our network infrastructure and information technology systems for our business operations.
Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.
Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences. If we, our customers or a third party upon whom we rely experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.
In addition, because we are incorporated in Delaware, we are governed by the 41 Table of Contents provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
While it is not possible at this time to predict the duration and extent of the impact that COVID-19 or the emergence of new variant strains of COVID-19 could have on worldwide economic activity and our business in particular, the continued spread of COVID-19, especially in light of the emergence of new variant strains of COVID-19, the timing, distribution, rate of public acceptance and efficacy of vaccines and other treatments, and the measures taken by governments, businesses and other organizations in response to COVID-19 could adversely impact our business, financial condition and results of operations.
While it is not possible at this time to predict the duration and extent of the impact that COVID-19, the emergence of new variant strains of COVID-19 or any other highly infectious disease could have on worldwide economic activity and our business in particular, the continued spread of COVID-19, especially in light of the emergence of new variant strains of COVID-19, the timing, distribution, rate of public acceptance and efficacy of vaccines and other treatments, and the measures taken by governments, businesses and other organizations in response to COVID-19 or any other highly infectious disease could adversely impact our business, financial condition and results of operations.
For example, certain index providers have announced restrictions on including companies with multiple class share structures in certain of their indexes. In July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices.
For example, certain index 41 Table of Contents providers have announced restrictions on including companies with multiple class share structures in certain of their indexes. In July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices.
In response to the COVID-19 pandemic, including the emergence of new variant strains of COVID-19, governments have instituted shelter-in-place orders, social distancing requirements, travel restrictions and similar measures to slow infection rates.
In response to the COVID-19 pandemic, including the emergence of new variant strains of COVID-19, governments previously instituted shelter-in-place orders, social distancing requirements, travel restrictions and similar measures to slow infection rates.
Intellectual property claims could also result in our having to stop making, selling, offering for sale or using technology found to be in violation of a third party’s rights. We might be required to seek a license for the third-party intellectual property rights, which may not be available on reasonable terms or at all.
Intellectual property claims could also result in our having to stop making, selling, offering for sale or using technology found to be in violation of a third party’s rights. We might be required to seek a license for the third-party intellectual property rights, which may not be available on 38 Table of Contents reasonable terms or at all.
This control may adversely affect the market price of our Class A common stock. 40 Table of Contents Further, future transfers by holders of our Class B common stock will generally result in those shares converting into shares of our Class A common stock, subject to limited exceptions, such as certain transfers effected for tax or estate planning purposes.
This control may adversely affect the market price of our Class A common stock. Further, future transfers by holders of our Class B common stock will generally result in those shares converting into shares of our Class A common stock, subject to limited exceptions, such as certain transfers effected for tax or estate planning purposes.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” (which generally is defined under Section 382 of the Code and applicable Treasury Regulations as a greater than 50% 33 Table of Contents change, by value, in its equity ownership over a three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended, the IRC or the Code, a corporation that undergoes an “ownership change” (which generally is defined under Section 382 of the Code and applicable Treasury Regulations as a greater than 50% change, by value, in its equity ownership over a three-year period) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
If we fail to attract new personnel, experience significant turnover or the loss of key 24 Table of Contents personnel or fail to retain and motivate our current personnel, it could adversely affect our business and future growth prospects. Further, many of the companies with which we compete for experienced personnel have greater resources than we have.
If we fail to attract new personnel, experience significant turnover or the loss of key personnel or fail to retain and motivate our current personnel, it could adversely affect our business and future growth prospects. Further, many of the companies with which we compete for experienced personnel have greater resources than we have.
Few of the licenses applicable to open-source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products or to maintain the confidentiality of our proprietary source code.
Few of the licenses applicable to open-source software have been interpreted by courts, and there is a risk 36 Table of Contents that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products or to maintain the confidentiality of our proprietary source code.
We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention. 43 Table of Contents Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other stockholders.
We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention. Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other stockholders.
Factors that may affect the market price of our Class A common stock include: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the prices of our products and services; • changes in our projected financial condition and results of operations; • changes in laws or regulations applicable to the provision of our products and services; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • security breaches impacting us or similar companies; • our involvement in any material litigation; • future sales of our Class A common stock by us or our stockholders, as well as the anticipation of lockup releases, or our sales of other securities in the future; • changes in senior management or key personnel; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory and market conditions; and • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and other technical trading factors.
Factors that may affect the market price of our Class A common stock include: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the prices of our products and services; • changes in our projected financial condition and results of operations; • changes in laws or regulations applicable to the provision of our products and services; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • security breaches impacting us or similar companies; • our involvement in any material litigation; 43 Table of Contents • future sales of our Class A common stock by us or our stockholders or our sales of other securities in the future; • changes in senior management or key personnel; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory and market conditions; and • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A common stock and other technical trading factors.
Moreover, to the extent the COVID-19 pandemic adversely affects our business, financial condition, and results of operations, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including, but not limited to, those related to our ability to expand within our existing customer base, acquire new customers, develop and expand our sales and marketing capabilities, and expand internationally.
Moreover, to the extent the COVID-19 pandemic or any other future health pandemic adversely affects our business, financial condition, and results of operations, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including, but not limited to, those related to our ability to expand within our existing customer base, acquire new customers, develop our sales and marketing capabilities, and expand internationally.
This development effort may require significant engineering, sales and marketing resources, all of which could adversely affect our business. Any failure of our platform to operate effectively with customer infrastructures could reduce the demand for our platform, and our business, financial condition and results of operations may be adversely affected.
This development effort may require significant engineering, sales and marketing resources, all of which could adversely affect our 21 Table of Contents business. Any failure of our platform to operate effectively with customer infrastructures could reduce the demand for our platform, and our business, financial condition and results of operations may be adversely affected.
Because patent applications can take 36 Table of Contents years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our products.
Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our products.
In addition, we may not achieve anticipated revenue growth from expanding our sales team if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective.
In addition, we may not achieve anticipated revenue growth from expanding our sales team if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing 22 Table of Contents programs are not effective.
We will require significant capital 23 Table of Contents expenditures and valuable management resources to grow without undermining our culture of innovation, teamwork and attention to customer success, which has been central to our growth so far. We intend to continue to expand our international operations in the future.
We will require significant capital expenditures and valuable management resources to grow without undermining our culture of innovation, teamwork and attention to customer success, which has been central to our growth so far. We intend to continue to expand our international operations in the future.
If we incur debt, the debt holders would have 16 Table of Contents rights senior to holders of our Class A common stock to make claims on our assets, and the terms of any debt could include restrictive covenants relating to our capital raising activities and other financial and operational matters, any of which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
If we incur debt, the debt holders would have rights senior to holders of our Class A and Class B common stock to make claims on our assets, and the terms of any debt could include restrictive covenants relating to our capital raising activities and other financial and operational matters, any of which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
Failure to manage growth could result in difficulty or delays in launching our platform, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties. Any of these could adversely impact our business, financial condition and results of operations.
Failure to manage growth could result in difficulty or delays in launching our platform, declines in quality or customer satisfaction, increases in costs, difficulties in 25 Table of Contents introducing new features, or other operational difficulties. Any of these could adversely impact our business, financial condition and results of operations.
Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property is difficult, expensive and time-consuming, particularly in countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property is difficult, expensive and time-consuming, particularly in countries where the laws may not be as 37 Table of Contents protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
Risks Related to Socioeconomic Factors 37 Table of Contents Our future revenue and results of operations could be harmed if the increases in demand we have seen from certain industries as a result of the COVID-19 pandemic fail to continue after the pandemic ends.
Risks Related to Socioeconomic Factors Our future revenue and results of operations could be harmed if the increases in demand we have seen from certain industries as a result of the COVID-19 pandemic fail to continue after the pandemic ends.
In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, in the past we have taken measures intended to help minimize the risk of the virus to our employees and the communities in which we participate, including promoting a remote work environment for our employees.
In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, in the past we have taken measures intended to help minimize the risk of the virus to our employees and the communities in which we participate, 39 Table of Contents including promoting a remote work environment for our employees.
An online attack, damage as a result of civil unrest, earthquake, fire, terrorist attack, power loss, global pandemics (such as the COVID-19 pandemic, including the emergence of new variant strains of COVID-19), telecommunications failure or other similar catastrophic event could cause system interruptions, delays in accessing our service, reputational harm and loss of critical data.
An online attack, damage as a result of civil unrest, earthquake, fire, terrorist attack, power loss, global pandemics (such as the COVID-19 pandemic, including the emergence of new variant strains of COVID-19), telecommunications failure, climate change-related events or other similar catastrophic event could cause system interruptions, delays in accessing our service, reputational harm and loss of critical data.
Accordingly, $140.0 million of our NOLs may be carried forward indefinitely for federal tax purposes and various states have enacted tax policies or rules that conform to federal tax laws. A lack of future taxable income would adversely affect our ability to utilize NOLs incurred in tax years beginning on or before December 31, 2017 before they expire.
Accordingly, $242.2 million of our NOLs may be carried forward indefinitely for federal tax purposes and various states have enacted tax policies or rules that conform to federal tax laws. A lack of future taxable income would adversely affect our ability to utilize NOLs incurred in tax years beginning on or before December 31, 2017, before they expire.
In Canada, the Personal Information Protection and Electronic Documents Act, or PIPEDA, and various related provincial laws, as well as Canada’s Anti-Spam Legislation, or CASL, also apply to our operations. In addition, many jurisdictions have enacted data localization laws and cross-border personal data transfer laws.
In Canada, the Personal Information Protection and Electronic Documents Act and various related provincial laws, as well as Canada’s Anti-Spam Legislation also apply to our operations. In addition, many jurisdictions have enacted data localization laws and cross-border personal data transfer laws.
Changes to developer platform policies related to third-party software, such as Apple or Google, creating restrictions that limit the ability of our existing or potential customers to use SDKs or that further limit the use of cookies could similarly adversely affect our business.
Changes to developer platform policies related to third-party software, such as Apple or 30 Table of Contents Google, creating restrictions that limit the ability of our existing or potential customers to use SDKs or that further limit the use of cookies could similarly adversely affect our business.
We have experienced ownership changes in the past and we may experience a future ownership change under Section 382 of the Code that could affect our ability to utilize the NOLs to offset our income, some of which may be outside of our control.
We have experienced ownership changes in the past and we may experience a future ownership change under Section 382 of the Code that could affect our ability to utilize the NOLs to offset 35 Table of Contents our income, some of which may be outside of our control.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. We currently have customers in the United States, Canada, Europe, the Middle East, the Asia-Pacific region and Latin America. We are continuing to adapt and develop strategies to address international markets, but such efforts may not be successful.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. We currently have customers in North America, Europe, the Middle East, the Asia-Pacific region and Latin America. We are continuing to adapt and develop strategies to address international markets, but such efforts may not be successful.
This could harm our ability to increase sales, maintain or increase subscription renewals, and maintain our prices. 18 Table of Contents Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation.
This could harm our ability to increase sales, maintain or increase subscription renewals, and maintain our prices. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation.
We plan to continue expanding our sales team and strategic partners, both domestically and internationally; however, there is no assurance that we will be successful in attracting and retaining talented sales personnel or strategic partners or that any new sales personnel will be able to achieve productivity in a reasonable period of time or at all.
We plan to continue expanding our sales team and strategic partners over the long term, both domestically and internationally; however, there is no assurance that we will be successful in attracting and retaining talented sales personnel or strategic partners or that any new sales personnel will be able to achieve productivity in a reasonable period of time or at all.
For instance, due to the prior emergence of variant strains of COVID-19, we had to previously alter our office reopening plans and modified or cancelled anticipated events. If a new variant strain of COVID-19 were to arise, we might be forced to take similar actions again in the future.
For instance, due to the prior emergence of variant strains of COVID-19, we had to previously alter our office reopening plans and modified or cancelled anticipated events. If a new variant strain of COVID-19 or another highly infectious disease were to arise, we might be forced to take similar actions again in the future.
Our ability to expand our customer base and achieve broader market adoption of our platform will depend on our ability to expand our sales and marketing operations.
Our ability to expand our customer base and achieve broader market adoption of our platform will depend on the productivity of our sales and marketing operations.
We recently completed our initial public offering, and potential candidates may not perceive our compensation package, including our equity awards, as favorably as employees hired prior to our initial public offering. In addition, our recruiting personnel, methodology and approach may need to be altered to address a changing candidate pool and profile.
We also completed our initial public offering in November 2021, and potential candidates may not perceive our compensation package, including our equity awards, as favorably as employees hired prior to our initial public offering. In addition, our recruiting personnel, methodology and approach may need to be altered to address a changing candidate pool and profile.
In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories, or other parties.
In addition, some of our 20 Table of Contents competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories, or other parties.
We have registered all of our common stock issuable upon exercise of outstanding stock options, settlement of outstanding restricted stock units, or RSUs, or otherwise issuable pursuant to the terms of any equity incentives we may grant in the future, for public resale under the Securities Act.
We have registered all of our common stock issuable upon exercise of outstanding stock options, settlement of outstanding restricted stock units, or RSUs, or otherwise issuable pursuant to the terms of the purchase rights under our employee stock purchase plan or any equity incentives we may grant in the future, for public resale under the Securities Act.
In particular, we intend to continue to expend substantial financial and other resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance and security; • our sales and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • platform development, including investments in our platform development team and the development of new products and functionality for our platform as well as investments in further improving our existing platform and infrastructure; • acquisitions or strategic investments; • international expansion; and • general administration, including increased insurance, legal and accounting expenses associated with being a public company.
In particular, we intend to continue to expend substantial financial and other resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance and security; • our sales and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • platform development, including investments in our platform development team and the development of new products and functionality for our platform as well as investments in further improving our existing platform and infrastructure; • acquisitions or strategic investments; • international expansion; and • general administration, including increased insurance, legal and accounting expenses associated with being a public company and transitioning from an emerging growth company to a large accelerated filer.
While we have reopened many of our offices, a significant portion of our employees continue to work remotely. We have a distributed workforce and our employees are accustomed to working remotely and working with others who are working remotely.
While we have reopened many of our offices, a significant portion of our employees continue to work remotely under our hybrid work model. We have a distributed workforce and our employees are accustomed to working remotely and working with others who are working remotely.
We also engage with industry analysts, consulting firms, marketing service providers, data and technology partners, marketing agencies and other solution 20 Table of Contents partners, business and trade press, and other industry experts who exert considerable influence in our market to promote our platform and our brand.
We also engage with industry analysts, consulting firms, marketing service providers, data and technology partners, marketing agencies and other solution partners, business and trade press, and other industry experts who exert considerable influence in our market to promote our platform and our brand.
As a result, our results of operations could suffer due to: • any decline in demand for our platform; • the failure of our platform to achieve continued market acceptance; • the market for our platform not continuing to grow, or growing more slowly than we expect; • the introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, our platform; • technological innovations or new standards that our platform does not address; • incidents or interruptions with third-party service providers, including Apple or Google services, that affect the ability of our customers to use our platform; • sensitivity to current or future prices offered by us or our competitors; • our inability to release enhanced versions of our platform on a timely basis; • the development of new communication channels with which we are not able to adequately integrate our platform; and • changes to mobile devices and platforms that prevent or degrade the functionality of our platform, or our inability to maintain interoperability of our platform with such mobile devices and platforms.
As a result, our results of operations could suffer due to: • any decline in demand for our platform, including as a result of reductions or delays in general customer engagement technology spending by our customers and potential customers in connection with a sustained general economic downturn; • the failure of our platform to achieve continued market acceptance; • the market for our platform not continuing to grow, or growing more slowly than we expect; • the introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, our platform; • technological innovations or new standards that our platform does not address; • incidents or interruptions with third-party service providers, including Apple or Google services, that affect the ability of our customers to use our platform; • sensitivity to current or future prices offered by us or our competitors; • our inability to release enhanced versions of our platform on a timely basis; • the development of new communication channels with which we are not able to adequately integrate our platform; and • changes to mobile devices and platforms that prevent or degrade the functionality of our platform, or our inability to maintain interoperability of our platform with such mobile devices and platforms.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors and consultants under our equity incentive plans. We may also raise capital through equity financings in the future.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors and consultants under our equity incentive plans and purchase rights to our employees under our employee stock purchase plan. We may also raise capital through equity financings in the future.
We also expect our costs and expenses to 17 Table of Contents increase in future periods, which could negatively affect our future results of operations if our revenue does not continue to increase.
We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not continue to increase.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act of 2010, the U.K.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the 27 Table of Contents U.S. Travel Act, the U.K. Bribery Act of 2010, the U.K.
Additionally, the risk of these threats may increase for us and our third-party service providers due to ongoing international instability. In the past, nation-states have sponsored cybersecurity attacks against private companies in response to U.S. 30 Table of Contents governmental actions or for other strategic purposes.
Additionally, the risk of these threats may increase for us and our third-party service providers due to ongoing international instability. In the past, nation-states have sponsored cyberattacks against private companies in response to U.S. governmental actions or for other strategic purposes.
We have a history of operating losses and may not achieve or sustain profitability in the future. We have experienced net losses in each of our last several fiscal years. We generated a net loss of $78.2 million and $32.0 million for the fiscal years ended January 31, 2022 and 2021, respectively.
We have a history of operating losses and may not achieve or sustain profitability in the future. We have experienced net losses in each of our last several fiscal years. We generated a net loss of $140.7 million and $78.2 million for the fiscal years ended January 31, 2023 and 2022, respectively.
For example, we recently announced our plans to expand our international operations to include offices in Canada and France. Our expansion will continue to place a significant strain on our managerial, administrative, financial and other resources. If we are unable to manage our growth successfully, our business, financial condition and results of operations may be adversely affected.
For example, we have recently expanded our international operations to include subsidiaries in Canada and France. Our expansion will continue to place a significant strain on our managerial, administrative, financial and other resources. If we are unable to manage our growth successfully, our business, financial condition and results of operations may be adversely affected.
As a result of our limited history operating at our current scale, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
As a result of our limited history operating at our current scale, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth, particularly in a softening economic environment.
As of January 31, 2022, we had an accumulated deficit of $215.0 million. W h ile we have experienced significant revenue growth in recent periods, we are not certain whether or when we will achieve or maintain profitability in the future.
As of January 31, 2023, we had an accumulated deficit of $353.9 million. W h ile we have experienced significant revenue growth in recent periods, we are not certain whether or when we will achieve or maintain profitability in the future.
As of January 31, 2022, we had net operating loss, or NOL, carryforwards for federal and state income tax purposes of approximately $179.4 million and $119.1 million, respectively, some of which may be available to offset taxable income in the future, and which expire in various years beginning in 2035 for federal purposes and 2026 for state purposes if not utilized.
As of January 31, 2023, we had net operating loss, or NOL, carryforwards for federal and state income tax purposes of approximately $281.6 million and $182.4 million, respectively, some of which may be available to offset taxable income in the future, and which expire in various years beginning in 2035 for federal purposes and 2026 for state purposes if not utilized.
If a customer’s service provider fails to provide sufficient capacity to support our platform or otherwise experiences service outages, such failure could interrupt our customers’ access to our platform and adversely affect their perception of our platform’s reliability.
For example, our customers access our platform through their internet service providers. If a customer’s service provider fails to provide sufficient capacity to support our platform or otherwise experiences service outages, such failure could interrupt our customers’ access to our platform and adversely affect their perception of our platform’s reliability.
Our revenue could be 21 Table of Contents significantly affected if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers.
Our revenue could be significantly affected if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers.
Further, the contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.
In addition, others may independently discover our trade secrets. Further, the contractual provisions that we enter into may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our headquarters is located in New York City, where we lease approximately 84,000 square feet pursuant to two leases that expire in April 2024. We also lease additional office space in San Francisco, Austin, Chicago, Berlin, London, and Singapore. These offices are leased, and we do not own any real property.
Biggest changeItem 2. Properties Our headquarters is located in New York City, where we lease approximately 84,000 square feet pursuant to two leases that expire in April 2024. We have also leased approximately 92,300 square feet of general office space in in New York City to act as our headquarters once these leases expire.
We believe that our current facilities are generally suitable to meet our needs for the foreseeable future. In addition, to the extent we require additional space in the future, we believe that it would be readily available on commercially reasonable terms.
In addition, to the extent we require additional space in the future, we believe that it would be readily available on commercially reasonable terms.
Added
This new lease commences in October 2023 and will terminate in January 2034. We also lease additional office space in Austin, Berlin, Chicago, Jakarta, London, Paris, San Francisco, Singapore, and Tokyo. These offices are leased, and we do not own any real property. We believe that our current facilities are generally suitable to meet our needs for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 44 Table of Contents Item 4. Mine Safety Disclosures Not applicable. 45 Table of Contents PART II
Biggest changeDefending such proceedings can be costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4.
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Defending such proceedings can be costly and can impose a significant burden on management and employees.
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Mine Safety Disclosures Not applicable. 45 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe payment of any future dividends will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in any debt agreements, and other factors that our board of directors may deem relevant.
Biggest changeThe payment of any future dividends will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in any debt agreements, and other factors that our board of directors may deem relevant. Unregistered Sales of Equity Securities None.
As of March 25, 2022 there were approximately 63 stockholders of record of our Class B common stock. Dividend Policy We have never declared or paid any dividends on our Class A common stock or Class B common stock. We currently intend to retain all available funds and any future earnings for the operation and expansion of our business.
As of March 24, 2023, there were approximately 32 stockholders of record of our Class B common stock. Dividend Policy We have never declared or paid any dividends on our Class A common stock or Class B common stock. We currently intend to retain all available funds and any future earnings for the operation and expansion of our business.
Holders of Record As of March 25, 2022, there were 5 stockholders of record of our Class A common stock.
Holders of Record As of March 24, 2023, there were 20 stockholders of record of our Class A common stock.
Removed
Unregistered Sales of Equity Securities The following sets forth information regarding all unregistered securities sold since October 31, 2021: • From November 1, 2021 to January 31, 2022, we issued an aggregate of 43,250 shares of common stock upon the exercise of stock options at a weighted-average exercise price of $2.21 per share, for an aggregate purchase price of $0.1 million.
Added
Use of Proceeds Not applicable. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Removed
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.
Removed
Unless otherwise specified above, we believe these transactions were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D or Regulation S promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or under benefit plans and contracts relating to compensation as provided under Rule 701.
Removed
The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions.
Removed
All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.
Removed
Use of Proceeds On November 19, 2021, we closed our initial public offering through which we sold 7,500,000 shares of our Class A common stock at an offering price of $65.00 per share, including 800,000 shares pursuant to the underwriters’ overallotment option to purchase additional shares of our Class A common stock, resulting in gross proceeds to us of $487.5 million .
Removed
In addition, the selling stockholders, named in our final prospectus that forms a part of the Registration Statement on Form S-1 (File No. 333-260428) for the initial public filed with the SEC pursuant to Rule 424(b)(4) on November 18, 2021, or the Final Prospectus, sold an additional 1,300,000 shares of our Class A common stock, for which we did not receive any proceeds.
Removed
All of the shares issued and sold in our initial public offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-260428), which was declared effective by the SEC on November 16, 2021 . Goldman Sachs & Co. LLC, J.P.
Removed
Morgan Securities LLC, Barclays Capital Inc., Piper Sandler & Co., William Blair & Company, L.L.C., 46 Table of Contents Canaccord Genuity LLC, Cowen and Company, LLC, JMP Securities LLC, Needham & Company, LLC, Oppenheimer & Co. Inc., Raymond James & Associates, Inc. and Loop Capital Markets LLC acted as underwriters for our initial public offering.
Removed
Following the sale of all the shares upon the closing of our initial public offering, the offer terminated. The net proceeds to us after deducting underwriting discounts and commissions of $26.8 million and net offering expenses of $3.9 million were $456.8 million.
Removed
No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates.
Removed
There has been no material change in the planned use of proceeds from our initial public offering from those disclosed in the Final Prospectus.
Removed
Issuer Purchases of Equity Securities The following table contains information relating to the repurchase of our early-exercised options made by us in the fourth quarter of fiscal year ended January 31, 2022: Period Total Number of Shares Purchased (1) Average Price Paid per Share November 1 - November 30, 2021 625 $1.64 December 1 - December 31, 2021 292 $1.88 January 1 - January 31, 2022 — — Total 917 (1) All purchases represent the repurchase of unvested shares of Class A common stock previously issued to employees pursuant to our Amended and Restated 2011 Equity Incentive Plan.
Removed
Item 6. [Reserved] Not Applicable in accordance with Regulation S-K issued by the Securities and Exchange Commission, effective February 10, 2021.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table sets forth our consolidated statement of operations data for each of the periods indicated: Fiscal Year Ended January 31, 2022 2021 2020 (in thousands) Revenue $ 238,035 $ 150,191 $ 96,364 Cost of revenue (1) 78,511 54,511 35,686 Gross profit 159,524 95,680 60,678 Operating expenses: Sales and marketing (1) 127,137 70,661 57,348 Research and development (1) 59,034 29,212 20,339 General and administrative (1) 51,564 27,959 16,524 Total operating expenses 237,735 127,832 94,211 Loss from operations (78,211) (32,152) (33,533) Other income (expense): Investment income 137 840 2,127 Other (expense) income, net (258) (120) 48 Loss before provision for income taxes (78,332) (31,432) (31,358) (Benefit from) provision for income taxes (165) 537 452 Net loss $ (78,167) $ (31,969) $ (31,810) (1) Includes stock-based compensation expense, net of amounts capitalized as follows: Fiscal Year Ended January 31, 2022 2021 2020 (in thousands) Cost of revenue $ 2,185 $ 650 $ 276 Sales and marketing 16,281 2,892 6,365 Research and development 15,613 2,102 3,705 General and administrative 13,101 1,896 2,062 Total $ 47,180 $ 7,540 $ 12,408 The following table sets forth our consolidated statement of operations data expressed as a percentage of revenue for each of the periods indicated: 52 Table of Contents Fiscal Year Ended January 31, 2022 2021 2020 (as a percentage of revenue) Revenue 100 % 100 % 100 % Cost of revenue 33 % 36 % 37 % Gross profit 67 % 64 % 63 % Operating expenses: Sales and marketing 53 % 47 % 60 % Research and development 25 % 19 % 21 % General and administrative 22 % 19 % 17 % Total operating expenses 100 % 85 % 98 % Loss from operations (33) % (21) % (35) % Other income (expense): Investment income — % 1 % 2 % Other (expense) income, net — % — % — % Loss before (benefit of) provision for income taxes (33) % (20) % (33) % (Benefit of) provision for income taxes — % — % — % Net loss (33) % 20 % (33) % Comparison of the Fiscal Years Ended January 31, 2022 and January 31, 2021 Revenue Fiscal Year Ended January 31, 2022 2021 Change % Change ($ in thousands) Revenue $ 238,035 $ 150,191 $ 87,844 58.5 % The increase in revenue of $87.8 million , or 58.5% , for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 was primarily driven by an $80.6 million or 57.1% increase in subscription revenue.
Biggest changeWe maintain a full valuation allowance in jurisdictions where we had net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. 50 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations data for each of the periods indicated: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Revenue $ 355,426 $ 238,035 $ 150,191 Cost of revenue (1) 115,818 78,511 54,511 Gross profit 239,608 159,524 95,680 Operating expenses: Sales and marketing (1) 201,684 127,137 70,661 Research and development (1) 97,293 59,034 29,212 General and administrative (1) 88,771 51,564 27,959 Total operating expenses 387,748 237,735 127,832 Loss from operations (148,140) (78,211) (32,152) Other income (expense), net 7,977 (121) 720 Loss before provision for income taxes (140,163) (78,332) (31,432) Provision for (benefit from) income taxes 583 (165) 537 Net loss $ (140,746) $ (78,167) $ (31,969) (1) Includes stock-based compensation expense, net of amounts capitalized as follows: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Cost of revenue $ 3,616 $ 2,185 $ 650 Sales and marketing 23,871 16,281 2,892 Research and development 28,897 15,613 2,102 General and administrative 15,833 13,101 1,896 Total $ 72,217 $ 47,180 $ 7,540 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for each of the periods indicated: 51 Table of Contents Fiscal Year Ended January 31, 2023 2022 2021 (as a percentage of revenue) Revenue 100 % 100 % 100 % Cost of revenue 33 % 33 % 36 % Gross profit 67 % 67 % 64 % Operating expenses: Sales and marketing 57 % 53 % 47 % Research and development 27 % 25 % 19 % General and administrative 25 % 22 % 19 % Total operating expenses 109 % 100 % 85 % Loss from operations (42) % (33) % (21) % Other income (expense), net 2 % — % 1 % Loss before provision for income taxes (40) % (33) % (20) % Provision for (benefit from) income taxes — % — % — % Net loss (40) % (33) % (20) % Comparison of the Fiscal Years Ended January 31, 2023 and January 31, 2022 Revenue Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Revenue $ 355,426 $ 238,035 $ 117,391 49.3 % The increase in revenue of $117.4 million, or 49.3%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an $116.7 million or 53% increase in subscription revenue.
Investing Activities Net cash provided by investing activities was $18.0 million for the fiscal year ended January 31, 2022, primarily consisting of maturities of marketable securities of $59.3 million, partially offset by purchases of marketable securities of $36.9 million, purchases of property and equipment of $2.3 million and capitalized internal-use software costs of $2.1 million.
Net cash provided by investing activities was $18.0 million for the fiscal year ended January 31, 2022, primarily consisting of maturities of marketable securities of $59.3 million, partially offset by purchases of marketable securities of $36.9 million, purchases of property and equipment of $2.3 million and capitalized internal-use software costs of $2.1 million.
However, we expect our sales and marketing expenses will increase in absolute dollars as we continue to invest in sales and marketing activities to acquire new customers and increase sales to existing customers. Research and Development Research and development expenses consist primarily of personnel costs for our engineering, service, design and information technology teams.
We expect our sales and marketing expenses will increase in absolute dollars as we continue to invest in sales and marketing activities to acquire new customers and increase sales to existing customers. Research and Development Research and development expenses consist primarily of personnel costs for our engineering, service, design and information technology teams.
Financing Activities Net cash provided by financing activities was $467.9 million for the fiscal year ended January 31, 2022, primarily consisting of the proceeds from the issuance of common stock upon our initial public offering, net of underwriting discounts and offering costs of $457.1 million, proceeds from the exercise of common stock options of $8.4 million and an investment from our redeemable non-controlling interest in connection with our joint venture Braze KK of $2.5 million.
Net cash provided by financing activities was $467.9 million for the fiscal year ended January 31, 2022, primarily consisting of the proceeds from the issuance of Class A common stock upon our initial public offering, net of underwriting discounts and offering costs, of $457.1 million, proceeds from the exercise of common stock options of $8.4 million and an investment from our redeemable non-controlling interest in connection with our joint venture Braze KK of $2.5 million.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those set forth under the section entitled “Risk Factors” in Item 1A of Part II of this Annual Report on Form 10-K. See “Special Note Regarding Forward Looking Statements” in this Annual Report on Form 10-K.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those set forth under the section entitled “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K. See “Special Note Regarding Forward Looking Statements” in this Annual Report on Form 10-K.
See the section titled “— Non-GAAP Free Cash Flow” for additional information about how we calculate free cash flow, a non-GAAP financial metric, and a reconciliation to net cash us ed in operating activities, the most directly comparable measure calculated in accordance with accounting principles generally accepted in the United States, or GAAP.
See the section titled “— Non-GAAP Free Cash Flow” for additional information about how we calculate free cash flow, a non-GAAP financial metric, and a reconciliation to net cash us ed in operating activities, the most directly comparable measure calculated in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.
Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt some of the reduced disclosure requirements available to emerging growth companies.
Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We previously elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt some of the reduced disclosure requirements available to emerging growth companies.
The cash outflow from 55 Table of Contents changes in our operating assets and liabilities were primarily due to an increase in deferred contract costs and accounts receivable of $32.0 million and $29.8 million, respectively, as a result of commissions and billings for new bookings and renewals and prepaid expense and other current assets of $17.5 million due to prepayments for third-party software fees, primarily consisting of hosting arrangements.
The cash outflow from changes in our operating assets and liabilities were primarily due to an increase in deferred contract costs and accounts receivable of $32.0 million and $29.8 million, respectively, as a result of commissions and billings for new bookings and renewals and prepaid expense and other current assets of $17.5 million due to prepayments for third-party software fees, primarily consisting of hosting arrangements.
We 57 Table of Contents evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe that the following critical accounting policies involve a greater degree of judgement or complexity.
We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe that the following critical accounting policies involve a greater degree of judgement or complexity.
Our 48 Table of Contents calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, expansion or contraction of existing customers relationships or price increases or decreases) that may cause any such contract not to be renewed on its existing terms.
Our calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, expansion or contraction of existing customers relationships or price increases or decreases) that may cause any such contract not to be renewed on its existing terms.
In addition, 107, 71, and 45 of our customers had ARR of $500,000 or more as of January 31, 2022, 2021, and 2020, respectively. Expanding Geographically We believe there is a significant opportunity to continue to expand our presence in international markets we have already penetrated and by entering markets we have not yet penetrated.
In addition, 156, 107, and 71 of our customers had ARR of $500,000 or more as of January 31, 2023, 2022, and 2021, respectively. Expanding Geographically We believe there is a significant opportunity to continue to expand our presence in international markets we have already penetrated and by entering markets we have not yet penetrated.
For the fiscal years ended January 31, 2022, 2021, and 2020, approximately 40%, 40%, and 39%, of our revenue was generated outside of the United States, respectively. We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on the greenfield opportunity in regions such as Latin America.
For the fiscal years ended January 31, 2023, 2022, and 2021, approximately 42%, 40%, and 40%, of our revenue was generated outside of the United States, respectively. We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on the greenfield opportunity in regions such as Latin America.
Through our sales and marketing efforts, we plan to capitalize on the ongoing digital transformation in regulated industries like healthcare and financial services to further propel adoption of our technology. As of January 31, 2022, we had 1,375 customers across a broad range of sizes and industries.
Through our sales and marketing efforts, we plan to capitalize on the ongoing digital transformation in regulated industries like healthcare and financial services to further propel adoption of our technology. As of January 31, 2023, we had 1,770 customers across a broad range of sizes and industries.
Our dollar-based net retention rate for the trailing 12 months ended January 31, 2022, 2021, and 2020, was 128%, 123%, and 126% respectively, for all our customers, and 136%, 133%, and 127%, respectively, for our customers with ARR of $500,000 or more.
Our dollar-based net retention rate for the trailing 12 months ended January 31, 2023, 2022, and 2021, was 124%, 128%, and 123% respectively, for all our customers, and 126%, 136%, and 133%, respectively, for our customers with ARR of $500,000 or more.
Investment Income 51 Table of Contents Investment income consists primarily of income earned on our investments, cash and cash equivalents and restricted cash. Other Income (Expense), Net Other income (expense), net, primarily consists of net exchange gains or losses on foreign currency transactions.
Other Income (Expense), Net Other income (expense), net, primarily consists of net exchange gains or losses on foreign currency transactions and investment income consists primarily of income earned on our investments, cash and cash equivalents, and restricted cash.
As a result of the accounting standards election, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies. This may make comparison of our consolidated financial statements to those of other public companies more difficult.
As a result of the accounting standards election, we have not historically been subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies. This may make comparison of our consolidated financial statements to those of other public companies more difficult.
We expand our reach within existing customers when our customers add new channels, purchase additional 47 Table of Contents subscription products such as Braze Currents, implement new engagement strategies, or onboard new business units and geographies.
We expand our reach within existing customers when our customers add new channels, purchase additional subscription products such as Braze Currents, implement new engagement strategies, or onboard new business units and geographies.
As of January 31, 2022, we recorded a full valuation allowance on our net deferred tax assets, which consist of net operating loss carryforwards and other basis differences, as we have concluded that it is more likely than not that our deferred tax assets will not be realized. Recently Adopted Accounting Pronouncements Refer t o Note 2.
As of January 31, 2023, we recorded a full valuation allowance in jurisdictions where we had net deferred tax assets, which consist of net operating loss carryforwards and other basis differences, as we have concluded that it is more likely than not that our deferred tax assets will not be realized. Recently Adopted Accounting Pronouncements Refer t o Note 2.
Our Non-GAAP free cash flow was $(39.8) million, $(9.9) million and $(10.4) million in the fiscal years ended January 31, 2022, 2021, and 2020, respectively.
Our Non-GAAP free cash flow was $(39.0) million, $(39.8) million and $(10.4) million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
We had net losses of $78.2 million, $32.0 million and $31.8 million, in the fiscal years ended January 31, 2022, 2021, and 2020, respectively. We had net cash used in operating activities of $35.4 million, $6.1 million, and $7.4 million in the fiscal years ended January 31, 2022, 2021, and 2020, respectively.
We had net losses of $140.7 million, $78.2 million and $32.0 million, in the fiscal years ended January 31, 2023, 2022, and 2021, respectively. We had net cash used in operating activities of $22.3 million, $35.4 million, and $6.1 million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Our most significant funding requirements are principally comprised of employee compensation and related taxes and benefits, non-cancelable purchase commitments, and operating lease obligations. Non-cancelable purchase commitments for business operations and operating lease obligations total $189.9 million and $76.1 million, respectively, as of January 31, 2022, due primarily over the next five years.
Our most significant funding requirements are principally comprised of employee compensation and related taxes and benefits, non-cancelable purchase commitments, and operating lease obligations. Non-cancelable purchase commitments for business operations and operating lease obligations total $248.6 million and $62.1 million, respectively, as of January 31, 2023, due primarily over the next five years.
We generated revenue of $238.0 million, $150.2 million, and $96.4 million in the fiscal years ended January 31, 2022, 2021, and 2020, respectively, representing year-over-year growth of 58% from the fiscal years ended January 31, 2021 to January 31, 2022 and 56% from the fiscal year ended January 31, 2020 to January 31, 2021.
We generated revenue of $355.4 million, $238.0 million, and $150.2 million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively, representing year-over-year growth of 49% from the fiscal years ended January 31, 2022 to January 31, 2023 and 58% from the fiscal year ended January 31, 2021 to January 31, 2022.
As of January 31, 2022, we had total deferred revenue of $126.3 million of which substantially all was recorded as a current liability. Deferred revenue will be recognized as revenue when all of the revenue recognition criteria are met.
As of January 31, 2023, we had total deferred revenue of $166.1 million of which substantially all was recorded as a current liability. Deferred revenue will be recognized as revenue when all of the revenue recognition criteria are met.
The following table presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable measure calculated in accordance with GAAP, for the periods presented: 56 Table of Contents Fiscal Year Ended January 31, 2022 2021 2020 (in thousands) Net cash used in operating activities $ (35,398) $ (6,080) $ (7,365) Less: Purchases of property and equipment (2,310) (2,466) (1,724) Capitalized internal-use software costs (2,065) (1,886) (830) Non-GAAP Free cash flow $ (39,773) $ (10,432) $ (9,919) Net cash provided by (used in) investing activities $ 18,040 $ 22,472 $ (87,234) Net cash provided by financing activities $ 467,910 $ 4,866 $ 1,257 Our free cash flow decreased for the fiscal year ended January 31, 2022 from the fiscal year ended January 31, 2021, primarily as a result of continued investment in our sales and marketing function and in our infrastructure to support the growth of our business and our operations as a public company.
The following table presents a reconciliation of free cash flow to net cash provided by/(used in) operating activities, the most directly comparable measure calculated in accordance with GAAP, for the periods presented: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (22,308) $ (35,398) $ (6,080) Less: Purchases of property and equipment (15,447) (2,310) (2,466) Capitalized internal-use software costs (1,258) (2,065) (1,886) Non-GAAP Free cash flow $ (39,013) $ (39,773) $ (10,432) Net cash (used in)/provided by investing activities $ (398,519) $ 18,040 $ 22,472 Net cash provided by financing activities $ 11,332 $ 467,910 $ 4,866 55 Table of Contents Our free cash flow increased slightly for the fiscal year ended January 31, 2023 from the fiscal year ended January 31, 2022, primarily as a result of continued investment in our sales and marketing function and in our infrastructure to support the growth of our business and our operations as a public company.
We generate revenue from fees related to subscription services and professional services and other. We recognize revenue related to contracts with customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
We recognize revenue related to contracts with customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
Seasonality We may experience seasonality in our cost of revenue as a result of our customers’ increase usage of our platform based on their business demands.
Seasonality We have experienced seasonality in our cost of revenue as a result of our customers’ increased usage of our platform based on their business demands.
Cash Flow Overview The following table summarizes our cash flows for the periods presented: Fiscal Year Ended January 31, 2022 2021 2020 (in thousands) Net cash used in operating activities $ (35,398) $ (6,080) $ (7,365) Net cash provided by/(used in) investing activities $ 18,040 $ 22,472 $ (87,234) Net cash provided by financing activities $ 467,910 $ 4,866 $ 1,257 Operating Activities For the fiscal year ended January 31, 2022, net cash used in operating activities was $35.4 million, primarily due to a net loss of $78.2 million adjusted for non-cash charges of $68.4 million and net changes in our operating assets and liabilities of $25.7 million.
Cash Flow Overview The following table summarizes our cash flows for the periods presented: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (22,308) $ (35,398) $ (6,080) Net cash (used in)/provided by investing activities $ (398,519) $ 18,040 $ 22,472 Net cash provided by financing activities $ 11,332 $ 467,910 $ 4,866 Operating Activities For the fiscal year ended January 31, 2023, net cash used in operating activities was $22.3 million, primarily due to a net loss of $140.7 million adjusted for non-cash charges of $109.0 million and net changes in our operating assets and liabilities of $9.4 million.
These costs primarily include payments to third-party cloud infrastructure providers for hosting software solutions, costs associated with application service providers utilized to deliver the platform, personnel-related costs, including salaries, cash-based performance compensation, benefits and stock-based compensation, and overhead cost allocations, including rent, utilities, depreciation, information technology costs, amortization of internal use software and certain administrative personnel costs. 50 Table of Contents We intend to continue to invest additional resources in our platform infrastructure and our customer support and success organizations to expand the capabilities of our platform.
These costs primarily include payments to third-party cloud infrastructure providers for hosting software solutions, costs associated with application service providers utilized to deliver the platform, personnel-related costs, including salaries, cash-based performance compensation, benefits and stock-based compensation, and overhead cost allocations, including rent, utilities, depreciation, information technology costs, amortization of internal use software and certain administrative personnel costs.
We have generated losses from our operations as reflected in our accumulated deficit of $215.0 million as of January 31, 2022, and cash flows used in operating activities for the fiscal year ended January 31, 2022 of $35.4 million.
We have generated losses from our operations as reflected in our accumulated deficit of $353.9 million as of January 31, 2023, and cash flows used in operating activities for the fiscal year ended January 31, 2023 of $22.3 million.
For the fiscal year ended January 31, 2021, net cash used in operating activities was $6.1 million, primarily due to a net loss of $32.0 million adjusted for non-cash charges of $21.2 million and net changes in our operating assets and liabilities of $4.7 million.
For the fiscal year ended January 31, 2022, net cash used in operating activities was $35.4 million, primarily due to a net loss of $78.2 million adjusted for non-cash charges of $68.4 million and net changes in our operating assets and liabilities of 54 Table of Contents $25.7 million.
Gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period as our revenue and cost of revenue fluctuates, including as a result of the timing and amount of resources we dedicate to improving our platform and expanding our products.
Our gross margin may fluctuate from period to period as our revenue and cost of revenue fluctuates, including as a result of the timing and amount of resources we dedicate to improving our platform and expanding our products. Operating Expenses Our operating expenses consist of sales and marketing, research and development and general and administrative expenses.
We determine the estimated benefit period by considering both qualitative and quantitative factors, including the length of the subscription terms in our customer contracts and the anticipated life of our technology, among other factors. Stock-Based Compensation Accounting for stock-based compensation requires us to make a number of judgments, estimates and assumptions.
We determine the estimated benefit period by considering both qualitative and quantitative factors, including the length of the subscription terms in our customer contracts and the anticipated life of our technology, among other factors.
Cost of Revenue, Gross Profit and Gross Margin Fiscal Year Ended January 31, 2022 2021 Change % Change ($ in thousands) Cost of revenue $ 78,511 $ 54,511 $ 24,000 44.0 % Gross profit $ 159,524 $ 95,680 $ 63,844 66.7 % Gross margin 67.0 % 63.7 % T he increase in cost of revenue of $24.0 million, or 44.0% , for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 was primarily driven by an increase of $11.0 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and an $8.1 million increase in third-party messaging fees associated with growth in our email and SMS channels.
Cost of Revenue, Gross Profit and Gross Margin Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Cost of revenue $ 115,818 $ 78,511 $ 37,307 47.5 % Gross profit $ 239,608 $ 159,524 $ 80,084 50.2 % Gross margin 67.4 % 67.0 % T he increase in cost of revenue of $37.3 million, or 47.5%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase of $15.4 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and an $11.2 million increase in third-party messaging fees associated with growth in our email and SMS channels.
Comparison of the Fiscal Years Ended January 31, 2021 and January 31, 2020 For a discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2021 compared to the fiscal year ended January 31, 2020, refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Final Prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 18, 2021.
Comparison of the Fiscal Years Ended January 31, 2022 and January 31, 2021 For a discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended January 31, 2022, filed with the SEC on March 31, 2022.
Additionally, the increase was driven in part by an increase in amortization of deferred contract costs of $6.4 million as a result of sales growth, an increase of $0.7 million in travel and entertainment costs due to the loosening of COVID-19 travel and event restrictions, and an increase in advertising and marketing costs of $4.1 million.
Additionally, the increase was driven in part by an increase in amortization of deferred contract costs of $8.4 million as a result of sales growth and an increase of $15.6 million in promotional, marketing, and travel and entertainment costs were primarily due to the loosening of COVID-19 travel and event restrictions which allowed for in-person, internal company trainings, in-person marketing events and in-person customer meetings.
Approximately 62.0% of the increase in subscription revenue was attributable to the growth from existing customers due to customer expansion of committed entitlements and features, and the remaining 38.0% was attributable to new customers. Total customers grew to 1,375 as o f January 31, 2022 from 890 as of January 31, 2021.
Approximately 72.5% of the increase in subscription revenue was attributable to the growth from existing customers due to customer expansion of committed contractual entitlements and features, and the remaining 27.5% was attributable to new customers. Total customers grew to 1,770 as of January 31, 2023 from 1,375 as of January 31, 2022. Professional services revenue increased $0.7 million, or 4%.
This is determined by following a five-step process, which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when we satisfy a performance obligation.
This is determined by following a five-step process, which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when we satisfy a performance obligation. 56 Table of Contents We identify performance obligations in a contract based on the goods and services that will be transferred to the customer that are identifiable from other promises in the contract, or that are distinct.
As we continue to expand our operations, we expect an increase in personnel headcount and expansion of our global footprint. Sales and Marketing Sales and marketing expenses consist primarily of personnel costs for our sales and marketing organization, sales commissions, costs related to brand awareness, sponsorships, customer marketing events and advertising, agency costs, travel-related expenses and allocated overhead costs.
Sales and Marketing Sales and marketing expenses consist primarily of personnel costs for our sales and marketing organization, sales commissions, costs related to brand awareness, sponsorships, customer marketing events and advertising, agency costs, travel-related expenses and allocated overhead costs. We intend to continue to invest in sales and marketing to help drive the growth of our business.
We believe our continued innovation will provide new avenues for growth through which we will continue to deliver differentiated outcomes for our customers. We intend to continue to invest in building additional products that expand our capabilities and facilitate the extension of our platform to new channels and use cases.
We intend to continue to invest in building additional products that expand our capabilities and facilitate the extension of our platform to new channels and use cases.
Operating Expenses Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. Personnel costs, including salaries, cash-based performance compensation, benefits and stock-based compensation, are the most significant component of operating expenses. Operating expenses also include allocated overhead costs, which include rent, utilities, depreciation, information technology costs and certain administrative personnel costs.
Personnel costs, including salaries, cash-based performance compensation, benefits and stock-based compensation, are the most significant component of operating expenses. Operating expenses also include allocated overhead costs, which include rent, utilities, depreciation, information technology costs and certain administrative personnel costs. As we continue to expand our operations, we expect an increase in personnel headcount and expansion of our global footprint.
For example, we continue to develop our artificial intelligence capabilities to enable brands to better analyze and act on customer data. We believe our market-driven product development approach maximizes the return on new feature development and channel expansion. Our customers consistently volunteer to participate in the testing of new products, which indicates their appetite for new and innovative functionality.
We are focused on investing in research and development to continue to enhance our platform. For example, we continue to enable brands to better analyze and act on customer data, to develop our artificial intelligence capabilities, and to expand on channel offerings. We believe our market-driven product development approach maximizes the return on new feature development and channel expansion.
Subscription services primarily consist of access to our customer engagement platform and related customer support. Our customers enter into a subscription for committed contractual entitlements.
Components of Results of Operations Revenue Revenue is derived from two primary sources: (1) subscription services and (2) professional services and other. Subscription services primarily consist of access to our customer engagement platform and related customer support. Our customers enter into a subscription for committed contractual entitlements.
General and Administrative Expense Fiscal Year Ended January 31, 2022 2021 Change % Change ($ in thousands) General and administrative $ 51,564 $ 27,959 $ 23,605 84.4 % The increase in general and administrative expenses of $23.6 million, or 84.4% , for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 was primarily driven by an increase in personnel and overhead costs of $20.9 million, which included $11.2 million of stock-based compensation costs .
General and Administrative Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) General and administrative $ 88,771 $ 51,564 $ 37,207 72.2 % The increase in general and administrative expenses of $37.2 million, or 72.2%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase in personnel and overhead costs of $21.8 million , which included $2.7 million of stock-based compensation costs, a nd an increase in legal, regulatory, and professional services costs of $5.9 million.
The level, timing and relative investment in our infrastructure could affect our cost of revenue in the future. We expect our cost of revenue to increase for the foreseeable future as we continue to grow our business. Gross Profit and Gross Margin Gross profit represents revenue less cost of revenue.
We expect our cost of revenue to increase for the foreseeable future as we continue to grow our business. Gross Profit and Gross Margin 49 Table of Contents Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
We routinely evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and expectations of future option exercise behavior. We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis.
We routinely evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and expectations of future option exercise behavior.
These increases were due to economies of scale as our infrastructure costs to support our revenue growth did not increase at the same pace as our revenue. In addition, we have undertaken initiatives to optimize the costs of our tech stack and drive personnel efficiencies related to customer support functions.
In addition, we have undertaken initiatives to optimize the costs of our tech stack and drive personnel efficiencies related to customer support functions.
Research and Development Expense Fiscal Year Ended January 31, 2022 2021 Change % Change ($ in thousands) Research and development $ 59,034 $ 29,212 $ 29,822 102.1 % Th e increase in research and development expense of $29.8 million, or 102.1% , for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 was primarily driven by an increase of personnel and overhead costs of $27.2 million, which included $13.5 million of stock-based compensation costs .
Research and Development Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Research and development $ 97,293 $ 59,034 $ 38,259 64.8 % Th e increase in research and development expense of $38.3 million , or 64.8%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase of personnel and overhead costs of $35.8 million , which included $13.3 million of stock-based compensation costs , to support our continued investment in the features and functionality of our platform, coupled with an overall increase in grant date fair value of the equity awards.
The increase in personnel costs was primarily due to a year-over-year increase in headcount. In addition, professional service fees increased $1.0 million and infrastructure and software costs increased $0.8 million as part of our strategy to continue investing in our technology and to develop new and improve existing functionalities for our platform.
The increase in personnel costs was primarily due to a year-over-year increase in headcount. In addition, software costs increased $1.5 million as we continue investing in our platform.
Operating Expenses Sales and Marketing Expense Fiscal Year Ended January 31, 2022 2021 Change % Change ($ in thousands) Sales and marketing $ 127,137 $ 70,661 $ 56,476 79.9 % The increase in sales and marketing expense of $56.5 million, or 79.9% , for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 was primarily driven by an increase in personnel costs and overhead costs of $42.4 million, which included $13.4 million of stock-based compensation costs, as a result of a year-over-year increase in headcount, and an increase in software and recruiting fees of $2.1 million as we continue to expand our sales and marketing presences globally.
Operating Expenses Sales and Marketing Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Sales and marketing $ 201,684 $ 127,137 $ 74,547 58.6 % The increase in sales and marketing expense of $74.5 million, or 58.6%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase in personnel and overhead costs of $47.2 million, which included $7.6 million of stock-based compensation costs, as a result of a year-over-year increase in headcount, coupled with an overall increase in grant date fair value of the equity awards.
Net cash provided by investing activities was $22.5 million for the fiscal year ended January 31, 2021, primarily consisting of maturities of marketable securities of $86.2 million, partially offset by purchases of marketable securities of $59.4 million and purchases of property and equipment and capitalized internal-use software costs of $2.5 million and $1.9 million, respectively.
Investing Activities Net cash used in investing activities was $398.5 million for the fiscal year ended January 31, 2023, primarily consisting of purchases of marketable securities of $638.2 million, partially offset by maturities of marketable securities of $256.4 million.
Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include access to our platform, which includes subscription contracts, technical support and platform updates and professional services, which include onboarding services. We allocate the transaction price of the contract to each distinct performance obligation on a relative standalone selling price basis.
If not considered distinct, the promised goods or services are combined with other goods or services and accounted for as a combined performance obligation. Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include access to our platform, which includes subscription contracts, technical support and platform updates and professional services, which include onboarding services.
Since our inception, we have financed our operations primarily through the net proceeds received from the sales of equity securities and cash generated from the sale of subscriptions to our platform.
The investment income that we generate on these investments is not material to our overall cash balance, but may be adversely affected due to volatility in interest rates. Since our inception, we have financed our operations primarily through the net proceeds received from the sales of equity securities and cash generated from the sale of subscriptions to our platform.
Our out-of-product channels include, but are not limited to, mobile push notifications, web push notifications, email, SMS and MMS messages, webhooks, Facebook and Google advertisements and multiple over-the-top media services and connected TV channels. In addition to monthly active users, we have a history of increasing annual recurring revenue, or ARR, from our customers.
Currently, our in-product messaging channels consist of Content Cards, which embed personalized content into a brand’s website or application, and in-app and in-browser messages. 47 Table of Contents Our out-of-product channels include, but are not limited to, mobile push notifications, web push notifications, email, SMS and MMS messages, webhooks, Facebook and Google advertisements and multiple over-the-top media services and connected TV channels.
The increase in total customers was the primary driver of a $7.2 million or 79.4% increase in professional services revenue from configuration services provided to those new customers. Additionally, in the fiscal year ended January 31, 2022 our international revenue increased by $35.7 million as we continue to expand market penetration in regions such as Europe and Asia-Pacific.
Additionally, in the fiscal year ended January 31, 2023, our international revenue increased by $55.1 million as we continue to expand market penetration in regions such as Europe and Asia-Pacific.
Summary of Significant Accounting Policies, to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements. JOBS Act Accounting Election Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.
JOBS Act Accounting Election Section 107(b) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.
The non-cash adjustments primarily relate to stock-based compensation of $7.5 million, amortization of deferred contract costs of $10.6 million and depreciation and amortization expense of $1.6 million.
The non-cash adjustments primarily relate to stock-based compensation of $72.2 million, amortization of deferred contract costs of $23.6 million, depreciation and amortization expense of $4.6 million, and expense associated with the donation of our Class A common stock to a charitable donor-advised fund of $4.3 million.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, which we adopted as of February 1, 2019 on a modified retrospective basis.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition We generate revenue from fees related to subscription services and professional services and other.
The cash inflow from changes in our operating assets and liabilities was primarily the result of an increase of deferred revenue of $23.4 million due to timing of subscriptions and renewals and an overall increase in revenue and an increase in accrued expenses and other current liabilities of $13.8 million incurred to support the growth of the business.
The cash inflows from changes in our operating assets and liabilities were primarily due to an increase in deferred revenue of $39.9 million as a result of increased billings driven by timing of subscriptions and renewals.
Liquidity and Capital Resources Sources of Funds As of January 31, 2022, our principal source of liquidity was cash, cash equivalents and marketable securities of $518.1 million. Our cas h and cash equivalents consist of deposit accounts, interest-bearing money market accounts and overnight short-term repurchase agreements that are stated at fair value.
Our cas h and cash equivalents consist of deposit accounts, interest-bearing money market accounts, and U.S. government securities that are stated at fair value. Our marketable securities positions consists mostly of highly liquid short-term investments.
Net cash provided by financing activities was $4.9 million for the fiscal year ended January 31, 2021, primarily consisting of the proceeds from the exercise of common stock options of $2.8 million and an investment in our redeemable non-controlling interest in connection with our joint venture Braze KK of $2.5 million.
Financing Activities Net cash provided by financing activities was $11.3 million for the fiscal year ended January 31, 2023, consisting solely of proceeds from the exercise of common stock options.
Common Stock Valuations Prior to our initial public offering, the fair value of the shares of our common stock underlying the stock options has historically been determined by our board of directors, with input from management and contemporaneous third-party valuations, as there was no public market for our common stock.
As such, the dividend yield has been estimated to be zero. Fair Value of Common Stock Prior to our initial public offering, the fair value of the common stock underlying the stock option awards was determined by our board of directors.
Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, cross-channel marketing campaigns, and continuously evolve their customer engagement strategies. Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail, eCommerce, media, entertainment and on-demand services.
Our platform is designed so that interactions between brands and consumers have the same relevance and cross-channel continuity as human interactions. 46 Table of Contents Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail, eCommerce, media, entertainment and on-demand services.
In addition, we had an increase in personnel costs and overhead costs of $4.2 million .
In addition, we had an increase in personnel and overhead costs of $10.3 million. The increased infrastructure, messaging, and personnel costs were incurred to support overall revenue growth.
The increased infrastructure, messaging, and personnel costs were incurred to support overall revenue growth. 53 Table of Contents Our gross profit increased $63.8 million, or 66.7% , in t he fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, and our gross margin increased by 3.3% to 67.0% in the fiscal year ended January 31, 2022 from 63.7% in the fiscal year ended January 31, 2021.
Our gross profit increased $80.1 million, or 50.2%, in the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, and our gross margin increased by 0.4% to 67.4% in the fiscal year ended January 31, 2023 from 67.0% in the fiscal year ended January 31, 2022.
We use the U.S. Treasury yield that corresponds with the expected term for our risk-free interest rate. • Expected dividends . We utilize a dividend yield of zero, as we do not currently issue dividends and do not expect to do so in the foreseeable future. • Forfeiture rate .
Risk-Free Interest Rate The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent term of the expected life of the option on the grant date. Dividend Yield 57 Table of Contents We have not declared or paid dividends to date and do not anticipate declaring dividends in the foreseeable future.
Sustaining Innovation and Technology Leadership Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage. We are focused on investing in research and development to continue to enhance our platform.
Although these investments in geographic regions may negatively affect our operating results in the near term, we believe that they will contribute to our long-term growth. Sustaining Innovation and Technology Leadership Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage.
The increase in personnel costs was primarily due to a year-over-year increase in headcount as we continue to invest in our finance and administrative functions to build processes, systems, and controls to enable our internal support functions to scale with the growth of our business.
The increases were primarily due to a period-over-period increase in headcount, coupled with an overall increase in grant date fair value of the equity awards, as well as continued investments in our finance and administrative functions to build processes, systems, and controls to enable our ongoing compliance with public company legal and regulatory requirements.
Provision for Income Taxes Provision for income taxes consists of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.
Provision for Income Taxes Provision for income taxes consists of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business.
As of January 31, 2022, we had approximately 3.7 billion monthly active users, up from approximately 3.0 billion monthly active users as of January 31, 2021. Currently, our in-product messaging channels consist of Content Cards, which embed personalized content into a brand’s website or application, and in-app and in-browser messages.
As of January 31, 2023, we had approximately 4.8 billion monthly active users, up from approximately 3.7 billion monthly active users as of January 31, 2022.
These factors include: • the prices of our common or preferred stock sold to third-party investors by us and in secondary transactions; • lack of marketability of our common stock; • our actual operating and financial performance; • current business conditions and projections; • hiring of key personnel and the experience of our management; • our history and the introduction of new services; • our stage of development; • likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition given prevailing market conditions; • the market performance of comparable publicly traded companies; and • United States and global capital markets conditions.
These factors included, but were not limited to, (i) contemporaneous third party valuations of our common stock; (ii) the rights, preferences, and privileges of our convertible preferred stock relative to our common stock; (iii) the lack of marketability of our common stock; (iv) stage and development of our business; (v) general economic conditions; and (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of our company, given prevailing market conditions.
In accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, our board of directors has exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock at each grant date.
Given the absence of a public trading market, our board of directors considered numerous objective and subjective factors to determine the fair value of our common stock at each meeting at which awards were approved.
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For example, in the second half of fiscal year 2021, we entered into a joint venture with our partner Japan Cloud Computing Co., Ltd., to facilitate further expansion into the Japanese market. Although these investments in geographic regions may negatively affect our operating results in the near term, we believe that they will contribute to our long-term growth.
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Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, marketing campaigns across multiple channels.
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Impact of COVID-19 on Our Business Beginning in January 2020, the COVID-19 pandemic caused general business disruption worldwide.
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We have also added early access to both WhatsApp and TikTok advertisements to certain customers on our platform. In addition to monthly active users, we have a history of increasing annual recurring revenue, or ARR, from our customers.
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In response to the spread of COVID-19, including the emergence of new variant strains of COVID-19, a significant portion of our employees 49 Table of Contents currently work remotely to minimize the risk of the virus to our employees and the communities in which we operate, and we may continue to take actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners.
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Our customers consistently volunteer to participate in the testing of new products, which indicates their appetite for new and innovative functionality. We believe our continued innovation will provide new avenues for growth through which we will continue to deliver differentiated outcomes for our customers.
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While we do not believe our results of operations, cash flows and financial condition have been materially impacted due to the COVID-19 pandemic to date, we have experienced, and may continue to experience, a modest adverse impact on certain aspects of our business, including a lengthening of the sales cycle for some prospective customers.
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Impact of Global Events and Macroeconomic Conditions on Our Business 48 Table of Contents Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations.
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We have also experienced, and may continue to experience, a modest positive impact on other aspects of our business, including an increase in the volume of messaging utilized by our existing customers. Moreover, we have seen slower growth in certain operating expenses due to reduced business travel, the virtualization or cancellation of customer and employee events and reduced lease obligations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Biggest changeFixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. As of January 31, 2023, a hypothetical 10% change in interest rates would not have had a material impact on our consolidated financial statements.
Gains or losses due to transactions in foreign currencies are included in interest and other income, net in our consolidated statements of operations. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
Gains or losses due to transactions in foreign currencies are included in interest and other income (expense), net in our consolidated statements of operations. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
A hypothetical 10% change in the relative value of the U.S. dollar to other currencies during any of the periods presented would not have had a material effect on our realized and unrealized gains (losses) on foreign exchange transactions. 61 Table of Contents
A hypothetical 10% change in the relative value of the U.S. dollar to other currencies during any of the periods presented would not have had a material effect on our realized and unrealized gains (losses) on foreign exchange transactions. 59 Table of Contents
Our inability or failure to do so could harm our business, financial condition, and results of operations. 60 Table of Contents Interest Rate Risk and Market Risk We had cash, cash equivalents and marketable securities of $518.1 million as of January 31, 2022, of which $35.2 million was invested in government bonds, commercial paper, corporate debt securities and asset-backed securities.
Our inability or failure to do so could harm our business, financial condition, and results of operations. Interest Rate Risk and Market Risk We had cash, cash equivalents, and marketable securities of $482.7 million as of January 31, 2023, of which $410.1 million was invested in government bonds, foreign bonds, and corporate debt securities.
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As of January 31, 2022, a hypothetical 10% change in interest rates would not have had a material impact on the value of our cash, cash equivalents, or available-for-sale investments.

Other BRZE 10-K year-over-year comparisons