UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q 

(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OctoberJuly 31, 20172020
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to________
Commission File Number 001-38069
CLOUDERA, INC.
(Exact name of registrant as specified in its charter)
Delaware26-2922329
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification no.)

5470 Great America Parkway
395 Page Mill Road
Palo Alto,Santa Clara, CA 9430695054
(650) 362-0488
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)



Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00005 par valueCLDRThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨x    No  x¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or aan emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer¨
☒

Accelerated filer¨☐
Non-accelerated filerx
☐

Smaller reporting company¨☐
(Do not check if a smaller reporting company)Emerging growth companyx☐
If an emerging growth company, indicate by checkmark if the registrant has not elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2 (2)(B) of the Securities Act¨☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes   ¨☐   No  x☒
As of November 30, 2017,August 31, 2020, there were 141,233,240309,247,634 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

Table of Contents
TABLE OF CONTENTS
Page
Page
Part I. Financial Information
Item 1.
2
Condensed Consolidated Balance Sheets as of OctoberJuly 31, 20172020 and January 31, 20172020
21
Condensed Consolidated Statements of Operations for the three and ninesix months ended OctoberJuly 31, 20172020 and 20162019
32
Condensed Consolidated Statements of Comprehensive Loss for the three and ninesix months ended OctoberJuly 31, 20172020 and 20162019
43
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended July 31, 2020 and 2019
4
Condensed Consolidated Statements of Cash Flows for the ninesix months ended OctoberJuly 31, 20172020 and 20162019
56
Notes to Condensed Consolidated Financial Statements
68
Item 2.
24
Item 3.
3732
Item 4.
3732
Part II. Other Information
Item 1.
3833
Item 1A.
3834
Item 2.
6659
Item 3.6.
6660
Item 4.
Mine Safety Disclosures
66
Item 5.
Other Information
66
Item 6.
Exhibits
67
Exhibit Index


Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CLOUDERA, INC.
CLOUDERA, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
July 31, 2020January 31, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$143,171 $107,638 
Marketable securities288,330 253,361 
Accounts receivable, net149,326 249,971 
Deferred costs46,199 54,776 
Prepaid expenses and other current assets28,245 42,155 
Total current assets655,271 707,901 
Property and equipment, net20,995 21,988 
Marketable securities, non-current133,890 122,193 
Intangible assets, net565,884 605,236 
Goodwill590,361 590,361 
Deferred costs, non-current32,717 35,260 
Operating lease right-of-use assets194,751 204,642 
Other assets9,657 12,209 
TOTAL ASSETS$2,203,526 $2,299,790 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$4,337 $3,858 
Accrued compensation55,666 61,826 
Other contract liabilities8,351 12,225 
Other accrued liabilities19,583 22,297 
Operating lease liabilities21,629 19,181 
Deferred revenue409,873 460,561 
Total current liabilities519,439 579,948 
Operating lease liabilities, non-current181,339 192,324 
Deferred revenue, non-current67,747 81,926 
Other accrued liabilities, non-current6,462 7,223 
TOTAL LIABILITIES774,987 861,421 
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.00005 par value; 20,000,000 shares authorized, 0 shares issued and outstanding as of July 31, 2020 and January 31, 20200 0 
Common stock $0.00005 par value; 1,200,000,000 shares authorized as of July 31, 2020 and January 31, 2020; 309,234,046 and 295,167,761 shares issued and outstanding as of July 31, 2020 and January 31, 2020, respectively
15 15 
Additional paid-in capital3,008,394 2,923,905 
Accumulated other comprehensive income763 273 
Accumulated deficit(1,580,633)(1,485,824)
TOTAL STOCKHOLDERS’ EQUITY1,428,539 1,438,369 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,203,526 $2,299,790 
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 October 31,
2017		 January 31,
2017
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$62,797
 $74,186
Short-term marketable securities326,717
 160,770
Accounts receivable, net66,170
 101,549
Prepaid expenses and other current assets23,786
 13,197
Total current assets479,470
 349,702
Property and equipment, net15,578
 13,104
Marketable securities, noncurrent76,464
 20,710
Intangible assets, net6,655
 7,051
Goodwill33,621
 31,516
Restricted cash18,050
 15,446
Other assets4,673
 5,015
TOTAL ASSETS$634,511
 $442,544
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)   
CURRENT LIABILITIES:   
Accounts payable$1,761
 $3,550
Accrued compensation40,029
 33,376
Other accrued liabilities16,931
 9,918
Deferred revenue, current portion197,013
 192,242
Total current liabilities255,734
 239,086
Deferred revenue, less current portion35,074
 25,182
Other liabilities13,615
 4,345
TOTAL LIABILITIES304,423
 268,613
Commitments and contingencies (Note 6)

 

Redeemable convertible preferred stock—
 657,687
STOCKHOLDERS’ EQUITY (DEFICIT):   
Common stock7
 2
Additional paid-in capital1,348,578
 192,795
Accumulated other comprehensive loss(614) (556)
Accumulated deficit(1,017,883) (675,997)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)330,088
 (483,756)
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)$634,511
 $442,544

See Notesaccompanying notes to Condensed Consolidated Financial Statementscondensed consolidated financial statements.
21
Table of Contents
CLOUDERA, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)



Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Revenue:
Subscription$191,522 $164,102 $378,607 $318,940 
Services22,814 32,609 46,189 65,239 
Total revenue214,336 196,711 424,796 384,179 
Cost of revenue:(1) (2)
Subscription27,929 29,075 56,565 58,412 
Services21,710 28,055 47,315 59,951 
Total cost of revenue49,639 57,130 103,880 118,363 
Gross profit164,697 139,581 320,916 265,816 
Operating expenses:(1) (2)
Research and development62,304 65,742 126,520 129,915 
Sales and marketing105,760 112,491 218,895 231,874 
General and administrative
33,167 50,445 67,842 96,877 
Total operating expenses201,231 228,678 413,257 458,666 
Loss from operations(36,534)(89,097)(92,341)(192,850)
Interest income1,444 3,156 3,685 6,447 
Other income (expense), net980 104 (1,517)337 
Loss before provision for income taxes(34,110)(85,837)(90,173)(186,066)
Provision for income taxes(1,887)(1,206)(3,838)(4,107)
Net loss$(35,997)$(87,043)$(94,011)$(190,173)
Net loss per share, basic and diluted$(0.12)$(0.31)$(0.32)$(0.69)
Weighted-average shares used in computing net loss per share, basic and diluted300,103 276,778 297,724 274,207 

 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Revenue:       
Subscription$78,105
 $52,733
 $216,762
 $144,093
Services16,464
 14,525
 47,231
 44,106
Total revenue94,569
 67,258
 263,993
 188,199
Cost of revenue:(1) (2)
       
Subscription14,486
 9,787
 56,173
 28,844
Services18,640
 12,652
 69,035
 35,969
Total cost of revenue33,126
 22,439
 125,208
 64,813
Gross profit61,443
 44,819
 138,785
 123,386
Operating expenses:(1) (2)
       
Research and development38,095
 25,968
 176,770
 77,118
Sales and marketing64,061
 54,206
 236,639
 147,250
General and administrative15,877
 8,633
 69,991
 25,309
Total operating expenses118,033
 88,807
 483,400
 249,677
Loss from operations(56,590) (43,988) (344,615) (126,291)
Interest income, net1,501
 695
 3,590
 2,143
Other income (expense), net(490) (296) 349
 (311)
Net loss before benefit from (provision for) income taxes(55,579) (43,589) (340,676) (124,459)
Benefit from (provision for) income taxes241
 (456) (1,210) (1,426)
Net loss$(55,338) $(44,045) $(341,886) $(125,885)
Net loss per share, basic and diluted$(0.40) $(1.20) $(3.27) $(3.47)
Weighted-average shares used in computing net loss per share, basic and diluted138,506
 36,598
 104,551
 36,261
(1) Amounts include stock-based compensation expense as follows (in thousands):
___________
(1)Amounts include stock‑based compensation expense as follows (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Cost of revenue – subscription$3,684 $4,189 $7,676 $8,008 
Cost of revenue – services3,004 4,196 6,991 8,456 
Research and development17,057 18,453 36,881 36,294 
Sales and marketing14,031 15,435 29,854 28,799 
General and administrative8,841 19,460 18,653 29,047 
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Cost of revenue – subscription$2,750
 $343
 $22,143
 $1,051
Cost of revenue – services4,187
 432
 28,414
 1,363
Research and development9,110
 1,313
 90,139
 4,326
Sales and marketing10,070
 1,463
 82,748
 4,496
General and administrative5,030
 1,766
 38,236
 5,322
(2)Amounts include amortization of acquired intangible assets as follows (in thousands):

 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Cost of revenue – subscription$584
 $514
 $1,608
 1,483
Sales and marketing454
 431
 1,315
 1,292
(2) Amounts include amortization of acquired intangible assets as follows (in thousands):

Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Cost of revenue – subscription$3,080 $2,687 $6,159 $5,597 
Sales and marketing16,596 17,250 33,193 34,500 

See Notesaccompanying notes to Condensed Consolidated Financial Statementscondensed consolidated financial statements.
32
Table of Contents
CLOUDERA, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)


Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Net loss$(35,997)$(87,043)$(94,011)$(190,173)
Other comprehensive income (loss), net of tax:
Foreign currency translation loss(85)(622)(921)(630)
Unrealized gain on investments559 452 1,411 802 
Total other comprehensive income (loss), net of tax474 (170)490 172 
Comprehensive loss$(35,523)$(87,213)$(93,521)$(190,001)

 Three Months Ended October 31, Nine Months Ended
October 31,
 2017 2016 2017 2016
Net loss$(55,338) $(44,045) $(341,886) $(125,885)
Other comprehensive income, net of tax:       
Foreign currency translation gains (losses)59
 (27) 33
 6
Unrealized gain (loss) on investments(152) (117) (91) 236
Total other comprehensive income (loss), net of tax(93) (144) (58) 242
Comprehensive loss$(55,431) $(44,189) $(341,944) $(125,643)


See Notesaccompanying notes to Condensed Consolidated Financial Statementscondensed consolidated financial statements.
43
Table of Contents
CLOUDERA, INC.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)
Three Months Ended July 31, 2020
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of April 30, 2020295,349 $15 $2,937,795 $289 $(1,544,636)$1,393,463 
Shares issued under employee stock plans7,683 — 25,518 — — 25,518 
Vested restricted stock units converted into shares6,244 — — — — 0 
Shares issued under employee stock purchase plan800 — 7,730 — — 7,730 
Stock-based compensation expense— — 46,617 — — 46,617 
Shares withheld related to net settlement of restricted stock units(842)— (9,266)— — (9,266)
Unrealized gain on investments— — — 559 — 559 
Foreign currency translation loss— — — (85)— (85)
Net loss— — — — (35,997)(35,997)
Balance as of July 31, 2020309,234 $15 $3,008,394 $763 $(1,580,633)$1,428,539 

Three Months Ended July 31, 2019
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of April 30, 2019274,184 $14 $2,755,408 $300 $(1,252,372)$1,503,350 
Shares issued under employee stock plans1,089 0 1,885 — — 1,885 
Vested restricted stock units converted into shares4,989 — — — — 0 
Shares issued under employee stock purchase plan735 — 3,590 — — 3,590 
Stock-based compensation expense— — 61,733 — — 61,733 
Shares withheld related to net settlement of restricted stock units(1,402)— (7,849)— — (7,849)
Unrealized gain on investments— — — 452 — 452 
Foreign currency translation loss— — — (622)— (622)
Net loss— — — — (87,043)(87,043)
Balance as of July 31, 2019279,595 $14 $2,814,767 $130 $(1,339,415)$1,475,496 
See accompanying notes to condensed consolidated financial statements.
4
Table of Contents
CLOUDERA, INC.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)
Six Months Ended July 31, 2020
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of January 31, 2020295,168 $15 $2,923,905 $273 $(1,485,824)1,438,369 
Shares issued under employee stock plans7,837 — 25,961 — — 25,961 
Vested restricted stock units converted into shares12,096 — — — — 0 
Shares issued under employee stock purchase plan800 — 7,730 — — 7,730 
Repurchases of common stock(3,945)— (25,974)— — (25,974)
Stock-based compensation expense— — 100,055 — — 100,055 
Shares withheld related to net settlement of restricted stock units(2,722)— (23,283)— — (23,283)
Unrealized gain on investments— — — 1,411 — 1,411 
Foreign currency translation loss— — — (921)— (921)
Cumulative effect of accounting change— — — — (798)(798)
Net loss— — — — (94,011)(94,011)
Balance as of July 31, 2020309,234 $15 $3,008,394 $763 $(1,580,633)$1,428,539 

Six Months Ended July 31, 2019
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of January 31, 2019268,819 $13 $2,711,340 $(42)$(1,149,242)$1,562,069 
Shares issued under employee stock plans1,931 1 4,887 — — 4,888 
Vested restricted stock units converted into shares10,180 — — — — 0 
Shares issued under employee stock purchase plan735 — 3,590 — — 3,590 
Stock-based compensation expense— — 110,604 — — 110,604 
Shares withheld related to net settlement of restricted stock units(2,070)— (15,654)— — (15,654)
Unrealized gain on investments— — — 802 — 802 
Foreign currency translation loss— — — (630)— (630)
Net loss— — — — (190,173)(190,173)
Balance as of July 31, 2019279,595 $14 $2,814,767 $130 $(1,339,415)$1,475,496 
See accompanying notes to condensed consolidated financial statements.
5
Table of Contents
CLOUDERA, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)



Six Months Ended July 31,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss$(94,011)$(190,173)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization44,939 46,166 
 Non-cash lease expense22,692 22,898 
Stock-based compensation expense100,055 110,604 
Amortization of deferred costs33,410 20,973 
Other5,126 (1,201)
Changes in assets and liabilities:
Accounts receivable100,340 80,660 
Prepaid expenses and other assets14,628 (3,958)
Deferred costs(22,290)(21,807)
Accounts payable(830)(3,661)
Accrued compensation(6,646)(6,090)
Other accrued liabilities(4,279)8,689 
 Other contract liabilities(3,874)(9,242)
Operating lease liabilities(21,206)(25,034)
Deferred revenue(67,249)(50,344)
Net cash provided by (used in) operating activities100,805 (21,520)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities(273,569)(311,224)
Proceeds from sale of marketable securities104,172 39,385 
Maturities of marketable securities123,710 235,402 
Capital expenditures(4,430)(4,721)
Net cash used in investing activities(50,117)(41,158)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchases of common stock(25,974)0 
Taxes paid related to net share settlement of restricted stock units(23,283)(15,645)
Proceeds from employee stock plans33,639 9,220 
Net cash used in financing activities(15,618)(6,425)
Effect of exchange rate changes on cash, cash equivalents and restricted cash463 (1,509)
Net increase (decrease) in cash, cash equivalents and restricted cash35,533 (70,612)
Cash, cash equivalents and restricted cash — Beginning of period110,990 162,039 
Cash, cash equivalents and restricted cash — End of period$146,523 $91,427 



Nine Months Ended October 31,
 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net loss$(341,886) $(125,885)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization9,695
 7,471
Stock-based compensation261,680
 16,558
Release of deferred tax valuation allowance(806) —
Accretion and amortization of marketable securities657
 2,420
Loss on disposal of fixed assets(111) —
Changes in assets and liabilities:   
Accounts receivable35,536
 1,856
Prepaid expenses and other assets(5,459) 378
Accounts payable(2,326) 910
Accrued compensation(1,231) 4,328
Accrued expenses and other liabilities9,442
 3,498
Deferred revenue14,527
 3,847
Net cash used in operating activities(20,282) (84,619)
CASH FLOWS FROM INVESTING ACTIVITIES   
Purchases of marketable securities(514,157) (103,776)
Sales of marketable securities57,436
 51,138
Maturities of marketable securities233,732
 155,232
Cash used in business combinations, net of cash acquired(1,937) (2,700)
Capital expenditures(9,005) (6,934)
Proceeds from sale of fixed assets145
 —
Net cash provided by (used in) investing activities(233,786) 92,960
CASH FLOWS FROM FINANCING ACTIVITIES   
Net proceeds from issuance of common stock in initial public offering237,422
 —
Net proceeds from follow-on offering46,803
 —
Taxes paid related to net share settlement of restricted stock units(50,503) —
Proceeds from employee stock plans11,221
 2,553
Net cash provided by financing activities244,943
 2,553
Effect of exchange rate changes340
 6
Net increase (decrease) in cash, cash equivalents and restricted cash(8,785) 10,900
Cash, cash equivalents and restricted cash — Beginning of period89,632
 35,994
Cash, cash equivalents and restricted cash — End of period$80,847
 $46,894
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   
Cash paid for income taxes$1,840
 $1,031
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES   
Purchases of property and equipment in other accrued liabilities$261
 $36
Fair value of common stock issued as consideration for business combination$2,081
 $—
Offering costs in accounts payable and other accrued liabilities$858
 $—
Conversion of redeemable convertible preferred stock to common stock$657,687
 $—
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchases of property and equipment, accrued but not yet paid$127 $500 
Right-of-use assets obtained in exchange for new operating lease liabilities$6,060 $2,966 




See accompanying notes to condensed consolidated financial statements.
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CLOUDERA, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

As of July 31,
20202019
Reconciliation of cash, cash equivalents and restricted cash as shown in the statement of cash flows
Cash and cash equivalents$143,171 $88,075 
Restricted cash included in Other assets3,352 3,352 
Total cash, cash equivalents and restricted cash$146,523 $91,427 
See accompanying notes to condensed consolidated financial statements.
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CLOUDERA, INC.
Notes to Condensed Consolidated Financial Statements
5
(unaudited)
Table of Contents
CLOUDERA, INC.
Notes to Unaudited Condensed Consolidated Financial Statements





1. OrganizationSummary of Business and Significant Accounting Policies
Description of Business
Cloudera, Inc. was incorporated in the state of Delaware on June 27, 2008 and is headquartered in Palo Alto,Santa Clara, California. Cloudera is an enterprise data cloud company. We sell software subscriptions and public cloud services for the recently released Cloudera Data Platform (CDP) solution-set and software subscriptions for our traditional on-premises data management,platforms. Subscriptions include software access rights and technical support. We also provide professional services for the implementation and use of our software subscriptions, machine learning expertise and advanced analytics platform. This platform delivers an integrated suite of capabilities forconsultation, training and education services. Our offerings are based predominantly on open source software, utilizing data management, machine learning and advanced analytics, affording customers an agile, scalable and cost‑effective solution for transforming their businesses.
stored natively in public cloud object stores as well as in various open source data stores. Unless the context requires otherwise, the words “we,” “us,” “our,” the “Company” and “Cloudera” refer to Cloudera, Inc. and its subsidiaries taken as a whole.
As of October 31, 2017 and January 31, 2017, we had an accumulated deficit totaling $1.0 billion and $676.0 million, respectively. We have funded our operations primarily with the net proceeds we received through the sale of our common stock in our initial public offering (IPO), our follow-on public offering (Follow-on Offering), other public or private sales of equity securities and proceeds from the sale of our subscriptions and services. Management believes that currently available resources will be sufficient to fund our cash requirements for at least the next twelve months.
Initial Public Offering
On May 3, 2017, we completed our IPO in which we issued and sold 17,250,000 shares of common stock, inclusive of the underwriters’ over-allotment option, at a public offering price of $15.00 per share. We received net proceeds of $235.4 million after deducting underwriting discounts and commissions of $18.1 million and other issuance costs of $5.3 million. In conjunction with the IPO, we donated $2.4 million, or 1% of the net proceeds, to fund the Cloudera Foundation’s activities. Immediately prior to the closing of the IPO, all 74,907,415 shares of our then-outstanding redeemable convertible preferred stock automatically converted into shares of common stock and we reclassified $657.7 million from temporary equity to additional paid in capital on our condensed consolidated balance sheet.
Follow-On Offering
On October 2, 2017, we completed our Follow-on Offering, in which we issued and sold 3,000,000 shares of common stock and certain stockholders sold 10,432,114 shares of common stock. The price per share to the public was $16.45. We received net proceeds of $46.0 million after deducting underwriting discounts and commissions of $2.0 million and other issuance costs of $1.4 million. We did not receive any proceeds from the sale of shares by the selling stockholders. We issued and sold shares in the offering in order to fund the withholding and remittance obligations in connection with the vesting and settlement of RSUs, and the amount of shares that we issued and sold in the offering was substantially equivalent to the number of shares of common stock that we withheld in connection with such net settlements.
2.    Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. The condensed consolidated financial statements include the results of Cloudera, Inc. and its wholly owned subsidiaries, which are located in various countries, including the United States, Australia, China, India, Germany, Ireland, The Netherlands, Singapore, Hungary and the United Kingdom. All intercompany balances and transactions have been eliminated upon consolidation. The condensed consolidated balance sheet as of January 31, 20172020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of our management, the

The information contained herein reflects all adjustments necessary for a fair presentation of our results of operations, financial position, stockholders’ equity and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the three and ninesix months ended OctoberJuly 31, 20172020 are not necessarily indicative of results to be expected for the full year ending January 31, 20182021 or for any other interim periodperiods or for any other future year.years.
The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of andin our Annual Report on Form 10-K for the year ended January 31, 2017, included in our prospectus2020, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (Securities Act), with the SEC on September 28, 2017.
Significant Accounting Policies
March 27, 2020.There have been no material changes toin our significant accounting policies as described in our Annual Report on Form 10-K for the prospectus filed withyear ended January 31, 2020 other than as noted below under “New Accounting Policies". We have enhanced the SEC pursuantdisclosure specific to Rule 424(b)our subscription revenue policy below under the Securities Act, on September 28, 2017."Subscription Revenue".
Fiscal Year
Our fiscal year ends on January 31. References to fiscal 2018,2021, for example, refersrefer to the fiscal year endedending January 31, 2018.2021.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates include revenue recognition, the useful lives of property and equipment and intangible assets, allowance for doubtful accounts, stock‑basedcredit losses, stock-based compensation expense, annual bonus attainment, self‑insuranceself-insurance costs incurred, the fair value and useful lives of tangible and intangible assets acquired and liabilities assumed resulting from business combinations, the fair valueevaluation for impairment of common stock priorintangible assets and goodwill, the estimated period of benefit for deferred contract costs, estimates related to our IPO,revenue recognition, such as the assessment of elements in a multi‑elementmulti-element arrangement and the valuation assigned to each element, contingencies, and contingencies.the incremental borrowing rate used in discounting of our lease liabilities. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from these estimates.
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Due to the COVID-19 Coronavirus pandemic (COVID-19 or COVID-19 pandemic), there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of July 31, 2020. While there was not a material impact to our consolidated financial statements as of and for the three and six months ended July 31, 2020, these estimates may change, as new events occur and additional information is obtained, as well as other factors related to COVID-19 pandemic that could result in material impacts to our consolidated financial statements in future reporting periods.
Segments
We operate as two2 operating segments – subscription and services. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is our chief executive officer, in deciding how to allocate resources and assess performance.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of short‑term, highly liquid investments with original maturities of three months or less from the date of purchase. Restricted cash represents cash on deposit with financial institutions in support of letters of credit outstanding in favor of certain landlords for office space.
Cash as reported on the condensed consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as shown on the condensed consolidated balance sheets. Cash as reported on the condensed consolidated statements of cash flows consists of the following (in thousands):
 As of October 31,
 2017 2016
Cash and cash equivalents$62,797
 $31,448
Restricted cash18,050
 15,446
Cash, cash equivalents and restricted cash$80,847
 $46,894

ConcentrationConcentrations of Credit Risk and Significant Customers
Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash and accounts receivable. Our cash is deposited with high credit quality financial institutions. At times, such deposits may be in excess of the Federal Depository Insurance Corporation insured limits. We have not experienced any losses on these deposits.
At OctoberOur trade receivables are recorded at the invoice amount, net of an allowance for credit losses, which is not material. The allowance for credit losses reflects our best estimate of probable losses inherent in the receivable portfolio determined based on various factors including historical experience, credit quality of the customer, current economic conditions and management’s expectations of future economic conditions. Receivables are written-off and charged against the recorded allowance when we have exhausted collection efforts without success.  
The COVID-19 pandemic and the recent economic downturn prompted us to perform additional credit reviews of our existing customers. After performing our additional reviews, we determined that, while we may experience delays in our collections, the risk of credit loss on our trade receivables as of July 31, 2017,2020 is not expected to materially differ from prior periods.
As of July 31, 2020 and January 31, 2020, nosingle customer represented 10% or more of accounts receivable. At January 31, 2017, one customer represented 21%than 10% of accounts receivable. For each of the three and ninesix months ended OctoberJuly 31, 20172020 and 2016,2019, no single customer accounted for 10% or more of revenue.
Revenue RecognitionRecently Adopted Accounting Standards
We generate revenue fromadopted the following accounting standards as of February 1, 2020:
•ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment;
•ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement; and
• ASU No. 2018-15, Intangibles-Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)
The adoption of the above listed accounting standards did not have a material impact on our condensed consolidated financial statements as of and for the three and six months ended July 31, 2020.
In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires an entity to utilize a new impairment model known as the current expected credit loss model in place of the currently used incurred loss method. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. For trade receivables, loans, and other financial instruments, an entity will be required to use a forward-looking expected loss model to recognize credit losses that are probable. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a
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reduction in the amortized cost basis of the securities. We adopted ASU 2016-13 using the modified retrospective approach as of February 1, 2020. As a result of the adoption, we recorded a $0.8 million adjustment to our beginning accumulated deficit balance to reflect the cumulative effect of the accounting change. The impact of the adoption was not material to our consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners and external market factors. We will continue to actively monitor the impact of the recent COVID-19 pandemic on expected credit losses.
New Accounting Policies
Derivative contracts
During the first quarter of fiscal year 2021, we implemented a currency risk management program. We use derivative financial instruments as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These derivative contracts consist of foreign currency forward contracts and are not designated as hedging instruments under the applicable accounting guidance. Accordingly, they are carried at fair value as either assets or liabilities on our condensed consolidated balance sheets. The changes in the fair value are included in “Other income (expense), net” within our condensed consolidated statements of operations and are intended to offset the foreign currency gains or losses associated with the underlying monetary assets and liabilities.
Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, including currency spot and forward rates.
Subscription Revenue
We sell subscriptions and services. Subscription arrangementsservices for an integrated suite of data analytics and management products. Our subscription offerings are typically one to three yearsbased predominantly on open source software including Spark, Impala, Hive, HBase, Kafka, Hadoop, and more. The open source software is available from the Apache Software Foundation ("ASF”) or available through an Affero General Public License (“AGPL“). Certain subscriptions also include licenses of proprietary software that provide additional features and functionality not included in length but may be up to seven years in limited cases. Arrangements with our customers typically do not include general rights of return. Incremental direct costs incurred related to the acquisition or origination of a customer contract are expensed as incurred.
Revenue recognition commences when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collection is probable.
Subscription revenueopen source software.
Subscription revenue relates to term (or time‑based) subscription agreements fortime-based) subscriptions to our platform, which can include both open source and proprietary software.software and related support. Subscriptions include internet, email and phone support, bug fixes, and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. Revenue forWithin our subscription arrangements, we account for the license to the proprietary software, if any, and support as two separate performance obligations. As the open source software is publicly available at no cost to the customer, we have determined that there is no value to be assigned to the open source software in our subscription arrangements. The proprietary software license represents a promise to provide a license to use functional intellectual property that is recognized ratably over the contractual term of the arrangement beginningat a point in time on the date access to the subscriptionsoftware is made available to the customer.
Services revenue
Services revenue relates to professional services forcustomer and the implementation and uselicense period has begun. We have concluded the support is a stand-ready performance obligation that consists of our subscriptions, training and education services and related reimbursable travel costs.
Fora series of distinct days of service that are satisfied ratably over time and materials and fixed fee arrangements, revenue is recognized as the services are performed or upon acceptance, if applicable. For milestone‑based arrangements,provided. We use a time-based output method to measure progress because our efforts are expended evenly throughout the period given the nature of the promise is a stand-ready service. We recognize support revenue is recognized upon acceptance or subsequent to completion uponratably, typically beginning on the lapsestart of any acceptance period.
Revenue for training and education services is recognized upon delivery, except for On‑Demand Training, which is recognized ratably over the contractual term.
Multiple‑element arrangements
Arrangements with our customers generally include multiple elements such as subscription and services. We allocate revenue to each elementterm of the arrangement based on vendor‑specific objective evidence of each element’s fair value (VSOE) when we can demonstrate sufficient evidence of the fair value. VSOE for elements of an arrangement is based upon the normal pricing and discounting practices for those elements when sold separately on a stand‑alone basis.arrangement.
We have established VSOE for someAs part of our services. If VSOE for one or more undelivered elements does not exist, revenue recognition does not commence until delivery of both thesupport offered under a subscription, and services have commenced, or when VSOE of the undelivered elements has been established. Once revenue recognition commences, revenue for the arrangement is recognized ratably over the longest service period in the arrangement.
Reseller arrangements
We recognize subscription revenue for sales through resellers or other indirect sales channels. Subscription revenue from these sales is generally recognized upon sell‑throughwe stand ready to an end user customer. Where payments to us

are believed to be contingent upon payment by the end userhelp customers resolve technical issues related to the reseller,installed platform. The subscriptions are designed to assist throughout a customer’s lifecycle from development to proof-of-concept, to quality assurance and testing, to production and development. Our subscriptions are generally offered under renewable, fixed fee contracts where payments are typically due annually in advance and may have a term of one year or multiple years. The contracts generally do not contain refund provisions for fees earned related to services performed. Unearned subscription revenue is included in deferred revenue and other contract liabilities. On occasion, we may sell engineering services and/or a premium subscription agreement that provides a customer with development input and the opportunity to work more closely with our developers.
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2. Revenue from Contracts with Customers
The following table reflects our contract liabilities balances (in thousands):
July 31,
2020		January 31,
2020
Deferred revenue$409,873 $460,561 
Other contract liabilities8,351 12,225 
Deferred revenue, non-current67,747 81,926 
Total contract liabilities$485,971 $554,712 
Significant changes in the contract liabilities balances during the period ended July 31, 2020 are as follows (in thousands):
Contract Liabilities
January 31, 2020$554,712
Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period(165,645)
Increases due to invoicing prior to satisfaction of performance obligations125,655
April 30, 2020514,722
Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period(166,692)
Increases due to invoicing prior to satisfaction of performance obligations137,941
July 31, 2020$485,971
Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents contracted revenue that has been billed but not recognized, until cash is collected.
Deferred revenue
Deferred revenue consists ofand unbilled non-cancelable amounts billed to or collected from customers under a binding agreement provided delivery of the related subscription and services has commenced.
Stock‑Based Compensation
We recognize stock‑based compensation expense for all stock‑based payments. Employee stock‑based compensation cost is estimated at the grant date based on the fair value of the equity for financial reporting purposes and isthat will be recognized as expense over the requisite service period. Prior to our IPO, fair value of our common stock for financial reporting purposes was determined considering objective and subjective factors and required judgment to determine the fair value of common stock for financial reporting purposes as of the date of each equity grant or modification.
We have elected to calculate the fair value of stock options based on the Black‑Scholes option‑pricing model. The Black‑Scholes model requires the use of various assumptions including expected option life and expected stockrevenue in future periods. Transaction price volatility. We estimate the expected term for stock options using the simplified method dueallocated to the lackremaining performance obligation is influenced by several factors, including seasonality, the timing of historical exercise activity. The simplified method calculatesrenewals and average contract terms.
During the expected term as the midpoint between the vesting datethree and the contractual expiration date of the award. We estimate the options’ volatility using volatilities of a group of public companies in a comparable industry, stage of life cycle, and size. The interest rate is derived from government bonds with a similar term as the options’ expected lives. We have not declared nor do we expect to declare dividends. Therefore, there is no dividend impact on the valuation of options. We are using the straight‑line (single‑option) method for employee expense attribution for stock options.
We have granted restricted stock units (RSUs) to our employees and members of our board of directors under the 2008 Equity Incentive Plan (2008 Plan). The employee RSUs vest upon the satisfaction of both a service‑based condition and a liquidity event‑related performance condition. The service‑based condition for the majority of these awards is generally satisfied pro‑rata over four years. The liquidity event‑related performance condition is satisfied upon the occurrence of a qualifying liquidity event, such as the effective date of an IPO, or six months following the effective dateended July 31, 2020, net revenue recognized from our remaining performance obligations satisfied in previous periods was not material.
As of an IPO. During the quarter ended April 30, 2017, the majorityJuly 31, 2020, approximately $820.2 million of RSUs were modified such that the liquidity event‑relatedrevenue is expected to be recognized from remaining performance condition is satisfied upon the effective date of an IPO, rather than six months following an IPO. The modification established a new measurement date for these modified RSUs. The liquidity event‑related performance condition is viewed as a performance‑based criterion for which the achievement of such liquidity event is not deemed probable for accounting purposes until the event occurs. The liquidity event‑related performance condition was achieved for the majority of our RSUs and became probable of being achieved for the remaining RSUs on April 27, 2017, the effective date of our IPO. We recognized stock‑based compensation expense using the accelerated attribution method with a cumulative catch‑up of stock‑based compensation expenseobligations in the amount of $181.5approximately $539.3 million attributableover the next 12 months and approximately $280.9 million thereafter.
Contract Assets
Contract assets consist of the right to serviceconsideration in exchange for product offerings that we have transferred to a customer when that right is conditional on something other than the passage of time (e.g., performance prior to such effective date. Shares subjectinvoicing on fixed fee service arrangements with substantive acceptance terms). We record unbilled accounts receivable related to RSUs in which the liquidity event-related performance condition was satisfied upon the effective date of the IPO were issued on September 27, 2017, the effective date of our Follow-on Offering to the extent the service‑based condition had been met.
Prior to our IPO, stock‑based compensation expense was also recorded when a holder of an economic interest in Cloudera purchased shares from an employee for an amountrevenue recognized in excess of the fair value of the common stock at the time of the purchase. We recognized any excess value transferred in these transactionsamounts invoiced as stock‑based compensation expensewe have an unconditional right to invoice and receive payment in the consolidated statementfuture related to those fulfilled obligations. As of operations.
Stock optionsJuly 31, 2020 and January 31, 2020, contract assets were $3.3 million and $4.6 million, respectively, which are included in prepaid expenses and other equity awards granted to non‑employees are accounted for at their estimated fair value using the Black‑Scholes method. These awards are subject to periodic re‑measurement over the period during which services are rendered. Stock‑based compensation expense is recognized over the vesting period on a straight‑line basis.current assets.


Net Loss Per Share
We follow the two‑class method when computing net loss per common share as we issue shares that meet the definition

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Table of participating securities. The two‑class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two‑class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Prior to the automatic conversion into shares of common stock as a result of our IPO, our redeemable convertible preferred stock contractually entitled the holders of such shares to participate in dividends, but did not contractually require the holders of such shares to participate in our losses. For periods in which we have reported net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti‑dilutive.Contents
JOBS Act Accounting Election
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to retain the ability to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Recently Adopted Accounting Standards
In March 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016‑09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share‑Based Payment Accounting, or ASU 2016‑09, which simplifies the accounting and reporting of share‑based payment transactions, including adjustments to how excess tax benefits and payments for tax withholdings should be classified and provides the election to eliminate the estimate for forfeitures. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period for which financial statements have not been issued or made available for issuance. We early adopted this standard in the first quarter of fiscal 2018. As a result of this adoption, we have elected to account for forfeitures as they occur. The adoption of this standard did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606), or ASU 2014‑09, which amended the existing FASB Accounting Standards Codification. ASU 2014‑09 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services and also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted.

We are currently in the process of assessing the adoption methodology, which allows ASU 2014‑09 to be applied either retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. Our final determination will depend on a number of factors, such as the significance of the impact of the new standard on our financial results, system readiness, including that of software procured from third‑party providers, and our ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.
We are also currently evaluating the impact ASU 2014‑09 will have on our consolidated financial statements. We are in the initial stages of our evaluation of the impact of ASU 2014‑09 on our accounting policies, processes, and system requirements. We have assigned internal resources in addition to engaging third party service providers to assist in the evaluation. While we continue to assess all potential impacts under ASU 2014‑09, we have completed a preliminary assessment to determine the effect of adoption on our existing revenue arrangements and are analyzing specific transactions to confirm those conclusions. We have also begun implementing our new revenue recognition systems.
We currently recognize subscription revenue ratably over the subscription period. Under the new standard, these subscription arrangements represent two performance obligations; a software license that is delivered upfront and a series of performance obligations that are delivered over time. We believe that a significant portion of our subscription revenue meets the criteria for revenue recognition over time and the vast majority of the revenue will continue to be recognized ratably under the new standard. We expect that a portion of the arrangement fee related to the software license will be recognized upfront, which we believe will usually be insignificant in comparison to the entire arrangement, as we offer the substantial majority of functional features for free in the open source version of our software. Accounting for certain sales commissions under ASU 2014‑09 is different than our current accounting policy which is to expense sales commissions as incurred whereas such costs will be deferred and amortized under ASU 2014‑09. This will result in an increase in deferred costs recognized on our balance sheet. Additionally, we preliminarily believe that the amortization period for such deferred commission costs will be longer than the contract term, as ASU 2014‑09 requires entities to determine whether the costs relate to specific anticipated contracts.
While we continue to assess the potential impacts of ASU 2014‑09, including the areas described above, and anticipate ASU 2014‑09 could have a material impact on our consolidated financial statements, we do not know and cannot reasonably estimate the quantitative impact on our financial statements at this time.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and activities is not a business. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. For all other entities, it is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, or ASU 2017-09, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under ASU 2017-09, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. This standard is effective for all entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.

3. Cash Equivalents and Marketable Securities
The following are the fair values of our cash equivalents and marketable securities as of OctoberJuly 31, 20172020 (in thousands):
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Cash equivalents:Cash equivalents:
Money market fundsMoney market funds$45,314 $— $— $45,314 
Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
Cash equivalents:(1)
       
Money market funds$6,882
 $—
 $—
 $6,882
Asset-backed securities500
 

 

 500
Commercial paper13,995
 —
 —
 13,995
Municipal securities4,475
 —
 —
 4,475
Municipal securities2,750 — — 2,750 
Reverse repurchase agreements(2)
4,000
 —
 —
 4,000
Marketable securities:       Marketable securities:
U.S. agency obligations7,812
 —
 (19) 7,793
U.S. agency obligations31,972 34 0 32,006 
Asset-backed securities37,245
 —
 (36) 37,209
Asset-backed securities9,064 32 0 9,096 
Corporate notes and obligations198,401
 19
 (172) 198,248
Corporate notes and obligations213,726 2,063 (1)215,788 
Commercial paper84,636
 3
 —
 84,639
Commercial paper50,875 20 0 50,895 
Municipal securities14,342
 —
 (11) 14,331
Municipal securities17,790 324 0 18,114 
Certificates of deposit29,150
 5
 (3) 29,152
Certificates of deposit56,998 80 (5)57,073 
U.S. treasury securities31,816
 —
 (7) 31,809
U.S. treasury securities39,134 114 0 39,248 
Total cash equivalents and marketable
securities		$433,254
 $27
 $(248) $433,033
Total cash equivalents and marketable securities$467,623 $2,667 $(6)$470,284 
___________
(1)Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of October 31, 2017.
(2)As part of our cash management strategy, we invest in reverse repurchase agreements. Such reverse repurchase agreements are tri-party repurchase agreements and have maturities of three months or less at the time of investment and are collateralized by U.S. treasury securities at 102% of the principal amount. In a tri-party repurchase agreement, a third-party custodian bank functions as an independent intermediary to facilitate transfer of cash and holding the collateral on behalf of the underlying investor for the term of the agreement thereby minimizing risk and exposure to both parties. These reverse repurchase agreements are included within cash equivalents due to their high liquidity and relatively low risk.



The following are the fair values of our cash equivalents and marketable securities as of January 31, 20172020 (in thousands):
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Cash equivalents:
Money market funds$34,596 $— $— $34,596 
Marketable securities:
Asset-backed securities68,194 235 0 68,429 
Corporate notes and obligations199,226 891 0 200,117 
Commercial paper46,460 7 0 46,467 
Municipal securities20,865 65 0 20,930 
Certificates of deposit14,996 19 0 15,015 
U.S. treasury securities24,563 33 0 24,596 
Total cash equivalents and marketable securities$408,900 $1,250 $0 $410,150 
 Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Estimated
Fair Value
Cash equivalents:(1)
       
Money market funds$49,390
 $—
 $—
 $49,390
U.S. agency obligations3,249
 —
 —
 3,249
Corporate notes and obligations2,050
 —
 —
 2,050
Commercial paper3,998
 —
 —
 3,998
Marketable securities:       
Asset-backed securities39,281
 —
 (17) 39,264
Corporate notes and obligations105,698
 5
 (116) 105,587
Municipal securities16,128
 —
 (23) 16,105
Certificate of deposit15,500
 20
 —
 15,520
U.S. treasury securities5,004
 —
 —
 5,004
Total cash equivalents and marketable
securities		$240,298
 $25
 $(156) $240,167
___________
(1)
Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31, 2017.
MaturitiesThe contractual maturities of our noncurrent marketable securities generally ranged from one to three years at October 31, 2017 and one to four years at January 31, 2017.
As of October 31, 2017, the following marketableinvestments in available-for-sale securities were in an unrealized loss positionas follows (in thousands):
July 31, 2020January 31, 2020
Amortized CostEstimated Fair ValueAmortized CostEstimated Fair Value
Due within one year$335,312 $336,394 $273,582 $274,058 
Due after one year through five years132,311 133,890 135,318 136,092 
Total investments in marketable securities$467,623 $470,284 $408,900 $410,150 
 Less than 12 months Greater than 12 months Total
 Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses
U.S. agency obligations$7,793
 $(19) $—
 $—
 $7,793
 $(19)
Asset-backed securities34,486
 (35) 747
 (1) 35,233
 (36)
Corporate notes and obligations153,659
 (143) 16,394
 (30) 170,053
 (173)
Municipal securities13,806
 (11) —
 —
 13,806
 (11)
Certificates of deposit10,497
 (3) —
 —
 10,497
 (3)
U.S. treasury securities31,809
 (6) —
 —
 31,809
 (6)
Total$252,050
 $(217) $17,141
 $(31) $269,191
 $(248)
No marketable securities held as of January 31, 2017 had been in a continuous unrealized loss position for more than twelve months. The unrealized loss for each of these fixed rate marketable securities ranged from less than $1,000 to $19,000was not material as of OctoberJuly 31, 2017 and less than $1,000 to $26,000 as of January 31, 2017. We do not believe any of the unrealized losses represent an other‑than‑temporary impairment based on our evaluation of available evidence as of October 31, 20172020 and January 31, 2017.2020. The unrealized losses on these investments were primarily due to changes in market interest rates. We expect to receive the full principal and interest on all of these marketable securities and have the ability and intent to hold these investments until a recovery of fair value. We determined that no credit losses related to our marketable securities was required for the three and six months ended July 31, 2020 and 2019.
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Realized gains and realized losses on our cash equivalents and marketable securities are included in other income (expense), net on the condensed consolidated statement of operations and were not materialmaterial for the three and ninesix months ended OctoberJuly 31, 20172020 and 2016.2019.
Reclassification adjustments out of accumulated other comprehensive lossincome into net loss were not material for the three and ninesix months ended OctoberJuly 31, 20172020 and 2016.

2019.

4.  Fair Value Measurement
Our financial assets and liabilities consist principally of cash and cash equivalents, marketable securities, restricted cash, accounts receivable and accounts payable. We measure and record certain financial assets and liabilities at fair value on a recurring basis. The estimated fair value of accounts receivable and accounts payable approximates their carrying value due to their short‑termshort-term nature. Cash equivalents, marketable securities and restricted cash are recorded at estimated fair value.
All of our cash equivalents and marketable securities are classified within Level 1 or Level 2 because the cash equivalents and marketable securities are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.
We follow a three‑levelthree-level valuation hierarchy for disclosure of fair value measurements as follows:
Level 1Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3
Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The following table represents our financial assets and liabilities according to the fair value hierarchy, measuredrisk inherent in the valuation technique and the risk inherent in the inputs to the model.
Assets and Liabilities Measured at fair value as of October 31, 2017 (in thousands):
 Level 1 Level 2 Level 3 Total
Cash equivalents:       
Money market funds$6,882
 $—
 $—
 $6,882
Asset-backed securities
 500
 
 500
Commercial paper—
 13,995
 —
 13,995
Municipal securities—
 4,475
 —
 4,475
Reverse repurchase agreement—
 4,000
 —
 4,000
Marketable securities:       
U.S. agency obligations—
 7,793
 —
 7,793
Asset-backed securities—
 37,209
 —
 37,209
Corporate notes and obligations—
 198,248
 —
 198,248
Commercial paper—
 84,639
 —
 84,639
Municipal securities—
 14,331
 —
 14,331
Certificates of deposit—
 29,152
 —
 29,152
U.S. treasury securities(1)
29,817
 1,992
 —
 31,809
Restricted cash:       
Money market funds14,672
 —
 —
 14,672
Total financial assets$51,371
 $396,334
 $—
 $447,705
________
(1)U.S. treasury securities classified as Level 1 are U.S. treasury bills for which there are quoted prices in active markets

Fair Value on a Recurring Basis
The following table represents our financial assets and liabilities according to the fair value hierarchy, measured at fair value as of JanuaryJuly 31, 20172020 (in thousands):
Level 1Level 2Total
Financial assets
Money market funds$45,314 $0 $45,314 
U.S. agency obligations0 32,006 32,006 
Asset-backed securities0 9,096 9,096 
Corporate notes and obligations0 215,788 215,788 
Commercial paper0 50,895 50,895 
Municipal securities0 20,864 20,864 
Certificates of deposit0 57,073 57,073 
U.S. treasury securities5,000 34,248 39,248 
Total financial assets$50,314 $419,970 $470,284 
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 Level 1 Level 2 Level 3 Total
Cash equivalents:       
Money market funds$49,390
 $—
 $—
 $49,390
U.S. agency obligations—
 3,249
 —
 3,249
Corporate notes and obligations—
 2,050
 —
 2,050
Commercial paper—
 3,998
 —
 3,998
Marketable securities:       
Asset-backed securities—
 39,264
 —
 39,264
Corporate notes and obligations—
 105,587
 —
 105,587
Municipal securities—
 16,105
 —
 16,105
Certificate of deposit—
 15,520
 —
 15,520
U.S. treasury securities—
 5,004
 —
 5,004
Restricted cash:       
Money market funds15,446
 —
 —
 15,446
Total financial assets$64,836
 $190,777
 $—
 $255,613
The following table represents our financial assets according to the fair value hierarchy, measured at fair value as of January 31, 2020 (in thousands):
Level 1Level 2Total
Financial assets
Money market funds$34,596 $0 $34,596 
Asset-backed securities0 68,429 68,429 
Corporate notes and obligations0 200,117 200,117 
Commercial paper0 46,467 46,467 
Municipal securities0 20,930 20,930 
Certificates of deposit0 15,015 15,015 
U.S. treasury securities0 24,596 24,596 
Total financial assets$34,596 $375,554 $410,150 

We value our Level 1 assets using quoted prices in active markets for identical instruments. We value our Level 2 assets with the help of a third‑partythird-party pricing service using quoted market prices for similar instruments, nonbindingnon-binding market prices that are corroborated by observable market data, or pricing models such as discounted cash flow techniques. We use such pricing data as the primary input, to which we have not made any material adjustments during the periods presented, to make our determination and assessments as to the ultimate valuation of these assets.Thereassets.
We have no Level 1 or 3 liabilities and no Level 3 assets.
Assets Measured at Fair Value on a Nonrecurring Basis
Certain of our assets, including intangible assets and goodwill, are measured at fair value on a nonrecurring basis, when they are deemed to be other-than temporarily impaired. There were no transfers into or out of Level 1, Level 2 or Level 3 assets and liabilities formaterial impairment charges recognized during the three and ninesix months ended OctoberJuly 31, 20172020, and 2016.2019.

5.  Derivative Contracts
We generate revenues and incur expenses in numerous currencies and are exposed to foreign currency risk. In the first quarter of fiscal year 2021, we implemented a currency risk management program, executing foreign currency forward contracts to offset the gains and losses on foreign currency denominated monetary assets and liabilities. The duration of our forward contracts are less than 12 months. We do not enter into any derivatives for trading or speculative purposes.
Our foreign currency forward contract liabilities and assets are classified within Level 2 in the three-level valuation hierarchy. The fair value of these contracts were not material. During the three and six months ended July 31, 2020, we recorded a loss of $0.5 million and $1.0 million, respectively, in other income (expense), net within our condensed consolidated statements of operations and is reported as part of other adjustments to reconcile net loss to net cash provided by operating activities in the condensed consolidated statements of cash flows. As of July 31, 2020, we had outstanding foreign currency forward contracts not designated as hedges with a total notional value of $6.2 million.

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6. Balance Sheet Components
Property and Equipment, Net
The cost and accumulated depreciation and amortization of property and equipment are as follows (in thousands):
As of
July 31, 2020January 31, 2020
Computer equipment and software$23,810 $22,489 
Office furniture and equipment13,371 12,672 
Leasehold improvements26,663 24,236 
Property and equipment, gross63,844 59,397 
Less: accumulated depreciation and amortization(42,849)(37,409)
Property and equipment, net$20,995 $21,988 
 As of
 October 31, 2017 January 31, 2017
Computer equipment and software$17,841
 $17,981
Office furniture and equipment7,648
 4,350
Leasehold improvements13,030
 8,468
Construction in progress612
 —
Property and equipment, gross39,131
 30,799
Less: accumulated depreciation and amortization(23,553) (17,695)
Property and equipment, net$15,578
 $13,104
Construction in progress primarily consists of leasehold improvements that have not been placed into service as of October 31, 2017.
Depreciation and amortization expense was $1.6 $2.7 million and $2.9 million for both the three months ended OctoberJuly 31, 20172020 and 20162019, respectively, and $6.7$5.6 million and $4.7$6.1 million for thenine six months ended October July 31, 20172020 and 2016,2019, respectively.

Intangible Assets
Intangible assets consisted of the following as of OctoberJuly 31, 2017 (dollars in2020 (in thousands):
Gross Fair
Value		Accumulated
Amortization		Net Book
Value		Weighted Average
Remaining Useful Life
(in years)
Developed technology$17,570 $(12,905)$4,665 1.6
Customer relationships and other acquired intangible assets671,447 (114,041)557,406 8.4
Unbilled contracts18,300 (14,487)3,813 0.4
Total$707,317 $(141,433)$565,884 8.3
 Gross Fair
Value		 Accumulated
Amortization		 Net Book
Value		 Weighted Average
Remaining Useful Life
(in years)
Developed technology$11,986
 $(6,148) $5,838
 2.7
Customer relationships and other acquired intangible assets6,797
 (5,980) 817
 4.0
Total$18,783
 $(12,128) $6,655
 2.9

Intangible assets consisted of the following as of January 31, 2017 (dollars in2020 (in thousands):
Gross Fair
Value		Accumulated
Amortization		Net Book
Value		Weighted Average
Remaining Useful Life
(in years)
Developed technology$17,570 $(11,321)$6,249 2.0
Customer relationships and other acquired intangible assets671,447 (80,847)590,600 8.9
Unbilled contracts18,300 (9,913)8,387 0.9
Total$707,317 $(102,081)$605,236 8.7
 Gross Fair
Value		 Accumulated
Amortization		 Net Book
Value		 Weighted Average
Remaining Useful Life
(in years)
Developed technology$10,155
 $(4,548) $5,607
 2.9
Customer relationships and other acquired intangible assets6,125
 (4,681) 1,444
 0.8
Total$16,280
 $(9,229) $7,051
 2.5
Amortization expense for intangible assets was $1.0$19.7 million and $19.9 million for both the three months ended OctoberJuly 31, 20172020 and 2016,2019, respectively, and $2.9$39.4 million and $2.8$40.1 million for the ninesix months ended OctoberJuly 31, 20172020 and 2016,2019, respectively.

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The expected future amortization expense of these intangible assets as of OctoberJuly 31, 20172020 is as follows (in thousands, by fiscal year)thousands):
Remaining three months of fiscal 2018$801
20192,628
20201,737
2021944
2022464
202381
Total intangible assets, net$6,655
Remaining six months of fiscal 2021$38,589
fiscal 202269,074
fiscal 202366,722
fiscal 202466,211
fiscal 202566,160
fiscal 2026 and thereafter259,128
Total amortization expense$565,884
Accrued Compensation
Accrued compensation consists of the following (in thousands):
As of
July 31,
2020		January 31,
2020
Accrued salaries, benefits and commissions$20,478 $27,067 
Accrued bonuses8,903 13,409 
Accrued compensation-related taxes17,022 15,205 
Employee stock purchase plan withholdings2,681 2,732 
Other(1)
6,582 3,413 
Total accrued compensation$55,666 $61,826 
 As of
 October 31, 2017 January 31, 2017
Accrued salaries and benefits$3,497
 $2,330
Accrued bonuses14,663
 15,338
Accrued commissions8,827
 11,856
Employee stock purchase plan withholdings7,689
 —
Accrued compensation-related taxes and other5,353
 3,852
Total accrued compensation$40,029
 $33,376

(1) Other consists primarily of amounts owed for severance-related benefits.
Other Accrued Liabilities
Other accrued liabilities consistsconsist of the following (in thousands):
As of
July 31,
2020		January 31,
2020
Accrued professional costs$3,590 $6,182 
Accrued taxes4,109 5,164 
Accrued travel477 1,574 
Other (1)
11,407 9,377 
Total other accrued liabilities$19,583 $22,297 
 As of
 October 31, 2017 January 31, 2017
Accrued taxes$2,383
 $1,585
Deferred real estate costs446
 47
Accrued professional costs4,250
 2,147
Customer deposits778
 301
Deferred sublease income405
 861
Accrued self-insurance costs1,307
 746
Other7,362
 4,231
Total other accrued liabilities$16,931
 $9,918
(1) Other includes amountsamounts owed to third‑partythird-party vendors that provide marketing, corporate event planning, cloud-computing services and cloud‑computing services.self-insurance costs.

6.
7.Leases
We have entered into various non-cancelable operating lease agreements for our facilities. Our leases have various expiration dates through September 2031. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.
Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term is determined to be the non-cancelable period including any lessee renewal options which are considered to be reasonably certain of exercise. The interest rate implicit in the lease contracts is typically not readily determinable. As such, we utilized the appropriate incremental
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borrowing rate based on information available at the commencement date, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment.
Components of lease expense are summarized as follows (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Operating lease cost$11,391 $11,583 $22,692 $22,898 
Short-term lease cost480 628 959 1,199 
Sublease income(3,605)(3,968)(7,527)(7,923)
Net lease cost$8,266 $8,243 $16,124 $16,174 
Lease term and discount rate information are summarized as follows:
As of
July 31,
2020		January 31,
2020
Weighted Average Remaining Lease Term (years)6.46.8
Weighted Average Discount Rate6.0 %6.0 %

Maturities of lease liabilities as of July 31, 2020 are as follows (in thousands):
Minimum Lease Payments, Gross
       Remaining six months of fiscal 2021$10,215
       fiscal 202241,195
       fiscal 202337,250
       fiscal 202437,657
       fiscal 202536,821
       fiscal 2026 and thereafter87,784
Total lease payments$250,922
        Less imputed interest(47,954)
Present value of lease liabilities$202,968

8. Commitments and Contingencies
Letters of Credit
As of both OctoberJuly 31, 20172020 and January 31, 2017,2020, we had a total of $19.9$19.7 million and $16.8$19.9 million, respectively, in letters of credit outstanding in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through 2027.
Operating LeasesLegal Proceedings
On June 7, 2019, a purported class action complaint was filed in the United States District Court for the Northern District of California, entitled Christie v. Cloudera, Inc., et al., Case No. 5:19-cv-3221-LHK. The complaint named as defendants Cloudera, its former Chief Executive Officer, its Chief Financial Officer and a former officer and director, asserting alleged class claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act) and SEC Rule 10b-5. Two substantially similar class action complaints, entitled Zarantonello v. Cloudera, Inc., et al., Case No. 5:19-cv-4007-LHK, and Dvornic v. Cloudera, Inc., et al., Case No. 5:19-cv-4310-LHK, were subsequently filed against the same defendants in the same court on July 12, 2019 and July 26, 2019, respectively. The suits have been consolidated under the
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name, In re Cloudera, Inc. Securities Litigation, Case No. 5:19-cv-3221-LHK. The court subsequently appointed lead plaintiffs and lead counsel, and a consolidated amended complaint was filed on February 14, 2020. The consolidated amended complaint asserted claims against the Company and 3 individual defendants under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, based on allegedly false and misleading statements between April 28, 2017 and June 5, 2019. It also added as defendants 10 current or former directors or officers of the Company and Intel Corporation and asserted claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, on behalf of all persons who acquired Cloudera stock pursuant or traceable to the S-4 registration statement filed in connection with Cloudera’s January 2019 merger with Hortonworks, and alleged that the registration statement contained untrue statements of material fact and omitted material facts. The complaint sought, among other things, an award of damages and attorneys’ fees and costs. Cloudera believes that the allegations in the action are without merit. On March 18, 2020, the court vacated its prior order appointing lead plaintiffs and lead counsel and reopened the lead plaintiff process. On July 27, 2020, the court appointed new lead plaintiffs and lead counsel. A further amended complaint is schedule to be filed on September 22, 2020.
On June 7, 2019, a purported class action complaint was filed in the Superior Court of California, County of Santa Clara, entitled Lazard v. Cloudera, Inc., et al., Case No. 19CV348674. The complaint named as defendants Cloudera, 13 individuals who are current or former directors or officers of the Company, and Intel Corporation. The complaint alleged that the registration statement contained untrue statements of material fact and omitted material facts. Two substantially similar suits, entitled Franchi v. Cloudera, Inc., et al., Case No. 19CV348790, and Cannizzo v. Cloudera, Inc., et al., Case No. 19CV348974, were subsequently filed in the same court on June 11, 2019 and June 14, 2019, respectively. The suits have been consolidated under the name In re Cloudera, Inc. Securities Litigation, Lead Case No. 19CV348674 and the consolidated amended complaint purports to assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 on behalf of all persons who acquired Cloudera stock pursuant or traceable to the S-4 registration statement filed in connection with Cloudera’s January 2019 merger with Hortonworks, and alleges that the registration statement contained untrue statements of material fact and omitted material facts. Plaintiffs seek, among other things, an award of damages and attorneys’ fees and costs. On July 1, 2020, the court overruled the Company’s demurrer to the consolidated amended complaint. On August 18, 2020, a purported shareholder class action captioned Stahl v. Cloudera, Inc., et al., Case No. 20CV369480 was filed in the Superior Court of California, County of Santa Clara. The Stahl complaint is substantially similar to the consolidated state court complaint and asserts the same claims against the same defendants on behalf of the same purported class. Cloudera believes that the allegations in the lawsuits are without merit.
On July 30, 2019, a purported shareholder derivative complaint was filed in the United States District Court for the District of Delaware, entitled Lee, et al. v. Cole, et al., Case No. 1:19-cv-01422-LPS. The complaint names as defendants 11 individuals who are current or former directors or officers of the Company, names the Company as a nominal defendant, and purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty, unjust enrichment, and alleged violation of Sections 10(b) and 20(a) of the Exchange Act. On September 5, 2019, a purported shareholder derivative complaint was filed in the United States District Court for the District of Delaware, entitled Slattery v. Reilly, et al., Case No. 1:19-cv-01662-LPS. The complaint names as defendants 13 individuals who are current or former directors or officers of the Company, names the Company as a nominal defendant, and purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty, unjust enrichment, and alleged violations of Section 10(b), 14 and 20(a) of the Exchange Act. On October 16, 2019, a purported shareholder derivative complaint was filed in the United States District Court for the District of Delaware, entitled Frentzel v. Bearden, et al., Case No. 1:19-cv-01962-LPS. The complaint names as defendants 13 individuals who are current or former directors or officers of the Company, and names the Company as a nominal defendant, and purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty, alleged violations of Section 14 of the Exchange Act, insider selling and misappropriation of information. All 3 derivative actions are based on allegations that are substantially similar to those in the class actions filed in the United States District Court for the Northern District of California, described above. All three derivative actions seek, among other things, an award of damages on behalf of the Company, corporate governance reforms and attorneys’ fees and costs. The Slattery and Frentzel actions additionally seek disgorgement on behalf of the Company. The suits have been consolidated under the name, In re Cloudera, Inc. Stockholder Derivative Litigation, Case No. 1:19-cv-01422-LPS. A consolidated amended complaint has not yet been filed.
On September 3, 2019, a purported shareholder derivative complaint was filed in the United States District Court for the Northern District of California, entitled Chen v. Reilly, et al., Case No. 5:19-cv-05536-LHK. That complaint names as defendants 13 individuals who are current or former directors or officers of the Company, names the Company as a nominal defendant, and purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and alleged violation of Section 14(a) of the Exchange Act. On
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September 10, 2019, a purported shareholder derivative complaint that is substantially similar to the Chen action and is brought against the same defendants, was filed in the United States District Court for the Northern District of California, entitled Fu v. Reilly, et al., Case No. 5:19-cv-05705-LHK. Both derivative actions are based on allegations that are substantially similar to those in the class actions filed in the United States District Court for the Northern District of California, described above. Both derivative actions seek, among other things, an award of damages on behalf of the Company, corporate governance reforms and attorneys’ fees and costs. The suits have been consolidated under the name, In re Cloudera, Inc. Derivative Litigation, Case No. 5:19-cv-05536-LHK. A consolidated amended complaint has not yet been filed and the case is currently stayed.
In the ordinary course of business, we are or may be involved in a variety of litigation matters, suits, investigations, and proceedings, including actions with respect to intellectual property claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters. Regardless of the outcome, these litigation matters can have an adverse impact on us because of defense costs, diversion of management resources, harm to reputation, and other factors. Future litigation may be necessary to defend ourselves, or our customers or partners on indemnity matters, by determining the scope, enforceability and validity of third-party proprietary rights or by establishing our proprietary rights. Further, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on us because of defense costs, potential negative publicity, diversion of management resources and other factors. While we are not aware of other pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on our business, consolidated financial position, results of operations or cash flows, our analysis of whether a claim may proceed to litigation cannot be predicted with certainty, nor can the results of litigation be predicted with certainty. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows in a particular period or subject us to an injunction that could seriously harm our business.
We lease facilities space under non‑cancelable operating leases with various expiration dates. Future minimum lease paymentsrecord a provision for contingent losses when it is both probable that a liability has been incurred and sublease proceeds under non-cancelable operating leases at October 31, 2017 are as follows (in thousands, by fiscal year):
 Minimum Lease Payments Sublease Rental Proceeds Net Minimum Lease Payments
Remaining three months of fiscal 2018$4,720
 (3,269) 1,451
201933,958
 (13,292) 20,666
202035,171
 (13,690) 21,481
202135,256
 (14,098) 21,158
202231,740
 (10,858) 20,882
2023 and thereafter162,502
 (4,388) 158,114
Total$303,347
 $(59,595) $243,752
In February 2017, we entered into a new sublease agreementthe amount of the loss can be reasonably estimated. With respect to sublet office space in Palo Alto, California. The sublease has a 45 month term commencingour outstanding legal matters, our management believes that the amount or estimable range of possible loss will not, either individually or in the third quarteraggregate, have a material adverse effect on our business, consolidated financial position, results of fiscal 2018. Rental proceeds committed under this sublease are reflected aboveoperations, or cash flows. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in the amountsexcess of $1.0 million in fiscal 2018, $4.0 million in fiscal 2019, $4.1 million in fiscal 2020, $4.3 million in fiscal 2021 and $0.7 million in fiscal 2022.
In June 2017, we entered into a new non‑cancelable operating lease agreement to rent office space in San Francisco, California. The lease has an 87 month term, commences in January 2018 and ends in April 2025 with an option to renew for an additional 60 months. Total minimum lease payments under the lease agreement, included in

the table above, are $34.5 million,management’s expectations, our results of which $0.4 million was required to be prepaid upon execution of the lease agreement.
Rental expense related to our non‑cancelable operating leases was approximately $4.8 million and $2.1 million for the three months ended October 31, 2017 and 2016, respectively, and $10.5 million and $6.2 million for the nine months ended October 31, 2017 and 2016, respectively.
Deferred rent
We account for operating leases containing predetermined fixed increases of the base rental rate during the lease term on a straight‑line basis over the lease term. We recorded the difference between amounts charged to operations and amounts payable under our operating leases as deferred rentfinancial condition including in the consolidated balance sheets.a particular reporting period, could be materially adversely affected.
Indemnification
From time to time, we enter into certain types of contracts that contingently require us to indemnify various parties against claims from third parties. These contracts primarily relate to (i) certain real estate leases under which we may be required to indemnify property owners for environmental and other liabilities and other claims arising from our use of the applicable premises, (ii) our amended and restated bylaws, under which we must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship with us, (iii) contracts under which we must indemnify directors and certain officers for liabilities arising out of their relationship with us, (iv) contracts under which we may be required to indemnify customers or partners against certain claims, including claims from third parties asserting, among other things, infringement of their intellectual property rights, and (v) procurement, consulting, or license agreements under which we may be required to indemnify vendors, consultants or licensors for certain claims, including claims that may be brought against them arising from our acts or omissions with respect to the supplied products, technology or services. From time to time, we may receive indemnification claims under these contracts in the normal course of business. In addition, under these contracts we may have to modify the accused infringing intellectual property and/or refund amounts received.
In the event that one or more of these matters were to result in a claim against us, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on our future business, operating results or financial condition. It is not possible to determine the maximum potential amount under these contracts due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.
We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and certain officers.
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To date, we have not incurred any material costs, and have not accrued any liabilities in the consolidated financial statements as a result of these provisions.
Contingencies
In the ordinary course
9.  Common Stock Repurchases
On March 3, 2020, our board of business, we are or may be involved indirectors authorized a varietyshare repurchase program of litigation matters, suits, investigations, and proceedings, including actions with respectup to intellectual property claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters. Regardless$100.0 million of the outcome, these litigation matters can have an adverse impact on us because of defense costs, diversion of management resources, harm to reputation, and other factors. In addition, it is possible that an unfavorable resolution of one or more such litigation matters could, in the future, materially and adversely affect our financial position, results of operations, and cash flows in a particular period or subject us to an injunction that could seriously harm our business.
We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to our outstanding legal matters management believes that the amount or estimable range of possible loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against

us for amounts in excess of management’s expectations, our results of operations and financial condition including in a particular reporting period, could be materially adversely affected.
7.    Stockholders' Equity
Convertible Preferred Stock
There were noCompany’s outstanding shares of convertible preferred stock as of October 31, 2017. Immediately priorcommon stock. Share repurchases may be made through open market purchases, block trades and/or privately negotiated transactions in compliance with Rule 10b-18 promulgated under the Exchange Act, subject to the closing of our IPO on May 3, 2017, all shares of our outstanding redeemable convertible preferred stock automatically converted into an aggregate of 74,907,415market conditions, applicable legal requirements, and other relevant factors. Repurchases may also be made under Rule 10b5-1 plans, which permit shares of common stock to be repurchased through pre-determined criteria. The timing, volume and we reclassified $657.7 million from temporary equity to additional paid in capital on our condensed consolidated balance sheet.
Preferred Stock
In March 2017, our boardnature of directors approved an increase to our authorized preferred stock to become effective on the closingrepurchases will be at the discretion of our IPO. At Octobermanagement based on their evaluation of the capital needs of the Company, market conditions, applicable legal requirements and other factors. The program does not have an expiration date, and it may be suspended or discontinued at any time. For the six months ended July 31, 2017 there were 20,000,000 shares of preferred stock, par value $0.00005, authorized and no shares of preferred stock issued and outstanding.
Common Stock
In March 2017 and April 2017, our board of directors and stockholders, respectively, approved an increase2020, we used $26.0 million to our authorized common stock. At October 31, 2017 there were 1,200,000,000 shares of common stock, par value $0.00005, authorized and 140,492,231repurchase 3.9 million shares of common stock issued and outstanding. At Januaryat an average repurchase price of $6.56 per share under the repurchase program. As of July 31, 2017, there2020, there was approximately $74.0 million of authorized funds remaining under the repurchase program. NaN shares were 160,000,000 shares of common stock, par value $0.00005, authorized and 38,156,688 shares of common stock issued and outstanding.repurchased during the three months ended July 31, 2020.

8.    Stock Option Plans
10.  Stock-Based Compensation
We maintain two share-based2 stock-based compensation plans: the 2017 Equity Incentive Plan (2017 Plan), and the 2008 Equity Incentive Plan (2008 Plan) and, collectively with the 2017 Plan,referred to as the Stock Plans. In March 2017, our board of directors adopted our 2017 Plan, which our stockholders approved in March 2017. The 2017 Plan became effective on April 27, 2017, the effective date of our IPO, and serves as the successor to our 2008 Plan. We do not expect to grant any additional awards under the 2008 Plan. Outstanding awards under the 2008 Plan continue to be subject to the terms and conditions of the 2008 Plan.
In March 2017, we increased the number of shares of common stock reserved for grant under the 2008 Plan by 2,000,000 shares.
In March 2017, we adopted the 2017 Plan with a reserve of 30,000,000 shares of our common stock for issuance under our 2017 Plan, plus an additional number of shares of common stock equal to any shares reserved but not issued or subject to outstanding awards under our 2008 Plan on the effective date of our 2017 Plan, plus, on and after the effective date of our 2017 Plan, (i) shares that are subject to outstanding awards under the 2008 Plan which cease to be subject to such awards, (ii) shares issued under the 2008 Plan which are forfeited or repurchased at their original issue price, and (iii) shares subject to awards under the 2008 Plan that are used to pay the exercise price of a stock option or withheld to satisfy the tax withholding obligations related to any award. The number of shares reserved for issuance under our 2017 Plan will increaseincreases automatically on the first day of February of each calendar year during the term of the 2017 Plan by a number of shares of common stock equal to the lesser of (i) 5% of the total outstanding shares of our common stock as of the immediately preceding January 31st31 or (ii) a number of shares determined by our board of directors.
On February 1, 2020, the number of shares reserved for issuance under the 2017 Plan increased automatically by 14,758,388 additional shares. As of OctoberJuly 31, 20172020, there are 73,373,382were 23,520,676 shares of common stock reserved and available for future issuance under the Stock Plans.

Stock Options
The Stock Plans provide for stock options to be granted at an exercise price not less than 100% of the fair market value at the grant date as determined by our board of directors, unless, with respect to incentive stock options, the optionee is a 10% stockholder, in which case the stock option price will not be less than 110% of such fair market value. Stock options granted generally have a maximum term of ten years from the grant date, are exercisable upon vesting unless otherwise designated for early exercise by the board of directors at the time of grant, and generally vest over a period of three to four year period,years, with 25% vesting after one year and then ratably on a monthly basis for the remaining two to three years.
The following tables summarizetable summarizes stock option activity and related information under the Stock Plans:
Options Outstanding
Number of Shares
(in thousands)		Weighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (Years)Aggregate
Intrinsic 
Value
(in thousands)
Balance — January 31, 202013,530 $5.96 2.1$70,057 
Exercised(7,837)3.31 — — 
Canceled(704)13.62 — — 
Balance — July 31, 20204,989 9.04 3.418,109 
  Stock Options
Outstanding		 Weighted-
Average
Exercise
Price		 Weighted-Average Remaining
Contractual
Term
(Years)		 Aggregate
Intrinsic
Value
        (in thousands)
Balance — January 31, 2017 23,239,679
 $4.67
 6.0
 $319,016
Granted 47,400
 20.10
 —
 —
Exercised (1,529,777) 2.31
 —
 —
Canceled (268,560) 13.51
 —
 —
Balance — October 31, 2017 21,488,742
 $4.76
 5.2
 $227,510
The total intrinsic value of stock options exercised during the nine months ended October 31, 2017 and 2016 was $21.5 million and $16.2 million, respectively. The intrinsic value is the difference between the current fair market value of the stock for accounting purposes at the time of exercise and the exercise price of the stock option. As we have accumulated net operating losses, no future tax benefit related to stock option exercises has been recognized.
The weighted‑average grant‑date value for purposes of recognizing stock‑based compensation expense of employee stock options granted during the nine months ended October 31, 2017 and 2016 was $8.67 and $10.13 per share, respectively.
The unamortized stock‑basedstock-based compensation expense for stock options of $14.7$0.1 million at Octoberas of July 31, 20172020 will be recognized over the average remaining vesting period of 1.60.3 years.
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Restricted Stock Units
We issue RSUsrestricted stock units (RSUs) to employees and directors under the Stock Plans. For new employee grants, the RSUs generally meet the service‑basedservice-based condition over a four-year period, with 25% met after one year and then ratably on a quarterly basis for the remaining three years. For continuing employee grants, the RSUs generally meet the service‑basedservice-based condition pro‑ratapro-rata quarterly over the four‑yeara period (without a one‑year cliff).of three years to four years.
The employee RSUs issued prior to our IPOfollowing table summarizes RSU activity and related information under the 2008 Plan have two vesting conditions: (1) a service‑based condition and (2) a liquidity event‑related performance condition which is considered a performance‑based condition. On March 8, 2017, our board of directors modified the terms of the majority of our RSUs. Prior to the modification, if the liquidity event‑related performance condition was an IPO, employees were required to continue to provide service for six months following the effective date of an IPO. The modification removed the requirement, for the majority of RSUs, that the RSU recipient must continue to provide service for six months following the effective date of an IPO in order to vest in the award, with such shares to be issued on a date to be determined by our board of directors. All other significant terms of the RSUs remained unchanged. The modification established a new measurement date for these modified RSUs.Stock Plans:
The liquidity event‑related performance condition was achieved for the majority of our RSUs and became probable of being achieved for the remaining RSUs on April 27, 2017, the effective date of our IPO. We recognized stock‑based compensation expense using the accelerated attribution method with a cumulative catch‑up of stock‑based compensation expense in the amount of $181.5 million attributable to service prior to such effective date.

Restricted stock activity for our Stock Plans is as follows:
 Restricted Stock Units Outstanding
 Number of
Restricted
Stock Units		 Weighted-
Average
Grant Date
Fair Value
Per Share
Balance —January 31, 201721,374,022
 $22.36
Granted5,027,626
 16.80
Canceled(1,384,357) 15.53
Vested(8,359,609) 15.06
Balance —October 31, 201716,657,682
 $15.58
Restricted Stock Units Outstanding
Number of RSUs
(in thousands)		Weighted-Average Grant Date Fair Value Per Share
Balance — January 31, 202038,584 $10.85 
Granted8,683 9.23 
Canceled(4,336)11.38 
Vested and converted to shares(12,096)9.54 
Balance — July 31, 202030,835 10.84 
The unamortized stock‑basedstock-based compensation expense for RSUs of $142.8$298.8 million at Octoberas of July 31, 20172020 will be recognized over the average remaining vesting period of 1.72.3 years.
2017 Employee Stock Purchase Plan
In March 2017, we adopted our 2017 Employee Stock Purchase Plan (ESPP). The ESPP became effective on April 27, 2017, the effective date of our IPO. Our ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the United States Internal Revenue Code of 1986, as amended (Code). Purchases will be accomplished through participation in discrete offering periods. The firstEach offering period andconsists of a six-month purchase period began on April 27, 2017 and will end on December 20, 2017 (or such other date determined by our board of directors or our compensation committee). Each subsequent offering period will be for six months (commencing each June 21 and December 21) and will consist of one six‑month purchase period, unless otherwise determined by our board of directors or our compensation committee.
Under our ESPP, eligible employees will be able to acquire shares of our common stock by accumulating funds through payroll deductions. Our employees generally are eligible to participate in our ESPP if they are employed by us for at least 20 hours per week and more than five months in a calendar year. Employees who are 5% stockholders, or would become 5% stockholders as a result of their participation in our ESPP, are ineligible to participate in our ESPP. We may impose additional restrictions on eligibility. Our eligible employees are able to select a rate of payroll deduction between 1% and 15% of their base cash compensation. The purchase price for shares of our common stock purchased under our ESPP is 85% of the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of each purchase period in the applicable offering period. No participant has the right to purchase shares of our common stock in an amount, when aggregated with purchase rights under all our employee stock purchase plans that are also in effect in the same calendar year(s), that has a fair market value of more than $25,000, determined as of the first day of the applicable purchase period, for each calendar year in which that right is outstanding. In addition, no participant is permitted to purchase more than 2,500 shares during any one purchase period or such lesser amount determined by our compensation committee or our board of directors. Once an employee is enrolled in our ESPP, participation will be automatic in subsequent offering periods. An employee’s participation automatically ends upon termination of employment for any reason..
We initially reserved 3,000,000 shares of our common stock for issuance under our ESPP. The number of shares reserved for issuance under our ESPP will increaseincreases automatically on February 1st1 of each of the first 10 calendar years following the first offering date by the number of shares equal to the lesser of either (i) 1% of the total outstanding shares of our common stock as of the immediately preceding January 31st31 (rounded to the nearest whole share) or (ii) a number of shares of our common stock determined by our board of directors. AsOn February 1, 2020, the number of October 31, 2017, $7.7 million has been withheld on behalf of employeesshares reserved for a future purchaseissuance under the ESPP and is recorded in accrued compensation.

increased automatically by 2,951,677 additional shares. As of July 31, 2020, the total number shares available for grant under the ESPP was 5,057,542 shares.
9.
11.Income taxesTaxes
Our quarterly income taxes reflect an estimate of our corresponding year’s annual effective tax rate and include, when applicable, adjustments for discrete items. For the ninethree months ended OctoberJuly 31, 2017,2020 and 2019, our tax provision was $1.9 million and $1.2 million, compared to $1.4respectively. For the six months ended July 31, 2020 and 2019, our tax provision was $3.8 million for the same period a year ago. Theand $4.1 million, respectively. Our tax provision for the ninethree and six months ended OctoberJuly 31, 20172020 was primarily relatesattributable to foreign income taxestaxes.
In June 2019, the Ninth Circuit Court of Appeals issued a new opinion in the case of Altera Corp. v. Commissioner, which upheld Department of Treasury regulations which require related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation. In February 2020, Altera Corp. filed a petition to appeal the decision with the Supreme Court of the United States. In June 2020, the Supreme Court denied the petition. We have reviewed this decision and determined no adjustment is required to our non-U.S. operationscondensed consolidated financial statements as our U.S. operations were in a loss position and we maintain a full valuation allowance against our U.S. deferred tax assets.result of this development.

10.    
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12. Related Party Transactions
Intel Corporation
We have been engaged in commercial transactions with Intel Corporation (Intel), a holder of our common stock, representing approximately 19% of outstanding shares as of October 31, 2017, with the right to designate a person that our board of directors must nominate for election, or nominate for re-election, to our board of directors, including a multi‑year subscription and services agreement, and a collaboration and optimization agreement. The aggregate revenue we recognized from Intel was $8.3 million and $6.2 million for the nine months ended October 31, 2017 and 2016, respectively. There was $6.0 million and $2.3 million in accounts receivable due from Intel as of October 31, 2017 and January 31, 2017, respectively. There was $5.8 million and $2.1 million in deferred revenue as of October 31, 2017 and January 31, 2017, respectively.
Cloudera Foundation
In January 2017, the Cloudera Foundation, an independent non‑profit organization, was created to provide our products, skills and people, to help solve important social problems around the world. We donated 1,175,063 shares of our common stock to the Cloudera Foundation during the fourth quarter of fiscal 2017. In conjunction with the IPO, we donated $2.4 million, or 1% of the net proceeds, to fund the Cloudera Foundation’s activities. We do not control the Cloudera Foundation’s activities, and accordingly, we do not consolidate the financial statements of the Cloudera Foundation.
Other related parties
Certain members of our board of directors currently serve on the board of directors or as an executive officer of threecertain companies that are our customers. The aggregate revenue we recognized from these customers was $5.4$2.1 million and $4.3$5.5 million for the ninethree months ended OctoberJuly 31, 20172020 and 2016,2019, respectively, and $4.0 million and $12.2 million for the six months ended July 31, 2020 and 2019, respectively. There was $0.2$1.6 million and $4.5$1.2 million in accounts receivable due from these customers as of OctoberJuly 31, 20172020 and January 31, 2017,2020, respectively. There was $5.5 million in deferred revenue as of October 31, 2017 and January 31, 2017.

11.
13. Segment Information
The results of the reportable segments are derived directly from our management reporting system and are based on our methods of internal reporting which are not necessarily in conformity with GAAP. ManagementOur management measures the performance of each segment based on several metrics, including contribution margin, as defined below. ManagementOur management does not use asset information to assess performance and make decisions regarding allocation of resources. Therefore, depreciation and amortization expense is not allocated among segments.
Contribution margin is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Segment contribution margin includes segment revenue less the related cost of sales excluding certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level. These unallocated costs include stock‑basedstock-based compensation expense, amortization of acquired intangible assets, direct sales and marketing costs, research and development costs, corporate general and administrative costs, such as legal and accounting, interest income, interest expense, and other income (expense).

and expense.
Financial information for each reportable segment was as follows (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Revenue:
Subscription$191,522 $164,102 $378,607 $318,940 
Services22,814 32,609 46,189 65,239 
Total revenue$214,336 $196,711 $424,796 $384,179 
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Revenue:       
Subscription$78,105
 $52,733
 $216,762
 $144,093
Services16,464
 14,525
 47,231
 44,106
Total revenue$94,569
 $67,258
 $263,993
 $188,199

Three Months Ended October 31, Nine Months Ended October 31,Three Months Ended July 31,Six Months Ended July 31,
2017 2016 2017 20162020201920202019
Contribution margin:       Contribution margin:
Subscription$66,953 43,803
 184,340
 117,783
Subscription$170,357 $141,903 $335,877 $274,133 
Services2,011
 2,305
 6,610
 9,500
Services4,108 8,750 5,865 13,744 
Total segment contribution margin$68,964 $46,108 $190,950 $127,283Total segment contribution margin$174,465 $150,653 $341,742 $287,877 
The reconciliation of segment financial information to our loss from operations is as follows (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Segment contribution margin$174,465 $150,653 $341,742 $287,877 
Amortization of acquired intangible assets(19,676)(19,937)(39,352)(40,097)
Stock-based compensation expense(46,617)(61,733)(100,055)(110,604)
Corporate costs, such as research and development, corporate general and administrative and other(144,706)(158,080)(294,676)(330,026)
Loss from operations$(36,534)$(89,097)$(92,341)$(192,850)

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 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Segment contribution margin$68,964
 $46,108
 $190,950
 $127,283
Amortization of acquired intangible assets(1,038) (945) (2,923) (2,775)
Stock-based compensation expense(31,147) (5,317) (261,680) (16,558)
Corporate costs, such as research and development, corporate general and administrative and other(93,369) (83,834) (270,962) (234,241)
Loss from operations$(56,590) $(43,988) $(344,615) $(126,291)
Sales outside of the United States represented approximately 29%approximately 40% and 26%38% of our total revenue for the three and six months ended OctoberJuly 31, 20172020 and 2016, respectively, and 28% and 24%2019, respectively. No individual foreign country represented more than 10% of our total revenue for the nine months ended October 31, 2017 and 2016, respectively.in any period presented. All revenues from external customers are attributed to individual countries on an end‑customerend-customer basis, based on domicile of the purchasing entity, if known, or the location of the customer’s headquarters if the specific purchasing entity within the customer is unknown.
As of OctoberJuly 31, 20172020 and January 31, 2017,2020, assets located outside the United States were 2% and 3%were 4% and 5% of total assets, respectively.

12.
14.  Net Loss Per Share
The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except per share data):
Three Months Ended October 31, Nine Months Ended October 31,Three Months Ended July 31,Six Months Ended July 31,
2017 2016 2017 20162020201920202019
Numerator:       Numerator:
Net loss$(55,338) $(44,045) $(341,886) $(125,885)Net loss$(35,997)$(87,043)$(94,011)$(190,173)
Denominator:       Denominator:
Weighted-average shares used in computing net loss per share, basic and diluted138,506
 36,598
 104,551
 36,261
Weighted-average shares used in computing net loss, per share basic and dilutedWeighted-average shares used in computing net loss, per share basic and diluted300,103 276,778 297,724 274,207 
Net loss per share, basic and diluted$(0.40) $(1.20) $(3.27) $(3.47)Net loss per share, basic and diluted$(0.12)$(0.31)$(0.32)$(0.69)
The following outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have been anti‑dilutiveanti-dilutive (in thousands):
As of July 31,
20202019
Stock options to purchase common stock4,989 16,461 
Restricted stock units30,835 37,860 
Shares issuable pursuant to the ESPP777 2,544 
Total36,601 56,865 

23
 As of October 31,
 2017 2016
Redeemable convertible preferred stock on an as-if converted basis—
 74,907
Stock options to purchase common stock21,489
 23,414
Restricted stock units16,917
 15,101
Shares issuable pursuant to the ESPP925
 —
Total39,331
 113,422
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains “forward-looking statements” withinwithin the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended.amended (the Exchange Act). These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, including the impact of the current COVID-19 pandemic on our business and future financial performance, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Form 10-Q and in our other SEC filings. You should review the risk factors for a more complete understanding of the risks associated with an investment in our securities. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Our fiscal year end is January 31, and references throughout this Quarterly Report on Form 10-Q to a given fiscal year are to the twelve months ended on that date.
Overview
At Cloudera, empowers organizationswe believe that data can make what is impossible today, possible tomorrow. We empower people to become data‑driven enterprises intransform complex data into clear and actionable insights. Powered by the newly hyperconnected world. We have developedrelentless innovation of the leading modern platform for data management, machine learning and advanced analytics. We have achieved this position through extensive collaboration with the global open source community, continuouswe advance digital transformation for the world’s largest enterprises. We deliver a modern enterprise data platform to manage and secure the data lifecycle from the Edge to AI, spanning any cloud or data center. We are an enterprise data cloud company.

innovation inWe pioneered the creation of the enterprise data management technologiescloud category. An enterprise data cloud is multi-function, hybrid and by leveraging the latest advances in infrastructure including the publicmulti-cloud, secure and governed, and open and extensible. An enterprise data cloud for “big data” applications. Our pioneering hybrid open source software (HOSS) model incorporates the best of open source with our robust proprietary software to form an enterprise‑grade platform. This platform delivers an integrated suite of capabilities for data management, machine learningoffers cloud-native agility, elasticity and advanced analytics, affording customers an agile, scalable and cost‑effective solution for transforming their businesses. Offered on a subscription basis, our platform enables organizations to use vast amounts of data from a variety of sources, including the Internet of Things (IoT), to better serve and market to their customers, design connected products and services and reduce risk through greater insight from data.ease-of-use.
We generate revenue primarily from salessubscriptions and services. Please see “Components of our term‑based subscriptionsResults of our platform generally on a per node basis, whether deployed on‑premises or in the cloud. We also offer consumption‑based pricingOperations - Revenue” for cloud‑based deployments. We also generate revenue from professional services and training.further details.
We market and sell our platform to a broad range of organizations, although we focus our selling efforts on the largest 8,000 corporate enterprises globally (Global 8000) as well as large public sector organizations.globally. We target these organizations because they capture and manage the vast majority of the world’s data and operate in highly complex ITinformation technology environments. We market our platform primarily through a direct sales force while benefiting from business driven by our ecosystem of technology partners, resellers, OEMs, MSPs,original equipment manufacturers (OEMs), managed service providers, independent software vendors and systems integrators. Our total number of Global 8000 customers grew to 666 as of October 31, 2017 from 566 as of January 31, 2017.
We compile our Global 8000 list based upon the FORBES Global 2000 ranking of the top 2000 global enterprises as determined by FORBES. The remainder of our Global 8000 list is based on entities listed in Data.com as having the highest annual revenue, excluding those that are already listed in the FORBES Global 2000. For purposes of customer count, we define a customer as an entity with a unique FORBES Global 2000 or Data.com identifier and quarterly subscription revenue as of the measurement date. We update our list of Global 8000 customers periodically. Our customer count is subject to adjustments for acquisitions, spin‑offs and other market activity or other factors and previously disclosed numbers of customers are updated to allow for comparability. While we do not typically count multiple entities within a given Global 8000 customer as a new customer, we do make exceptions for holding companies and other organizations for which the FORBES Global 2000 or Data.com identifier in our judgment does not accurately represent the Cloudera customer. The FORBES Global 2000 list is updated annually in the second quarter of the calendar year and we have since updated our previously disclosed numbers of customers to allow for comparability.
We have a broad customer base that spans industries and geographies. For the three and ninesix months ended OctoberJuly 31, 20172020 and 2016,2019, no customercustomer accounted for more than 10% of our total revenue. We have significant revenue in the industries of banking and financial services, manufacturing, technology, business services, telecommunications, public sector, consumer and retail, and healthcare and life sciences verticals, and continue to expand our penetration across many other data‑intensivedata-intensive industries. Sales outside of the United States represented approximately 28%,40% and 24%38% of our total revenue for the ninethree and six months ended OctoberJuly 31, 20172020 and 2016,2019, respectively.
Our business model is based on a “land and expand” strategy designed to use the initial sale as a foothold to increase revenue per customer by increasing the amount of data and number of use cases each customer runs through our platform. After an initial purchase of our platform, we work with our customers to identify new use cases that can be developed on or moved to our platform, ultimately increasing the amount of data managed on our platform as well as the number and size of our platform deployments.

Annualized Recurring Revenue (ARR) is the primary metric that management uses to monitor customer retention and growth and to make operational decisions related to our business. ARR equals the annualized value of all recurring subscription contracts with active entitlements as of the end of the applicable period. ARR provides a normalized and composite view of customer retention, renewal and expansion as well as growth from new customers, that is a supplement to reported revenue.
To further illustrate
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As ofChange
July 31, 2020July 31, 2019Amount%
(in thousands, except percentages)
Annualized Recurring Revenue$739,355 $659,049 $80,306 12 %
The increase in ARR was primarily due to existing customers expanding their use of Cloudera products.
COVID-19 Update
The United States and the economicsglobal communities in which we operate are facing a severe challenge posed by the COVID-19 Coronavirus pandemic (COVID-19 or COVID-19 pandemic). In response to this challenge we, like many companies, have implemented and continue to focus on cost reduction initiatives in all aspects of our customer relationships, we have provided an analysisbusiness, including, but not limited to, reduced travel for employees, decreases in employee-related expenses, minimizing use of outside contractors and consultants, temporary closure of our net expansion rate. Our quarterly net subscription revenue expansion rate equals:offices and, since mid-March 2020, a requirement that our employees work remotely. We have been operating effectively under our remote work model, which we anticipate continuing for some time to ensure the safety and well-being of our employees.
We do not believe there has been a material impact from the subscription revenueeffects of the COVID-19 pandemic on our business and operations, results of operations, financial condition, cash flows, liquidity and capital resources as of and during the three and six months ended July 31, 2020.
The full extent of the future impact of the COVID-19 pandemic on our business and operating results is currently uncertain and will depend on certain developments, including the duration and spread of the outbreak; government responses to the pandemic; the impact on our customers and our sales cycles; the impact on our customer, the industry or employee events; the extent of delays in hiring and onboarding new employees; and the effect on our partners and vendors, all of which are uncertain and difficult to predict. We anticipate some near-term impact on our services business since interacting directly with customers in either a given quartersales setting or an on-site professional services setting is difficult in this environment. However, the majority of our revenues are subscription-based which we believe offers significant protection from end user customers that had subscription revenuethe COVID-19 pandemic’s economic disruptions in the same quartershort term. Accordingly, we believe that our existing financial position will allow us to manage the impact of the prior year,
divided by
the subscription revenue attributable to that same group of customers in that prior quarter.
Our net expansion rate equals the simple arithmetic average of our quarterly net subscription revenue expansion rateCOVID-19 pandemic for the four quarters ending with the most recently completed fiscal quarter. We have excluded Intel Corporation from our calculation of net expansion rate, as it is a related party. Our net expansion rate for the period ended October 31, 2017 was 135% as compared to 143% for the same period a year ago.foreseeable future.
Components of Results of Operations
Revenue
We generate revenue primarily from the sale of subscriptions for our platform that our customers deploy either on‑premises or in the cloud, as well as the sale ofand services. Subscription revenue relates to term (or time‑based) subscriptions to our platform, which includestime-based) subscription agreements for both open source and proprietary software. Our subscriptionpropriety software, including support. Subscription arrangements are typically one to three years in length and we recognize subscription revenue ratably over the termbut may be up to seven years in limited cases. Arrangements with our customers typically do not include general rights of the subscription period. Our subscription includes internet, email and phone support, bug fixes and the right to receive unspecified software updates and upgrades released when and if available during the subscription term.return. Services revenue relates to professional services for the implementation and use of our subscriptions, customermachine learning expertise and consultation, training and education services and related reimbursable travel costs. We price our subscription offerings based on the number of servers in a cluster, or nodes, core or edge devices, data under management and/or the scope of support provided. Our consulting services are priced primarily on a time and materials basis, and to a lesser extent, a fixed fee basis, and education services are generally priced based on attendance.
Cost of Revenue
Cost of revenue for subscriptions primarily consists of personnel costs including salaries, bonuses, travel costs, benefits and stock‑basedstock-based compensation for employees providing technical support for our subscription customers, allocated shared costs (including rent and information technology) and amortization of certain acquired intangible assets from business combinations. Cost of revenue for services primarily consists of personnel costs including salaries, bonuses, benefits and stock‑basedstock-based compensation, fees to subcontractors associated with service contracts, travel costs and allocated shared costs (including rent and information technology). We expect cost of revenue to increase in absolute dollars for the foreseeable future as we continue to obtain new customers and expand our relationship with existing customers. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” during the nine months ended October 31, 2017 our initial public offering (IPO) was declared effective and the performance-based condition for the restricted stock units (RSUs) was either achieved or probable of being achieved. As such we recognized a cumulative catch‑up of stock‑based compensation expense attributable to service prior to such effective date for the RSUs.
Operating Expenses
Research and Development.  Research and development expenses primarily consist of personnel costs including salaries, bonuses, travel costs, benefits and stock‑basedstock-based compensation for our research and development employees, contractor fees, allocated shared costs (including rent and information technology), supplies, and depreciation of equipment associated with
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the continued development of our platform prior to establishment of technological feasibility and the related maintenance of the existing technology. We expect our research and development expenses to increase in absolute dollars for the foreseeable future as we continue to enhance and add new technologies, features and functionality to our subscriptions. We also expect allocated shared costs to increase in future periods due to the commencement of the lease for our new headquarters in Palo Alto in July 2017. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” during the nine months ended October 31, 2017 our IPO was declared effective and the performance-based condition for the RSUs was either achieved or probable of being achieved. As such we recognized a cumulative catch‑up of stock‑based compensation expense attributable to service prior to such effective date for RSUs.

Sales and Marketing.  Sales and marketing expenses primarily consist of personnel costs including salaries, bonuses, travel costs, sales‑basedsales-based incentives, benefits and stock‑basedstock-based compensation for our sales and marketing employees. In addition, sales and marketing expenses also includesinclude costs for advertising, promotional events, corporate communications, product marketing and other brand‑buildingbrand-building activities, allocated shared costs (including rent and information technology) and amortization of certain acquired intangible assets from business combinations. Sales‑basedMost sales-based incentives are capitalized and expensed as incurred. We expect our sales and marketing expenses to increase in absolute dollars as we continue to invest in selling and marketing activities to attract new customers and expand our relationship with existing customers. As discussed in detail below, see “—Significant Impactsover the period of Stock‑based Compensation Expense,” duringbenefit from the nine months ended October 31, 2017 our IPO was declared effective and the performance-based condition for the RSUs was either achieved or probable of being achieved. As such we recognized a cumulative catch‑up of stock‑based compensation expense attributable to service prior to such effective date for RSUs.underlying contracts.
General and Administrative.  General and administrative expenses primarily consist of personnel costs including salaries, bonuses, travel costs, benefits and stock‑basedstock-based compensation for our executive, finance, legal, human resources, information technology and other administrative employees. In addition, general and administrative expenses include fees for third‑partythird-party professional services, including consulting, legal and accounting services, andmerger related costs, other corporate expenses, and allocated shared costs (including rent and information technology).  We expect our general and administrative expenses to increase in absolute dollars due to the anticipated growth of our business and related infrastructure as well as legal, accounting, insurance, investor relations and other costs associated with becoming a public company. We also expect allocated shared costs to increase in future periods due to the commencement of the lease for our new headquarters in Palo Alto in July 2017. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” during the nine months ended October 31, 2017 our IPO was declared effective and the performance-based condition for the RSUs was either achieved or probable of being achieved. As such we recognized a cumulative catch‑up of stock‑based compensation expense attributable to service prior to such effective date for RSUs.
Interest Income net
Interest income primarily relates to amounts earned on our cash and cash equivalents and marketable securities.
Other Income (Expense), net
Other income (expense), net primarily relates to foreign currency transactions and realized gains and losses on our foreign currency forward contracts, marketable securities and other non‑operatingnon-operating gains or losses.
Provision for Income Taxes
Provision for income taxes primarily consists of state andincome taxes for certain foreign income taxes. Due to cumulative losses,jurisdictions in which we maintain aconduct business. A valuation allowance against ouris established, when necessary, for any portion of deferred income tax assets. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance shouldassets where it is considered more likely than not that it will not be applied against our deferred tax assets.realized.
Significant Impacts of Stock‑Based Compensation Expense
We have granted RSUs to our employees and members of our board of directors under our 2008 Equity Incentive Plan (2008 Plan). The employee RSUs vest upon the satisfaction of both a service‑based condition and a liquidity event‑related performance condition. The service‑based vesting condition for these awards is generally satisfied pro‑rata over four years. The liquidity event‑related performance vesting condition is satisfied upon the occurrence of a qualifying event, such as the effective date of an IPO, or six months following the effective date of an IPO.
The liquidity event‑related performance condition was achieved for the majority of our RSUs and probable of being achieved for the remaining RSUs on April 27, 2017, the effective date of our IPO. We recognized stock‑based compensation expense using the accelerated attribution method with a cumulative catch‑up of stock‑based compensation expense in the amount of $181.5 million attributable to service prior to such effective date. The shares

were issued on September 27, 2017, the effective date of our follow-on offering (Follow-on Offering), to the extent the service‑based condition had been met.
Results of Operations
The following table sets forth our results of operationsRevenue
Our total revenues for the periods indicated:three and six months ended July 31, 2020 and 2019 were as follows:
Three Months Ended July 31,ChangeSix Months Ended July 31,Change
20202019Amount%20202019Amount%
(in thousands, except percentages)
Subscription$191,522 $164,102 $27,420 17 %$378,607 $318,940 $59,667 19 %
Services22,814 32,609 (9,795)(30)%46,189 65,239 (19,050)(29)%
Total revenue$214,336 $196,711 $17,625 9 %$424,796 $384,179 $40,617 11 %
As a percentage of total revenue:
Subscription89 %83 %89 %83 %
Services11 %17 %11 %17 %
Total revenue100 %100 %100 %100 %
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
 (in thousands)
Revenue:       
Subscription$78,105
 $52,733
 $216,762
 $144,093
Services16,464
 14,525
 47,231
 44,106
Total revenue94,569
 67,258
 263,993
 188,199
Cost of revenue:(1) (2)
       
Subscription14,486
 9,787
 56,173
 28,844
Services18,640
 12,652
 69,035
 35,969
Total cost of revenue33,126
 22,439
 125,208
 64,813
Gross profit61,443
 44,819
 138,785
 123,386
Operating expenses:(1) (2)
       
Research and development38,095
 25,968
 176,770
 77,118
Sales and marketing64,061
 54,206
 236,639
 147,250
General and administrative15,877
 8,633
 69,991
 25,309
Total operating expenses118,033
 88,807
 483,400
 249,677
Loss from operations(56,590) (43,988) (344,615) (126,291)
Interest income, net1,501
 695
 3,590
 2,143
Other income (expense), net(490) (296) 349
 (311)
Net loss before benefit from (provision for) income taxes(55,579) (43,589) (340,676) (124,459)
Benefit from (provision for) income taxes241
 (456) (1,210) (1,426)
Net loss$(55,338) $(44,045) $(341,886) $(125,885)
___________
(1)Amounts include stock‑based compensation expense as follows:

 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
 (in thousands)
Cost of revenue – subscription$2,750
 $343
 $22,143
 $1,051
Cost of revenue – services4,187
 432
 28,414
 1,363
Research and development9,110
 1,313
 90,139
 4,326
Sales and marketing10,070
 1,463
 82,748
 4,496
General and administrative5,030
 1,766
 38,236
 5,322
Total stock‑based compensation expense$31,147
 $5,317
 $261,680
 $16,558

(2)Amounts include amortization of acquired intangible assets as follows:

 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
 (in thousands)    
Cost of revenue – subscription$584
 $514
 $1,608
 $1,483
Sales and marketing454
 431
 1,315
 1,292
Total amortization of acquired intangible assets$1,038
 $945
 $2,923
 $2,775

The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Revenue:       
Subscription83 % 78 % 82 % 77 %
Services17
 22
 18
 23
Total revenue100
 100
 100
 100
Cost of revenue(1) (2): 
       
Subscription15
 15
 21
 15
Services20
 18
 26
 19
Total cost of revenue35
 33
 47
 34
Gross margin65
 67
 53
 66
Operating expenses(1) (2):
       
Research and development40
 39
 67
 41
Sales and marketing68
 80
 90
 78
General and administrative17
 13
 26
 14
Total operating expenses125
 132
 183
 133
Loss from operations(60) (65) (130) (67)
Interest income, net2
 1
 1
 1
Other income (expense), net(1) —
 —
 —
Net loss before benefit from (provision for) income taxes(59) (64) (129) (66)
Benefit from (provision for) income taxes—
 (1) (1) (1)
Net loss(59)% (65)% (130)% (67)%
___________
(1)Amounts include stock‑based compensation expense as a percentage of total revenue as follows:
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Cost of revenue – subscription3% 1% 8% 1%
Cost of revenue – services4
 1
 11
 1
Research and development10
 2
 34
 2
Sales and marketing11
 2
 31
 2
General and administrative5
 2
 15
 3
Total stock‑based compensation expense33% 8% 99% 9%

(2)Amounts include amortization of acquired intangible assets as a percentage of total revenue as follows:
 Three Months Ended October 31, Nine Months Ended October 31,
 2017 2016 2017 2016
Cost of revenue – subscription1% 1% 1% 1%
Sales and marketing—
 —
 —
 —
Total amortization of acquired intangible assets1% 1% 1% 1%


Three and Nine Months Ended October 31, 2017 and 2016
Revenue
 Three Months Ended October 31, Change Nine Months Ended October 31, Change
 2017 2016 Amount % 2017 2016 Amount %
 (dollars in thousands)
Subscription$78,105
 $52,733
 $25,372
 48% $216,762
 $144,093
 $72,669
 50%
Services16,464
 14,525
 1,939
 13% 47,231
 44,106
 3,125
 7%
Total revenue$94,569
 $67,258
 $27,311
 41% $263,993
 $188,199
 $75,794
 40%
As a percentage of total revenue:               
Subscription83% 78%     82% 77%    
Services17% 22%     18% 23%    
Total revenue100% 100%     100% 100%    
The increase in subscription revenue for the three and ninesix months ended OctoberJuly 31, 2017,2020, as compared to the same periods aperiod in the prior fiscal year, ago, was primarily attributable to volume driven increases an increase in subscription sales to new and existing customers. Our net expansion rate for the period ended October 31, 2017 was 135% as compared to 143% for the same period a year ago.
OurThe decrease in services revenue for the three and ninesix months ended OctoberJuly 31, 2017 increased,2020, as compared to the same periods aperiod in the prior fiscal year, ago, at awas attributable to lower rate compared to the increase in our subscription revenue primarily due to our efforts to develop relationships with partners, system integrators and training vendors, resulting in a shift of the provision of such services to these partners. Customers benefit from the increased choice in partners, and we anticipate that our services revenue will continue to decreasedemand partially as a percentageresult of total revenue in future periods.COVID-19 related customer budget restrictions as well as limitation for on-site service delivery.

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Cost of Revenue, Gross Profit and Gross Margin
Three Months Ended July 31,ChangeSix Months Ended July 31,Change
20202019Amount%20202019Amount%
(in thousands, except percentages)
Cost of revenue:
Subscription$27,929 $29,075 $(1,146)(4)%$56,565 $58,412 $(1,847)(3)%
Services21,710 28,055 (6,345)(23)%47,315 59,951 (12,636)(21)%
Total cost of revenue$49,639 $57,130 $(7,491)(13)%$103,880 $118,363 $(14,483)(12)%
Gross profit$164,697 $139,581 $25,116 18 %$320,916 $265,816 $55,100 21 %
Gross margin:
Subscription85 %82 %85 %82 %
Services5 %14 %(2)%8 %
Total gross margin77 %71 %76 %69 %
Cost of revenue, as a percentage of total revenue:
Subscription13 %15 %13 %15 %
Services10 %14 %11 %16 %
Total cost of revenue23 %29 %24 %31 %
 Three Months Ended October 31, Change Nine Months Ended October 31, Change
 2017 2016 Amount % 2017 2016 Amount %
 (dollars in thousands)
Cost of revenue:               
Subscription$14,486
 $9,787
 $4,699
 48% $56,173
 $28,844
 $27,329
 95%
Services18,640
 12,652
 5,988
 47% 69,035
 35,969
 33,066
 92%
Total cost of revenue$33,126
 $22,439
 $10,687
 48% $125,208
 $64,813
 $60,395
 93%
Gross profit$61,443
 $44,819
 $16,624
 37% $138,785
 $123,386
 $15,399
 12%
Gross margin:               
Subscription81 % 81%     74 % 80%    
Services(13)% 13%     (46)% 18%    
Total gross margin65 % 67%     53 % 66%    
Cost of revenue, as a percentage of total revenue:               
Subscription15 % 15%     21 % 15%    
Services20 % 18%     26 % 19%    
Total cost of revenue35 % 33%     47 % 34%    
The increasedecrease in subscription cost of revenue for subscription for the three and six months ended OctoberJuly 31, 2017 as compared to the same period a year ago was primarily due to an increase of $2.4 million in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $1.6 million in salaries and benefits related to growth in employee headcount to support our overall expansion in customers.
Subscription gross margin was consistent at 81% in the three months ended October 31, 2017 as compared to the same period a year ago despite an increase in costs due to the recording of stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO, offset by the increase in revenue over the same period . We expect subscription gross margin to decline in the fourth quarter of fiscal 2018,2020, as compared to the same period in the prior fiscal 2017,year, was primarily due to the recordinga decrease of stock‑based compensation expense$0.9 million and $1.0 million, respectively, in facilities and office related costs. The remaining decrease was due primarily to RSUs being probable of achieving their vesting condition, whereas achievement of vesting was not probablelower payroll and payroll related costs.
The decrease in fiscal 2017 and no stock‑based compensation expense was recorded for these RSUs, partially offset by improvement in economies of scale. Excluding the impact of stock‑based compensation expense, we expect subscription gross margin to continue to improve.
The increase inservices cost of revenue for subscription for the ninethree and six months ended OctoberJuly 31, 2017 as compared to the same period a year ago was primarily due to an increase of $21.1 million in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $4.8 million in salaries and benefits related to growth in employee headcount to support our overall expansion in customers.
Subscription gross margin declined from 80% to 74% in the nine months ended October 31, 2017 as compared to the same period a year ago due to the recording of stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO.


The increase in cost of revenue for services for the three months ended October 31, 2017 as compared to the same period a year ago was primarily due to an increase of $3.8 million in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $2.1 million in salaries and benefits related to growth in employee headcount.
Services gross margin declined from 13% to negative 13% in the three months ended October 31, 2017 as compared to the same period a year ago due to the recording of stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO. We expect services gross margin to decline in in the fourth quarter of fiscal 2018,2020, as compared to the same period in the prior fiscal 2017,year, was primarily due to the recordinga decrease of stock‑based$4.2 million and $9.0 million, respectively, in employee-related costs including salaries, stock-based compensation, expense related to RSUs being probabletravel, benefits and IT allocations as a result of achieving their vesting condition, whereas achievementlower headcount, and a decrease of vesting was not probable$1.8 million and $2.9 million, respectively, in fiscal 2017 and no stock‑based compensation expense was recorded for these RSUs, partially offset bythird party contractor services.
Subscription gross margin increased utilization of chargeable consultants.
The increase in cost of revenue for services for the ninethree and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, ago was primarily due to an increase of $27.1 million in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $5.1 million in salaries and benefits related to growth in employee headcount.the business, better margin from reduced costs, and one-time valuation adjustments made in prior fiscal year related to deferred subscription revenue obligations from our merger with Hortonworks.
Services gross margin declined from 18% to negative 46% indecreased for the ninethree and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, agoprimarily due to a decrease in services revenue by approximately 30% in both periods, while the recordingcost of stock‑based compensation expense resulting from the achievementservices revenue decreased by 23% and 21%, respectively, as explained above.
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Table of the liquidity event‑related performance condition on the effective date of the IPO.Contents
Operating Expenses
Three Months Ended October 31, Change Nine Months Ended October 31, ChangeThree Months Ended July 31,ChangeSix Months Ended July 31,Change
2017 2016 Amount % 2017 2016 Amount %20202019Amount%20202019Amount%
(dollars in thousands)(in thousands, except percentages)
Research and development$38,095
 $25,968
 $12,127
 47% $176,770
 $77,118
 $99,652
 129%Research and development$62,304 $65,742 $(3,438)(5)%$126,520 $129,915 $(3,395)(3)%
Sales and marketing64,061
 54,206
 $9,855
 18% 236,639
 147,250
 $89,389
 61%Sales and marketing105,760 112,491 (6,731)(6)%218,895 231,874 (12,979)(6)%
General and administrative15,877
 8,633
 $7,244
 84% 69,991
 25,309
 $44,682
 177%General and administrative33,167 50,445 (17,278)(34)%67,842 96,877 (29,035)(30)%
Total operating expenses$118,033
 $88,807
 $29,226
 33% $483,400
 $249,677
 $233,723
 94%Total operating expenses$201,231 $228,678 $(27,447)(12)%$413,257 $458,666 $(45,409)(10)%
Operating expenses, as a percentage of total revenue:               Operating expenses, as a percentage of total revenue:
Research and development40% 39%     67% 41%    Research and development29 %33 %30 %34 %
Sales and marketing68% 80%     90% 78%    Sales and marketing49 %57 %51 %60 %
General and administrative17% 13%     26% 14%    General and administrative16 %26 %16 %25 %
Total operating expenses125% 132%     183% 133%    Total operating expenses94 %116 %97 %119 %
Research and Development
The increasedecrease in research and development expenses for the three and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, ago was primarily due to an increasea decrease of $7.8$1.5 million and $1.1 million, respectively, in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPOcloud computing costs. The remaining decrease was due primarily to reduced travel cost and an increase of $2.3 million in employee‑related costs including salaries, benefits and travel costs, associated with the growth in employee headcount.

The increase in research and development expenses for the nine months ended October 31, 2017 as compared to the same period a year ago was primarily due to an increase of $85.8 million in stock‑based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $10.0 million in employee‑related costs including salaries, benefits and travel costs, associated with the growth in employee headcount.lower facilities expenses.
Sales and Marketing
The increasedecrease in sales and marketing expenses for the three and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, ago was primarily due to an increasereduced cost related to travel, marketing programs and events, and lower headcount. Travel cost declined $4.2 million and $10.0 million, respectively, of $8.6which a majority is from COVID-19 related travel restrictions. Cost related to marketing programs and events declined $1.9 million in stock‑basedand $6.7 million, respectively, due partially to synergies from our merger with Hortonworks enabling us to combine and eliminate certain programs and events. Payroll and related costs, excluding variable compensation, expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPO.
The increase in sales and marketing expenses for the nine months ended October 31, 2017 as compared to the same period a year ago was primarily down due to an increase of $78.3 millionreduced headcount. These reductions were partially offset by increased variable compensation from one-time valuation adjustments made in stock‑based compensation expense resultingthe prior fiscal year related to deferred commission expenses from the achievement of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $9.2 million in employee‑related costs including salaries, incentive‑based compensation, benefits and travel costs, associatedour merger with the growth in employee headcount to support our overall sales activities.Hortonworks.
General and Administrative
The increasedecrease in general and administrative expenses for the three and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, ago was primarily due to an increase of $3.3reduced cost related to consulting and contractor services and stock-based compensation. Consulting and contractor services were down $7.6 million and $16.7 million, respectively, mainly driven by higher cost related to post-merger activities in stock‑basedprior fiscal year. Stock-based compensation expense resulting from the achievement of the liquidity event‑related performance condition on the effective date of the IPOwas also down by $10.6 million and an increase of $1.5$10.4 million, in employee‑related costs including salaries, benefits and travel costs, associatedrespectively, due to charges incurred with the growthdeparture of our former CEO in employee headcount to support our overall expansion an increase in professional servicesthe second quarter of $0.6 million.fiscal 2020.
The increase in general and administrative expensesInterest Income
Three Months Ended July 31,ChangeSix Months Ended July 31,Change
20202019Amount%20202019Amount%
(in thousands, except percentages)
Interest income$1,444 $3,156 $(1,712)(54)%$3,685 $6,447 $(2,762)(43)%
Interest income for the ninethree and six months ended OctoberJuly 31, 20172020, as compared to the same period ain the prior fiscal year, ago was primarilydecreased mainly due to an increasea decline in interest rates, increased funds held as cash and cash equivalents due to greater market
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volatility, and the decline in stock‑based compensation expense resulting fromweighted average maturities as we re-invested in securities with shorter maturities during the achievementsecond quarter of the liquidity event‑related performance condition on the effective date of the IPO and an increase of $4.9 million in employee‑related costs including salaries, benefits and travel costs, associated with the growth in employee headcount to support our overall expansion and a cash donation of $2.4 million, or 1% of the net proceeds from the IPO, to fund the Cloudera Foundation.fiscal 2021.
Benefit from (Provision for)Other Income Taxes(Expense), Net
Three Months Ended July 31,ChangeSix Months Ended July 31,Change
20202019Amount%20202019Amount%
(in thousands, except percentages)
Other income (expense), net$980 $104 $876 842 %$(1,517)$337 $(1,854)NM
 Three Months Ended October 31, Change Nine Months Ended October 31, Change
 2017 2016 Amount % 2017 2016 Amount %
 (dollars in thousands)
Benefit from (provision for) income taxes$241
 $(456) $697
 (153) % $(1,210) $(1,426) $216
 (15) %
(NM = Not meaningful)
The benefit from (provision for)increase in other income, taxes decreased in bothnet for the three and nine months ended OctoberJuly 31, 2017,2020, as compared to the same periods aperiod in the prior fiscal year, ago,was primarily due to anforeign currency exchange gains.
Other expense, net of $1.5 million for the six months ended July 31, 2020, as compared to other income, tax benefitnet of $0.8$0.3 million resulting from an acquisition, offset by increasesduring the same period in foreignthe prior fiscal year, was primarily due to a $2.0 million impairment charge made in the first quarter of fiscal year 2021, to write off our investment in equity securities of a privately held company.
Provision for Income Taxes
Three Months Ended July 31,ChangeSix Months Ended July 31,Change
20202019Amount%20202019Amount%
(in thousands, except percentages)
Provision for income taxes$(1,887)$(1,206)$(681)56  %$(3,838)$(4,107)$269 (7)%
The provision for income taxes and tax withholding onincreased slightly for the three months ended July 31, 2020, while remaining relatively flat for the six-month period. The increase in provision for income taxes for the three months ended July 31, 2020, as compared to the same period in the prior fiscal year, was primarily due to increased foreign sales driven by our continued international expansion into new countries.taxes.
Seasonality
We have seasonal and end‑of‑quarterend-of-quarter concentration of our sales, which impacts our ability to plan and manage cash flows and margins. Our sales vary by season with the fourth quarter typically being our largest.strongest sales quarter, and the first quarter typically being our largest collections and operating cash flow quarter. In addition, within each quarter, most sales occur in the last month of that quarter.
See “Risk Factors—Our sales cycles can be long, unpredictable and vary seasonally, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.”

Liquidity and Capital Resources
As of OctoberJuly 31, 2017,2020, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $466.0$565.4 million which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds commercial paper, and reverse repurchase agreements, and our marketable securities are comprised of U.S. agency obligations, asset‑backedasset-backed securities, corporate notes and obligations, commercial paper, municipal securities, certificates of deposit and U.S. treasury securities. To date, ourOur principal sourcessource of cash liquidity have been the net proceedsis payments we received through the sale of our common stock in our IPO in May 2017 and our Follow-on Offering in October 2017, private sales of equity securities, as well as payments receivedreceive from customers for our subscriptions and services.
On March 3, 2020, our board of directors authorized a share repurchase program of up to $100 million of the Company’s outstanding shares of common stock. Share repurchases may be made through open market purchases, block trades and/or privately negotiated transactions in compliance with Rule 10b-18 promulgated under the Exchange Act, subject to market conditions, applicable legal requirements, and other relevant factors. Repurchases may also be made under Rule 10b5-1 plans, which permit shares of common stock to be repurchased through pre-determined criteria. The timing, volume and nature of the repurchases will be at the discretion of our management based on their evaluation of the capital needs of the Company, market conditions, applicable legal requirements and other factors. The program does not have an expiration date, and it may be suspended or discontinued at any time. For the six months ended July 31, 2020, we used $26.0 million to repurchase 3.9 million shares of common stock at an average repurchase price of $6.56 per share under the repurchase
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program. As of July 31, 2020, there was approximately $74.0 million of authorized funds remaining under the repurchase program. No shares were repurchased during the three months ended July 31, 2020.
We believe that our existing liquiditycurrently available resources will be sufficient to meet our working capital and capital expenditure needscash requirements for at least the next twelve months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including the COVID-19 pandemic, our net expansion rate, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our subscriptions and services and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity-linked and debt financing arrangements. We cannot assure yoube assured that any additional financing will be available on terms favorable to us, or at all. If adequate funds are not available on acceptable terms, or at all, we may not be able to adequately fund our business plans and it could have a negative effect on our operating cash flows and financial condition.
The following table summarizes our cash flows for the periods indicated:
 Nine Months Ended October 31,
 2017 2016
 (in thousands)
Cash used in operating activities$(20,282) $(84,619)
Cash provided by (used in) investing activities(233,786) 92,960
Cash provided by financing activities244,943
 2,553
Effect of exchange rate changes340
 6
Net increase (decrease) in cash, cash equivalents and restricted cash$(8,785) $10,900
Six Months Ended July 31,
20202019
(in thousands)
Net cash provided by (used in) operating activities$100,805 $(21,520)
Net cash used in investing activities(50,117)(41,158)
Net cash used in financing activities(15,618)(6,425)
Effect of exchange rate changes463 (1,509)
Net increase (decrease) in cash, cash equivalents and restricted cash$35,533 $(70,612)
Cash Used inProvided by (Used in) Operating Activities
DuringOur largest source of operating cash flows is cash collections from our customers following the ninepurchase and renewal of their subscription agreements. Payments from customers for these subscription agreements are generally received near the beginning of the annual contract period. We also generate cash from the sales of our services offerings. Our primary uses of cash from operating activities are for employee related expenditures and leased facilities.
Operating cash flow increased during the six months ended OctoberJuly 31, 2017,2020 mainly due to cash collections on increased sales of our subscription-based offerings and lower nonrecurring costs incurred in the first half of fiscal 2020 associated with combining the Cloudera and Hortonworks businesses.
For the six months ended July 31, 2020, net cash provided by operating activities mainly consisted of our net loss of $94.0 million, adjusted for stock-based compensation expense of $100.1 million, depreciation and amortization expenses of $44.9 million, amortization of deferred costs of $33.4 million, non-cash lease expense of $22.7 million, and net cash outflow of $11.4 million from changes in assets and liabilities. The outflow from changes in assets and liabilities was primarily due to a decrease in deferred revenue of $67.2 million, cash payments of $21.2 million for operating lease liabilities, an increase of $22.3 million in deferred costs related to sales variable compensation, partially offset by a decrease in accounts receivable of $100.3 million from strong collections.
For the six months ended July 31, 2019, net cash used in operating activities was $20.3 million which was due to amainly consisted of our net loss of $341.9$190.2 million, offset by non‑cash adjustmentsadjusted for stock-based compensation expense of $271.1$110.6 million, and a decrease from net change in operating assets and liabilities of $50.5 million. Non‑cash adjustments primarily consisted of $261.7 million of stock‑based compensation, $9.7 million of depreciation and amortization and $0.7expenses of $46.2 million, in accretion andnon-cash lease expense of $22.9 million, amortization of marketable securities.deferred costs of $21.0 million, and net cash outflow of $30.8 million from changes in assets and liabilities. The net changeoutflow from changes in operating assets and liabilities was due to a decrease in accounts receivabledeferred revenue of $35.5$50.3 million, due to the timingcash payments of invoicing compared to the receipt of cash from customers,$25.0 million for operating lease liabilities, an increase in deferred revenuecosts of $14.5 million due to the timing of amounts billed to customers compared to revenue recognized during the same period, a net increase in accounts payable and accrued expenses and other liabilities of $7.1 million due to timing of payments to vendors, offset by an increase in prepaid expenses and other assets of $5.5$21.8 million, and a decreasenet cash outflow of $14.3 million from changes in accrued compensation of $1.2 million due to the timing of bonus and incentive-based compensation payments.
During the nine months ended October 31, 2016, cash used in operating activities was $84.6 million which was due to a net loss of $125.9 million offset by non‑cash adjustments of $26.5 million and a decrease from net change inother operating assets and liabilities, of $14.8 million. Non‑cash adjustments consisted of $16.6 million of stock‑based compensation, $7.5 million of depreciation and amortization and $2.4 million in accretion and amortization of marketable securities. The net change in operating assets and liabilities was due to an increase in accounts payable

and accrued expenses and other liabilities of $4.4 million due to growth in operations and timing of payments to vendors, an increase in accrued compensation of $4.3 million due to the timing of bonus and incentive-based compensation payments, an increase in deferred revenue of $3.8 million due to the receipt of cash from customers in advance of revenue recognition,partially offset by a decrease in accounts receivable of $1.9 million due$80.7 million.
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Cash Used in Investing Activities
The changes in cash flows from investing activities primarily relate to the timing of invoicing compared to the receiptour purchases, maturities and sales of our investments in marketable securities, cash from customers,acquired or used for business combinations, and a decrease of $0.4 millioninvestments in prepaid expensescapital and other assets.assets to support our growth.
Cash Provided by (Used in) Investing Activities
DuringFor the ninesix months ended OctoberJuly 31, 2017,2020, net cash used in investing activities was $233.8 million which was primarily due toconsisted of purchases of marketable securities of $514.2$273.6 million and capital expenditures for the purchasepurchases of property and equipment of $9.0$4.4 million, and an acquisition of $1.9 million, net of cash acquired,partially offset by sales and maturities of marketable securities of $291.2$227.9 million.
DuringFor the ninesix months ended OctoberJuly 31, 2016,2019, net cash provided byused in investing activities was $93.0consisted of purchases of marketable securities of $311.2 million which was due toand capital expenditures for the purchases of property and equipment of $4.7 million, partially offset by sales and maturities of marketable securities of $206.4 million, offset by purchases of marketable securities of$103.8 million,$274.8 million.
Cash Used in Financing Activities
The changes in cash flows from financing activities primarily relate to net proceeds from or used for employee stock plans and common stock repurchased under our share repurchase program as further discussed in Note 9 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
For the six months ended July 31, 2020, net cash used in business combinations, net of cash acquired, of $2.7 million, and purchases of property and equipment of $6.9 million.
Cash Provided by Financing Activities
During the nine months ended October 31, 2017, cash provided by financing activities was $244.9consisted of repurchases of common stock of $26.0 million, which was duetaxes paid related to the net proceeds from the issuanceshare settlement of commonrestricted stock in the IPOunits of $237.4$23.3 million, net proceeds from the issuance of common stock in the Follow-on Offering of $46.8 million, andpartially offset by proceeds from the exercise of stock options and ESPP withholdingsemployee stock purchase plan withholding of $11.2 million, offset by$33.6 million.
For the six months ended July 31, 2019, net cash used in financing activities consisted of taxes paid related to the net share settlement of restricted stock units of $50.5 million.
During the nine months ended October 31, 2016, cash provided$15.6 million, partially offset by financing activities was $2.6 million which was due to proceeds from the exercise of stock options.options and employee stock purchase plan withholding of $9.2 million.
Off‑BalanceOff-Balance Sheet Arrangements
Through October 31, 2017, weWe have not entered into any off‑balanceoff-balance sheet arrangements and do not have any holdings in variable interest entities.
Contractual Obligations and Commitments
There have been no material changes in our contractual obligations and commitments, as disclosed in the prospectus filed withAnnual Report on Form 10-K for the SEC pursuantyear ended January 31, 2020. See Note 7 to Rule 424(b) under the Securities Act of 1933, as amended (Securities Act), on September 28, 2017. See Note 6 to ourour condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a table of our contractual obligations and commitmentsminimum lease payments as of the date of this Quarterly Report on Form 10-Q.July 31, 2020.
Critical Accounting Policies and Estimates
 There have been no material changes Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in the United States. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We refer to accounting estimates of this type as critical accounting policies and significant judgmentsestimates.
Due to COVID-19, there has been uncertainty and estimates as compared to the critical accounting policies and estimates discloseddisruption in the final prospectus forglobal economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our Follow-on Offering datedestimates or judgments or require us to revise the carrying value of our assets or liabilities as of September 27, 2017, and filed with the SEC on September 28, 2017, pursuant to Rule 424(b)(4)under the Securities Act.
JOBS Act Accounting Election
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of4, 2020, the date we (i) are no longer an emerging growth companyof filing this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or (ii) affirmatively and irrevocably opt out of the extended transitionconditions.

period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements
See Note 21 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted asstandards.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. Information relating to quantitative and qualitative disclosures about these markets risks is described below.
Interest Rate Risk
Our primary exposure to market risk relates to interest rate changes. We had cash and cash equivalents and marketable securities totaling $466.0$565.4 million as of OctoberJuly 31, 2017,2020 and $483.2 million as of January 31, 2020, which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds commercial paper, and reverse repurchase agreements, and our marketable securities are comprised of U.S. agency obligations, asset‑backedasset-backed securities, corporate notes and obligations, commercial paper, municipal securities, certificates of deposit and U.S. treasury securities. Our investments are made for capital preservation purposes. We do not hold or issue financial instruments for trading or speculative purposes. A hypothetical 100 basis point change in interest rates would change the fair value of our investments in marketable securities by $4.0 million.$4.2 million as of July 31, 2020.
Foreign Currency Risk
Our revenue and expenses are primarily denominated in U.S. dollars. For our non‑U.S.non-U.S. operations, the majority of our revenue and expenses are denominated in other currencies such as the Euro, British Pound Sterling, Australian Dollar, Chinese Yuan, Hungarian Forint, Singapore Dollar and Chinese Yuan. Indian Rupee. Fluctuations in international currencies impact the amount of total assets, liabilities, revenues, operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. As the U.S. dollar fluctuates against certain international currencies, the amounts of revenue and deferred revenue that we report in U.S. dollars for foreign subsidiaries that transact in international currencies may also fluctuate relative to what we would have reported using a constant currency rate.
To manage exposures to currency fluctuations, we entered into foreign currency forward contracts to offset the gains and losses on our foreign currency denominated monetary assets and liabilities beginning in the first quarter of fiscal year 2021. They are intended to offset the foreign currency gains or losses associated with the underlying monetary assets and liabilities. See Note 5 in the “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. For the ninethree and six months ended OctoberJuly 31, 2017, approximately 11%2020, foreign exchange transaction gains and losses recorded as part of other income (expense), net within our revenuecondensed consolidated statements of operations were not material. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our condensed consolidated financial statements for the three and approximately 12% of aggregate cost of sales and operating expenses were generated in currencies other than U.S. dollars.
For the ninesix months ended OctoberJuly 31, 2017, we recorded a gain on foreign exchange transactions of $0.2 million. To date, we have not had a formal hedging program with respect to foreign currency, but we may do so in the future if our exposure to foreign currency should become more significant. A 10% increase or decrease in current exchange rates could have a $1.0 million impact on our financial results.2020 and 2019.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controlsDisclosure Controls and procedures.Procedures
Our management, with the participation and supervision of our chief executive officerChief Executive Officer and our chief financial officer, haveChief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (asas of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange(Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our chief executive officer and our chief financial officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure, means controls and other procedures of a company that are designed at a reasonable assurance level and are effective to provide reasonable assuranceensure that information we are required to disclosebe disclosed by a company in the reports that we fileit files or submitsubmits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SECthe Securities and Exchange Commission’s rules and forms at the reasonable assurance level. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ourthe company’s management, including our chiefits principal executive officer and chiefprincipal financial officer,officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of July 31, 2020, our disclosure controls and procedures were effective.
Changes in internal controlInternal Control over financial reporting.Financial Reporting
Our chief executive officer and chief financial officer did not identify any changes
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There was no change in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Actthat occurred during the quarter ended OctoberJuly 31, 20172020 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.reporting even though most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic on our internal controls to minimize the impact on the operating effectiveness.
Inherent limitationLimitation on the effectivenessEffectiveness of internal control.Internal Control
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating and evaluating the

controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

PART II. – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
FromFor a discussion of legal proceedings, see Note 8 in the “Notes to Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Further, from time to time, we are a party to or act as an indemnitor to our customers, partners, directors or partnersofficers on various litigation matters, and we, our customers, partners, or our customersdirectors or partnersofficers are subject to claims that arise in the ordinary course of business. In addition, we or our customers or partners have received, and may in the future receive, various types of claims including potential claims from third parties asserting, among other things, infringement of their intellectual property rights.
Future litigation may be necessary to defend ourselves, or our customers or partners on indemnity matters, by determining the scope, enforceability and validity of third‑partythird-party proprietary rights or to establishby establishing our proprietary rights. Further, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on us because of defense costs, potential negative publicity, diversion of management resources and other factors. While we are not aware of other pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on our business, consolidated financial position, results of operations or cash flows, our analysis of whether a claim may proceed to litigation cannot be predicted with certainty, nor can the results of litigation be predicted with certainty. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.
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ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider theOur operations and financial results are subject to various risks and uncertainties, including those described below, as well as the other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described belowthat could materially and adversely affect our business, financial condition, results of operations, cash flows, growth prospects, and growth prospects. In such an event, the markettrading price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently believe are not material may also impair our business, financial condition, results of operations and growth prospects.
stock.
Risks Related to our Business
We have a history of losses, and we may not become profitable in the future.
We have incurred net losses since our founding in 2008, including net losses of $341.9of $94.0 million and $187.3$336.6 million for the ninesix months ended Octoberended July 31, 20172020 and the year ended JanuaryJanuary 31, 2017,2020, respectively, and expect to continue to incur net losses for the foreseeable future. As a result, we had an accumulated deficit of $1,017.9 million at October$1.6 billion as of July 31, 2017.2020. These losses and accumulated deficit reflect the substantial investments we made to acquire new customers, commercialize our platform, participate in the open source development community and develop our proprietary software components, under our hybrid open source software (HOSS) model, and continue to develop our platform. In addition, as a result of our merger with Hortonworks, we have incurred substantial transaction and purchased intangible amortization costs. Furthermore, to the extent we are successful in increasing our customer base, we may also incur increased losses because customer acquisition costs and upfront costs associated with new customers are higher in the first year than the aggregate revenue we recognize from those new customers in the first year.

We expect to continue to make significant future expenditures related to the development and expansion of our business, including:
•investments in our research and development team and in the development of new solutions and enhancements of our platform, including contributions to the open source data management ecosystem;
•investments in sales and marketing, including expanding our sales force, increasing our customer base, increasing market awareness of our platform and development of new technologies;
•expanding of our operations and infrastructure, including internationally;
•hiring additional employees; and
•incurring costs associated with general administration, including legal, accounting and other expenses related to being a public company.
As a result of these increased expenses, we will have to generate and sustain increased revenue to be profitable in future periods. Further, in future periods, our revenue growth rate could decline, and we may not be able to generate sufficient revenue to offset higher costs and achieve or sustain profitability. If we fail to achieve, sustain or increase profitability, our business and operating results could be adversely affected.
We have a short operating history, which makes it difficult to predict our future results of operations.
We have a short operating history, which limits our ability to forecast our future results of operations and subjects us to a number of uncertainties, including our ability to plan for and anticipate future growth. Our historical revenue growth should not be considered indicative of our future performance. Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including slowing demand for our solutions, increasing competition, a decrease in the growth of our overall market, or our failure, for any reason, to continue to capitalize on growth opportunities. We have also encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market reception of our platform and HOSS model, competition from other companies, attracting and retaining customers, hiring, integrating, training and retaining skilled personnel, developing new solutions and unforeseen expenses. If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results could be adversely affected.
If the market for our data management, machine learning and analytics platform develops more slowly than we expect, our growth may slow or stall, and our operating results could be harmed.
The market for a data management, machine learning and analytics platform is relatively new, rapidly evolving and unproven. Our future success will depend in large part on our ability to penetrate the existing market for data management, machine learning and analytics platforms, as well as the continued growth and expansion of that market. It is difficult to predict customer adoption and renewals of our subscriptions, customer demand for our platform, the size, growth rate and expansion of this market, the entry of competitive products or the success of existing competitive products. Our ability to penetrate the existing market for data management, machine learning and analytics platforms and any expansion of that market depends on a number of factors, including the cost, performance and perceived value associated with our platform, as well as potential customers’ willingness to adopt an alternative approach to data collection, storage and processing. If we or other data management providers experience security incidents, loss of customer data, disruptions in delivery or other problems, the market for data management, machine learning and analytics platforms as a whole, including our solutions, may be negatively affected. Furthermore, many potential customers have made significant investments in legacy data collection, storage and processing software and may be unwilling to invest in new solutions. If data management, machine learning and analytics platforms do not achieve widespread adoption, or there is a reduction in demand caused by a lack of customer acceptance, technological challenges, weakening economic conditions, security or privacy concerns, competing technologies and products, decreases in corporate spending or otherwise, it could result in decreased revenue and our business could be adversely affected.

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We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.
The market for data management, machine learning and analytics platforms is intensely competitive and characterized by rapid changes in technology, customer requirements, industry standards and frequent new product introductions and improvements. We anticipate continued challenges from current competitors, which in many cases are more established and enjoy greater resources than us, as well as by new entrants into the industry. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.
Our main sources of current and potential competition fall into fourfive categories:
legacy data management product providers such as HP, IBM, Oracle and Teradata;
•public cloud providers who include proprietary data management, machine learning and analytics offerings, such as Amazon Web Services, Google Cloud Platform and Microsoft Azure;
•legacy data management product providers such as HP, IBM, Oracle and Teradata;
•strategic and technology partners who may also offer our competitors’ technology or otherwise partner with them, including our strategic partners who provide Partner Solutions (as defined below) as they may offer a substantially similar solution based on a competitor’s technology;
•cloud-only data management companies and
open source companies, including Hortonworkscompanies; and MapR, as well as
•internal IT organizations that provide open source self‑supportself-support for their enterprises.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as:
•greater name recognition, longer operating histories and larger customer bases;
•larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products;
•broader, deeper or otherwise more established relationships with technology, channel and distribution partners and customers;
•wider geographic presence or greater access to larger customer bases;
•greater focus in specific geographies;
•greater ease of use for cloud-only deployments;
•lower labor and research and development costs;
•larger and more mature intellectual property portfolios; and
•substantially greater financial, technical and other resources to provide support, to make acquisitions and to develop and introduce new products.
In addition, some of our larger competitors have substantially broader and more diverse product and service offerings and may be able to leverage their relationships with distribution partners and customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our platform, including by selling at zero or negative margins, product bundling or offering closed technology platforms such as IBM Watson.platforms. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of platform performance or features. As a result, even if the features of our platform are superior, customers may not purchase our solutions. These larger competitors often have broader product lines and market focus or greater resources and may therefore not be as susceptible to economic downturns or other significant reductions in capital spending by customers. If we are unable to sufficiently differentiate our solutions from the integrated or bundled products of our competitors, such as by offering enhanced functionality,

performance or value, we may see a decrease in demand for those solutions, which could adversely affect our business, operating results and financial condition.
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In addition, new innovative start‑upstart-up companies, including emerging cloud-only data management companies, and larger companies that are making significant investments in research and development, may introduce products that have greater performance or functionality, are easier to implement or use, or incorporate technological advances that we have not yet developed or implemented or may invent similar or superior products and technologies that compete with our platform. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources.
Some of our competitors have made or could make acquisitions of businesses or enter into partnerships that allow them to offer more competitive and comprehensive solutions. As a result of such arrangements, our current or potential competitors may be able to accelerate the adoption of new technologies that better address customer needs, devote greater resources to bring these products and services to market, initiate or withstand substantial price competition, or develop and expand their product and service offerings more quickly than we do. These competitive pressures in our market or our failure to compete effectively may result in fewer orders, reduced revenue and gross margins and loss of market share. In addition, it is possible that industry consolidation may impact customers’ perceptions of the viability of smaller or even mid‑sizemid-size software firms and consequently customers’ willingness to purchase from such firms.
We may not compete successfully against our current or potential competitors. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition and results of operations could be adversely affected. In addition, companies competing with us may have an entirely different pricing or distribution model. Increased competition could result in fewer customer orders, price reductions, reduced operatingrevenue and gross margins and loss of market share. Further, we may be required to make substantial additional investments in research, development, marketing and sales in order to respond to such competitive threats, and we cannot assure you that we will be able to compete successfully in the future.
The outbreak of COVID-19 pandemic could have an adverse effect on our business, results of operations and financial condition.
The COVID-19 coronavirus pandemic (COVID-19 or COVID-19 pandemic) has caused significant volatility in financial markets and has raised the prospect of an extended global recession. Public health problems resulting from COVID-19 and precautionary measures instituted by governments and businesses to mitigate its spread, including travel restrictions and quarantines, have contributed to a general slowdown in the global economy, and could adversely impact our customers and business partners and disrupt our operations. Changes in our operations in response to COVID-19 or employee illnesses resulting from the pandemic may result in inefficiencies or delays, including in sales and product development efforts and additional costs related to business continuity initiatives, that cannot be fully mitigated through succession planning, employees working remotely or teleconferencing technologies. Our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require an investment of time and resources, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period of time, our ability to manage our business may be impaired, and operational risks, cybersecurity risks and other risks facing us even prior to the pandemic may be elevated.
COVID-19 and related governmental reactions have had, and may continue to have a negative impact on our business, liquidity, results of operations, and stock price due to the occurrence of some or all of the following events or circumstances among others:
•We may not be able to manage our business effectively due to key employees becoming ill, working from home inefficiently and being unable to travel to our facilities;
•We and our business partners may be prevented from operating worksites, due to employee illness or reluctance to appear at work and “stay-at-home” regulations;
•The operations of our sales force may be disrupted, which may impact our ability to add new customers and increase sales to existing customers;
•We may suffer a reduced demand for our products and services, including due to any prolonged economic downturn that may occur;
•The market price of our common stock may drop or remain volatile; and
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•We may incur significant employee health care costs under our insurance programs.
The extent of the impact of COVID-19 on our business and financial results will depend largely on future developments, including the duration of the spread of the pandemic, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, business partners and vendors, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.
We may acquire or invest in companies and technologies, which may divert our management’s attention, and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments.
As part of our business strategy, we have acquired companies in the past and may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. For example, on January 3, 2019, we completed our merger with Hortonworks. We also may enter into relationships with other businesses to expand our solutions or our ability to provide services. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their technology is not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to conditions or approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close.
Even if we are able to complete acquisitions or enter into alliances and joint ventures that we believe will be successful, such transactions are inherently risky. Acquisitions, including the completed merger with Hortonworks, involve many risks, including the following:
•an acquisition may negatively impact our results of operations because it:
– may require us to incur charges, including integration and restructuring costs, both one-time and ongoing, as well as substantial debt or liabilities, including unanticipated and unknown liabilities,
– may cause adverse tax consequences, substantial depreciation or deferred compensation charges,
– in the future may require the amortization, goodwill and other intangible assets, and
– may not generate sufficient financial returns for us to offset our acquisition costs;
•we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
•an acquisition and the related integration process may be complex, expensive and time consuming, and may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
•an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
•an acquisition may result in increased regulatory and compliance requirements;
•an acquisition may result in increased uncertainty if we enter into businesses, markets or business models in which we have limited or no prior experience and in which competitors have stronger market positions;
•we may encounter difficulties in maintaining the key business relationships and the reputations of the businesses we acquire, and we may be dependent on unfamiliar affiliates and partners of the companies we acquire;
•we may fail to maintain sufficient controls, policies and procedures, including integrating any acquired business into our control environment;
•we may fail to achieve anticipated synergies, including with respect to complementary software or services;
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•we may obtain unanticipated or unknown liabilities, including intellectual property or other claims, or become exposed to unanticipated risks in connection with any acquisition; and
•an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience.
If we are unable to address these difficulties and challenges or other problems encountered in connection with any future acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment, we might incur unanticipated liabilities or we might otherwise suffer harm to our business generally.
To the extent we pay the consideration for any future acquisitions or investments in cash, the payment would reduce the amount of cash available to us for other purposes. The merger with Hortonworks resulted in, and future acquisitions or investments could also result in, dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses, or impairment charges against goodwill on our balance sheet, any of which could harm our financial condition and negatively impact our stockholders.
We have invested significantly in our Cloudera Data Platform (CDP) offering and if it fails to achieve market adoption our business, results of operations and financial condition could be harmed.
We introduced CDP Public Cloud in September 2019, and Data Center in November 2019. We have less experience with marketing, determining pricing for and selling CDP, and we are continuing to refine our approach to selling, marketing, pricing and supporting adoption of this offering. We have directed, and intend to continue to direct, a significant portion of our financial and operating resources to develop and grow CDP, including offering trials to existing and potential customers. We cannot guarantee that CDP will be adopted broadly. If we are unsuccessful in our efforts to drive customer adoption of CDP, which may be adversely impacted by the current COVID-19 pandemic, or if we do so in a way that is not profitable or fails to compete successfully against our current or future competitors, our business, results of operations and financial condition could be harmed.
Because of the characteristics of open source software, there may be fewer technology barriers to entry in the hybrid open source market by new competitors and it may be relatively easy for new and existing competitors with greater resources than we have to compete with us.
One of the characteristics of open source software is that the governing license terms generally allow liberal modifications of the code and distribution thereof to a wide group of companies and/or individuals. As a result, others could easily develop new software products or services based upon those open source programs that compete with existing open source software that we support and incorporate into our platform. Our recently announced licensing model changes might be ineffective to slow or alter these competitive dynamics. Such competition with use of the open source projects that we utilize can materialize without the same degree of overhead and lead time required by us, particularly if the customers do not value the differentiation of our proprietary components. It is possible for new and existing competitors, including those with greater resources than ours, to develop their own open source software or hybrid proprietary and open source software offerings, potentially reducing the demand for, and putting price pressure on, our platform. In addition, some competitors make open source software available for free download andor use or may position competing open source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operatingrevenue and gross margins and loss of market share, any one of which could seriously harm our business.
If our customers do not renew or expand their subscriptions, or if they renew on less favorable terms, our future revenue and operating results will be harmed.
Our future success depends, in part, on our ability to sell renewals of subscriptions and expand the deployment of our platform with existing customers. While we generally offer subscriptions of up to three years in length, our customers typicallyoften purchase one-year subscriptions which generally do not provide for automatic renewal or a right to terminate the subscription early. Our customers may not renew or expand the use of their subscriptions after the expiration of their current subscription agreements. In addition, our customers may opt for a lower‑lower priced edition of our platform or decrease their usage of our platform. Our existing customers generally have no contractual

obligation to expand or renew their subscriptions after the expiration of the committed subscription period and given our limited operating history, we may not be able to accurately predict customer renewal rates. Our customers’ renewal and/or expansion pricing rates may decline or fluctuate as a result of factors, including, but not limited to, their satisfaction with our platform including CDP, and our customer support, the frequency and severity of software and implementation errors, our platform’s reliability, the pricing of our subscriptions and
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services or of competing solutions or services, the effects of global economic conditions, such as those caused by the current COVID-19 pandemic and their ability to continue their operations and spending levels. If our customers renew their subscriptions, they may renew for shorter contract lengths, less usage or on other terms that are less economically beneficial to us. Our implementation of a “pay wall” for the distribution of some of our software solutions might prove ineffective at improving our renewal and/or expansion rates with existing customers or deal close rates with new customers. We have limited historical data with respect to rates of customer subscription renewals, so we may not accurately predict future renewal trends. We cannot assure you that our customers will renew or expand their subscriptions, and if our customers do not renew their agreements or renew on less favorable terms or for less usage, our revenue may grow more slowly than expected or decline and our business could suffer.
Achieving renewal or expansion of subscriptions may require us to increasingly engage in sophisticated and costly sales efforts that may not result in additional sales. In addition, the rate at which our customers expand the deployment of our platform depends on a number of factors, including general economic conditions, such as the global macroeconomic impact of the current COVID-19 pandemic, the functioning of our solutions, the ability of our field organization, together with our partner ecosystem, to assist our customers in identifying new use cases, modernizing their data architectures, and achieving success with data‑drivendata-driven initiatives and our customers’ satisfaction with our customer support. If our efforts to expand penetration within our customers are not successful, our business may suffer.
We have a limited operating history, which makes it difficult to predict our future results of operations.
We have a limited operating history, which limits our ability to forecast our future results of operations and subjects us to a number of uncertainties, including our ability to plan for and anticipate future growth. Our historical revenue growth should not be considered indicative of our future performance. Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including slowing demand for our solutions, increasing competition, a decrease in the growth of our overall market, or our failure, for any reason, to continue to capitalize on growth opportunities and merger integration plans. We have also encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market reception of our platform and open source model, competition from other companies, attracting and retaining customers, hiring, integrating, training and retaining skilled personnel, developing new solutions and unforeseen expenses. If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results could be adversely affected.
Our sales cycles can be long, unpredictable and vary seasonally, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.
Our results of operations may fluctuate, in part, because of the resource‑intensiveresource-intensive nature of our sales efforts, the length and variability of the sales cycle for our platform and the difficulty in making short‑termshort-term adjustments to our operating expenses. The timing of our sales is difficult to predict. The length of our sales cycle, from initial evaluation to payment for our subscriptions is generally four to nine months, but can vary substantially from customer to customer. Our sales cycle can extend to more than 18 months for some customers. Our sales efforts involve educating our customers about the use, technical capabilities and benefits of our platform, solutions and HOSSopen source model. Customers often undertake a prolonged evaluation process, which frequently involves not only our platform but also those of other companies. Some of our customers initially deploy our platform on a limited basis, with no guarantee that these customers will deploy our platform widely enough across their organization to justify our substantial pre‑salespre-sales investment. As a result, it is difficult to predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers. Large individual sales have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. In addition, our sales efforts may be interrupted as a result of the current COVID-19 pandemic, which may impact our ability to sell and market our products and services to customers. If our sales cycle lengthens or our substantial upfront investments do not result in sufficient revenue to justify our investments, our operating results could be adversely affected.
We have seasonal and end-of-quarter concentration of our sales, which impacts our ability to plan and manage cash flows and margins. Our sales vary by season, with the fourth quarter typically being our largest. In addition, within each quarter, most sales occur in the last month of that quarter. Therefore, it is difficult to determine whether we are achieving our quarterly expectations until near the end of the quarter, with seasonality magnifying the difficulty for determining whether we will achieve annual expectations. Most of our expenses are relatively fixed or require time to adjust. Therefore, if expectations for our business are not accurate, we may not be able to adjust our cost structure on a timely basis and margins and cash flows may differ from expectations.
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We do not have an adequate history with our subscription or pricing models to accurately predict the long-term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results.
We have limited experience with respect to determining the optimal prices and pricing models for our solutions.solutions, especially as we develop and sell new offerings such as the CDP. As the markets for our solutions mature, or as new competitors introduce new products or services that compete with ours, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, large customers, which are the focus of our sales efforts, may demand greater price concessions. Additionally, the renewal rate of our large customers may have more significant impact period to period

on our revenue and operating results. As a result, in the future we may be required to reduce our prices, which could adversely affect our revenue, gross margin, profitability, financial position and cash flow. In addition, as an increasing amount of our business may move to our cloud‑basedcloud-based solutions for transient workloads and the use of our consumption‑basedconsumption-based pricing model may represent a greater share of our revenue, our revenue may be less predictable or more variable than our historical revenue from a time period-based subscription pricing model. Moreover, a consumption‑basedconsumption-based subscription pricing model may ultimately result in lower total cost to our customers over time, or may cause our customers to limit usage in order to stay within the limits of their existing subscriptions, reducing overall revenue or making it more difficult for us to compete in our markets.
Our results may fluctuate significantly from period to period, which could adversely impact the value of our common stock.
Our results of operations, including our revenue, net revenue expansion rate, gross margin, profitability and cash flows, may vary significantly in the future, and period‑to‑periodperiod-to-period comparisons of our operating results may not be meaningful. Accordingly, our results for any particular period should not be relied upon as an indication of future performance. Our financial results may fluctuate from period to period as a result of a variety of factors, many of which are outside of our control. Fluctuation in periodic results may adversely impact the value of our common stock. Factors that may cause fluctuations in our periodic financial results include, without limitation, those listed elsewhere in this “Risk Factors” section and those listed below:
•the budgeting cycles and purchasing practices of our customers, including their tendency to purchase in the fourth quarter of our fiscal year, and near the end of each quarter;quarter, and the timing of subsequent contract renewals;
•the achievement of milestones in connection with delivery of services, impacting the timing of services revenue recognition;recognition, especially due to the impact of the current COVID-19 pandemic;
•subscriptions from the Global 8000 and other large enterprises;
•price competition;
•our ability to attract and retain new customers;
•our ability to expand penetration within our existing customer base;
•the timing and success of new solutions by us and our competitors;
•the timing and success of our product releases;
•changes in customer requirements or market needs and our ability to make corresponding changes to our business;
•changes in the competitive landscape, including consolidation among our competitors or customers;
•general economic conditions, both domestically and in our foreign markets;markets, including the domestic and global macroeconomic impact of the current COVID-19 pandemic;
•natural disasters, acts of war, terrorism, epidemics, or pandemics and other health crises;
•the timing and amount of certain payments and expenses, such as research and development expenses, sales commissions and stock‑based compensation, including the recording of stock‑based compensation expense as a result of the vesting and settlement of restricted stock units (RSUs) including in connection with our initial public offering;stock-based compensation;
•our inability to adjust certain fixed costs and expenses, particularly in research and development, for changes in demand;
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•increases or decreases in our revenue and expenses caused by fluctuations in foreign currency exchange rates, as an increasing portion of our revenue is collected, and expenses are incurred and paid in currencies other than the U.S. dollar;
•the cost of and potential outcomes of existing and future claims or litigation, which could have a material adverse effect on our business;

•potential impairment of goodwill and intangible assets;
•future accounting pronouncements and changes in our accounting policies; and
•changes in tax laws, or tax regulations and governmental regulations.
Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results. This variability and unpredictability could result in our failure to meet our revenue or other operating result expectations or those of investors for a particular period. The failure to meet or exceed such expectations could have a material adverse effect on our business, results of operations and financial condition that could ultimately adversely affect our stock price.
Because we derive substantially all of our revenue from a single software platform, failure of this platform to satisfy customer demands or to achieve increased market acceptance could adversely affect our business, results of operations, financial condition and growth prospects.
We derive and expect to continue to derive substantially all of our revenue from our data management, machine learning and analytics platform. As such, the market acceptance of our platform is critical to our continued success. Demand for our platform is affected by a number of factors beyond our control, including continued market acceptance, the timing of development and release of new products by our competitors, technological change, any developments or disagreements with the open source community, and growth or contraction in our market.market and general economic conditions. We expect the growth and proliferation of data to lead to an increase in the data analysesanalysis demands of our customers, and our platform may not be able to scale and perform to meet those demands or may not be chosen by users for those needs. If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of our platform and solutions, our business operations, financial results and growth prospects will be materially and adversely affected.
Security and privacy breaches may hurt our business.
Any security breach, including those resulting from a cybersecurity attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss of confidential information, damage to our reputation, early termination of our contracts, litigation, regulatory investigations or other liabilities. If our security measures or the security measures we have provided to customers are breached as a result of third-party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to our customers’ confidential information, our reputation may be damaged, our business may suffer and we could incur significant liability.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived security breach occurs, the market perception of our security measures could be harmed and we could lose sales and customers.
In addition, many of our customers use our platform to store and process vast quantities of private and otherwise sensitive data that are critical to their businesses. They may have a greater sensitivity to security defects in our products than to defects in other, less critical, software products. An actual or perceived security breach or theft of the business-critical data of one of our customers, regardless of whether the breach is attributable to the failure of our products or services, could adversely affect the market’s perception of our security products. Moreover, if a high-profile security breach occurs with respect to another data management, machine learning and analytics platform provider, our customers and potential customers may lose trust in the security of data management, machine learning and analytics platforms generally, which could adversely impact our ability to retain existing customers or attract new ones.
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We have been, and may in the future be, subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
Companies in the software and technology industries, including some of our current and potential competitors, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. The litigation may involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence. From time‑to‑time,time-to-time, third parties, including certain other companies, have asserted and may assert patent, copyright, trademark or other intellectual property rights against us, our partners or our customers. We or our customers have received, and may in the future receive, notices that claim we have misappropriated, misused or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to the enterprise software market.
There may be third‑partythird-party intellectual property rights, including issued or pending patents, that cover significant aspects of our technologies, or the technologies in our platform or business methods. We may be exposed to increased risk of being the subject of intellectual property infringement claims as a result of acquisitions, such as our merger with Hortonworks, and our incorporation of open source software into our platform, as, among other things, we have a lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risks. Any intellectual property claims, with or without merit, could be very time‑consuming,time-consuming, could be expensive to settle or litigate and could divert our management’s attention and other resources. These claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have willfully infringed patents or copyrights. These claims could also result in our having to stop using, distributing or supporting technology found to be in violation of a third party’sthird-party’s rights. We might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, we could be required to pay significant royalties, which would increase our operating expenses. As a result, we may be required to develop alternative non‑infringingnon-infringing technology, which could require significant effort and expense. If we cannot license or develop technology for any infringing aspect of our business, we could be forced to limit or stop

sales of our offerings and may be unable to compete effectively. Any of these results could adversely affect our business operations and financial results.
Third parties may also assert such claims against our customers or partners whom we typically indemnify against claims that our solutions infringe, misappropriate or otherwise violate the intellectual property rights of third parties, including in the third‑partythird-party open source components included in our platform, as well as our own open source and proprietary components. As the numbers of products and competitors in our market increase and overlaps occur, claims of infringement, misappropriation and other violations of intellectual property rights may increase. Also, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or have divulged proprietary or other confidential information.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under patent and other intellectual property laws of the United States and other jurisdictions outside of the United States so that we can prevent others from using our inventions and proprietary information. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, and our business may be harmed. In addition, defending our intellectual property rights may entail significant expense. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have patents and patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties.
Moreover, despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our platform or offerings or obtain and use information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants, vendors and customers, and generally limit access to and distribution of our proprietary information. However, we cannot be certain that we have entered into such agreements with all parties who may have or have had access to our confidential information or that the agreements we have entered into will not be
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breached. We cannot guarantee that any of the measures we have taken will prevent misappropriation of our technology. Because we may be an attractive target for cybersecurity attacks, we may have a greater risk of unauthorized access to, and misappropriation of, our proprietary information.
Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of protection for some intellectual property right. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our products or services are available. The laws of some countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Also, our involvement in standard setting activity or the need to obtain licenses from others may require us to license our intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties from using our intellectual property.
We may be required to spend significant resources to monitor and protect our intellectual property rights and we may conclude that in at least some instances the benefits of protecting our intellectual property rights may be outweighed by the expense. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.
We do not control and may be unable to predict the future course of open source technology development, including the ongoing development of open source components used in our platform, which could reduce the market appeal of our platform and damage our reputation.
We do not control many aspects of the development of the open source technology in our platform. Different groups of open source software programmers collaborate with one another to develop the software projects in our platform. Given the disparate inputs from various developers, we cannot control entirely how an open source project

develops and matures. Also, different open source projects may overlap or compete with the ones that we incorporate into our platform. The technology developed by one group for one project may become more widely used than that developed by others. If we acquire or adopt a new technology and incorporate it into our platform but a competing technology becomes more widely used or accepted, the market appeal of our platform may be reduced and that could harm our reputation, diminish our brand and result in decreased revenue.
If open source software programmers, many of whom we do not employ, or our own internal programmers do not continue to develop and enhance open source technologies, we may be unable to develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.
We rely to a significant degree on a number of open source software programmers, or committers and contributors, to develop and enhance components of our platform. Additionally, members of the corresponding Apache Software Foundation Project Management Committees (PMCs)open source project management committees, many of whom are not employed by us, are primarily responsible for the oversight and evolution of the codebases of important components of the open source data management ecosystem. If the open source data management committers and contributors fail to adequately further develop and enhance open source technologies, or if the PMCscommittees fail to oversee and guide the evolution of open source data management technologies in the manner that we believe is appropriate to maximize the market potential of our solutions, then we would have to rely on other parties, or we would need to expend additional resources, to develop and enhance our platform. We also must devote adequate resources to our own internal programmers to support their continued development and enhancement of open source technologies, and if we do not do so, we may have to turn to third parties or experience delays in developing or enhancing open source technologies. We cannot predict whether further developments and enhancements to these technologies would be available from reliable alternative sources. In either event, our development expenses could be increased and our technology release and upgrade schedules could be delayed. Delays in developing, completing or delivering new or enhanced components to our platform could cause our offerings to be less competitive, impair customer acceptance of our solutions and result in delayed or reduced revenue for our solutions.
Our software development and licensing model could be negatively impacted if the Apache License, Version 2.0 is not enforceable or is modified so as to become incompatible with other open source licenses.
Important components of our platform have been provided under the Apache License, Version 2.0. This license states that any work of authorship licensed under it, and any derivative work thereof, may be reproduced and distributed provided that certain conditions are met. It is possible that a court would hold this license to be unenforceable or that someone could assert a claim for proprietary rights in a program developed and distributed under it. Any ruling by a court that this license is not enforceable, or that open source components of our platform may not be reproduced or distributed, may negatively impact
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our distribution or development of all or a portion of our solutions. In addition, at some time in the future it is possible that important components of the open source projects in our platform that may be distributed under a different license or the Apache License, Version 2.0, which governs Hadoop, Spark and other current elements of our platform, may be modified, which could, among other consequences, negatively impact our continuing development or distribution of the software code subject to the new or modified license.
Further, full utilization of our platform may depend on software, applications, hardware and services from various third parties, and these items may not be compatible with our platform and its development or available to us or our customers on commercially reasonable terms, or at all, which could harm our business.
Our use of open source software in our solutions could negatively affect our ability to sell our platform and subject us to possible litigation.
Our solutions include software covered by open source licenses, which may include, by way of example, GNU General Public License and the Apache License. We do not own all of the open source technology in our platform and the ownership of the open source technology in our platform may not be easily determinable by us. Rather, we rely on the Apache Software Foundation (ASF) as well as certain other third partythird-party open source contributors to ensure that the open source contributions to our platform are properly owned by the committers and contributors who contribute the open source technology and that such contributions do not infringe on other parties’ intellectual property rights. Moreover, the terms of certain of the open source licenses have not been interpreted by United States courts or other courts, and there is a risk that such licenses could be construed in a manner that is incompatible with

our current business model, imposing unanticipated conditions or restrictions on our ability to market our solutions. We, our customers and the ASF may have received, or may in the future receive, notices that claim we have misappropriated, misused or infringed other parties’ intellectual property rights, and, to the extent products based on the open source data management ecosystem gain greater market visibility, we, our customers, and the ASF, face a higher risk of being the subject of intellectual property infringement claims. In addition, we or our customers could be subject to lawsuits by parties claiming ownership of (or that different license terms apply to) what we believe to be open source software, or seeking to enforce the terms of an open source license. By the terms of certain open source licenses, we could be required to release the source code of our proprietary software, and to make our proprietary software available under open source licenses, if we combine our proprietary software with open source software in a certain manner. In the event that portions of our proprietary software are determined to be impacted by an open source license, we could be required to publicly release the affected portions of our source code, re‑engineerre-engineer all or a portion of our technologies, or otherwise be limited in the licensing of our technologies and services, each of which could reduce or eliminate the value of our technologies and cause us to have to significantly alter our current business model. These claims could also result in litigation (including litigation against our customers or partners, which could result in us being obligated to indemnify our customers or partners against such litigation), require us to purchase a costly license or require us to devote additional research and development resources to change our solutions, any of which could have a negative effect on our business and operating results. In addition, if the license terms for the open source code change, we may be forced to re‑engineerre-engineer our solutions or incur additional costs to find alternative tools. Further, changes in our software licensing model may impact future revenue growth rates.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third‑partythird-party commercial software, as open source licensors generally do not provide warranties, support, indemnity or assurance of title or controls on origin of the software. Further, some open source projects have known vulnerabilities and architectural instabilities and are provided on an “as‑is”“as-is” basis. Many of these risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect the performance of our platform and our business. In addition, we are often required to absorb these risks in our customer and partner relationships by agreeing to provide warranties, support and indemnification with respect to such third partythird-party open source software. While we have established processes intended to alleviate these risks, we cannot assure that these measures will reduce these risks.
Because our business relies on the Apache Software Foundation, our business could be harmed by the decisions made by the ASF or claims or disputes directed at the ASF or reputational harm otherwise suffered by the ASF.
Our business relies on the ASF, a non‑profitnon-profit corporation that supports Apache open source software projects. We do not control nor can we predict the decisions the ASF will make with respect to the further development and enhancement of open source technologies which may impact our business. For example, the reduction or elimination of support of Hadoop, Spark or other technologies by the ASF, the migration of Hadoop, Spark and other open source data management technology to an organization other than the ASF, or any other actions taken by the ASF or the Hadoop project may impact our business
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model. Moreover, if the ASF is subject to claims, disputes or otherwise suffers reputational harm, our business, results of operations, financial condition and growth prospects could be harmed if customers perceive our solutions to be risky or inferior to data management solutions which do not rely on the ASF for continued development and enhancement of open source technologies.
Security and privacy breaches may hurt our business.
Any security breach, including those resulting from a cybersecurity attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss of confidential information, damage to our reputation, early termination of our contracts, litigation, regulatory investigations or other liabilities. If our security measures or the security measures we have provided to customers are breached as a result of third‑party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to our customers’ confidential information, our reputation may be damaged, our business may suffer and we could incur significant liability.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to

implement adequate preventative measures. If an actual or perceived security breach occurs, the market perception of our security measures could be harmed and we could lose sales and customers.
In addition, many of our customers use our platform to store and process vast quantities of private and otherwise sensitive data that are critical to their businesses. They may have a greater sensitivity to security defects in our products than to defects in other, less critical, software products. An actual or perceived security breach or theft of the business‑critical data of one of our customers, regardless of whether the breach is attributable to the failure of our products or services, could adversely affect the market’s perception of our security products. Moreover, if a high‑profile security breach occurs with respect to another data management, machine learning and analytics platform provider, our customers and potential customers may lose trust in the security of data management, machine learning and analytics platforms generally, which could adversely impact our ability to retain existing customers or attract new ones.
Real or perceived errors, failures, bugs or disruptions in our platform and solutions could adversely affect our reputation and business could be harmed.
Our platform and solutions are very complex and have contained and may contain undetected defects or errors, especially when solutions are first introduced or enhanced.enhanced, or as we develop new platform such as CDP. In addition, our platform employs open source software and to the extent that our solutions depend upon the successful operation of open source software in conjunction with our solutions, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our solutions, delay new solutionssolutions’ introductions, result in a failure of our solutions, result in liability to our customers, and injure our reputation.
If our platform is not implemented or used correctly or as intended, inadequate performance and disruption in service may result. Moreover, as we acquire companies, such as through our merger with Hortonworks, and integrate new open source data management projects, we may encounter difficulty in incorporating the newly‑obtainednewly-obtained technologies into our platform and maintaining the quality standards that are consistent with our reputation.
Since our customers use our platform and solutions for important aspects of their business, any errors, defects, disruptions in service or other performance problems could hurt our reputation and may damage our customers’ businesses. Furthermore, defects in our platform and solutions may require us to implement design changes or software updates. Any defects or errors in our platform and solutions, or the perception of such defects or errors, could result in:
•expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work around errors or defects;
•loss of existing or potential customers or channel partners;
•delayed or lost revenue;
•delay or failure to attain market acceptance;
•delay in the development or release of new solutions or services;
•negative publicity, which will harm our reputation;
•warranty claims against us, which could result in an increase in our provision for doubtful accounts;
•an increase in collection cycles for accounts receivable or the expense and risk of litigation; and
•harm to our results of operations.
Although we have contractual protections, such as warranty disclaimers and limitation of liability provisions, in our standard terms and conditions of sale, they may not fully or effectively protect us from claims by customers, partners or other third parties. Any insurance coverage we may have may not adequately cover all claims asserted against us, or cover only a portion of such claims. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation and divert management’s time and other resources.

If we are unable to hire, retain, train and motivate qualified personnel and senior management, our business could be harmed.
Our future success depends, in part, on our ability to continue to attract, integrate and retain qualified and highly skilled personnel. In particular, we are substantially dependent on the continued service of our existing engineering personnel because of the complexity of our platform and are also highly dependent on the contributions of our executive team. The loss of any key personnel could make it more difficult to manage our operations and research and development activities, reduce our employee retention and revenue, disrupt our relationships with our employees, customers and vendors, and impair our ability to compete. Any significant leadership change or senior management transition involves inherent risk and any failure to ensure the timely and suitable replacement and a smooth transition could hinder our strategic planning, execution and future performance. Although we have entered into employment offer letters with our key personnel, these agreements have
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no specific duration and constitute at‑willat-will employment. We do not maintain key person life insurance policies on any of our employees. The loss of one or more of our key employees could seriously harm our business. If we are unable to attract, integrate, or retain the qualified and highly skilled personnel required to fulfill our current or future needs, our business, financial condition and operating results could be harmed.Moreover, if key personnel become ill due to the current COVID-19 pandemic, we may not be able to manage our business effectively and, as a result, our business and operating results could be harmed.
Our senior management has substantially changed over the last fiscal year, including, for example, the recent departures of our former chief executive officer, Thomas Reilly and interim chief executive officer, Martin Cole. We have a new chief executive officer, Robert Bearden, who started in January 2020.
Competition for highly skilled personnel is often intense, especially in the San Francisco Bay Area where we have a substantial presence and need for highly skilled personnel. We may not be successful in attracting, integrating or retaining qualified personnel to fulfill our current or future needs. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our common stock declines, it may adversely affect our ability to hire or retain highly skilled employees. In addition, we may periodically change our equity compensation practices, which may include reducing the number of employees eligible for equity awards or reducing the size of equity awards granted per employee. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.
We have experienced rapid growth in recent periods and expect our growth to continue. If we fail to effectively manage our growth, our business and operating results could be adversely affected.
We have experienced and may continue to experience rapid growth in our headcount and operations, which has placed and will continue to place significant demands on our managerial, administrative, operational, financial and other resources. For example, our employee headcount increased from 1,1401,648 employees as of January 31, 20162018 to 1,470 2,719 employees as of JanuaryJuly 31, 2017.2020. This growth has placed, and any future growth will place, significant demands on our management and our operational and financial infrastructure. To manage this growth effectively, we must continue to improve our operational, financial and management systems and controls by, among other things:
•recruiting, training, integrating and retaining new employees, particularly for our sales and research and development teams;
•developing and improving our internal administrative infrastructure, particularly our financial, operational, compliance, recordkeeping, communications and other internal systems;
•managing our international operations and the risks associated therewith;
•maintaining high levels of satisfaction with our platform among our customers; and
•effectively managing expenses related to any future growth.
If we fail to manage our growth, or if we fail to implement improvements or maintain effective internal controls, our costs and expenses may increase more than we plan and our ability to expand our customer base, enhance our platform, develop new solutions, expand penetration within existing customers, respond to competitive pressures or otherwise execute our business plan, our business and operating results could be adversely affected.
Because we recognize a substantial portion of our subscription revenue from our platform over the subscription term, downturns or upturns in new sales and renewals will not be immediately reflected in our operating results.
We generally recognize subscription revenue ratably over the term of the subscription period. As a result, most of the revenue we report in each quarter areis derived from the recognition of deferred revenue relating to

subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions, or a reduction in expansion rates, in any single quarter could have only a small impact on our revenue results during that quarter or subsequent period. Such a decline or deceleration, however, will negatively affect our revenue or revenue growth rates in future quarters. Accordingly, the effect of these changes or events may not be fully reflected in our results of operations until future periods. Given the ratable nature of our revenue recognition, our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period. We may be unable to adjust our cost structure to reflect the changes in revenue. In
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addition, a significant majority of our costs are expensed as incurred, while revenue is generally recognized over the life of the customer agreement. As a result, increased growth in the number of our customers could result in our recognition of more costs than revenue in the earlier periods of the terms of our agreements.
Our revenue growth depends in part on the success of our strategic relationships with third parties and their continued performance.
We seek to grow our partner ecosystem as a way to grow our business. To grow our business, we anticipate that we will continue to establish and maintain relationships with third parties, such as resellers, OEMs, system integrators, independent software and hardware vendors and platform and cloud service providers. For example, in 2014, we entered into a strategic collaboration and optimization agreement with Intel Corporation (Intel). In addition, we work closely with select vendors (Partner Solutions) to design solutions to specifically address the needs of certain industry verticals or use cases within those verticals, which we refer to as Partner Solutions.verticals. As our agreements with strategic partners terminate or expire, we may be unable to renew or replace these agreements on comparable terms, or at all. Moreover, especially given the possible impact of the current COVID-19 pandemic, we cannot guarantee that the companies with which we have strategic relationships will continue to devote the resources necessary to expand our reach, increase our distribution and increase the number of Partner Solutions and associated use cases. In addition, customer satisfaction with Partner Solutions may be less than anticipated, negatively impacting anticipated revenue growth and results of operations. Further, some of our strategic partners offer competing products and services or also work with our competitors. As a result of these factors, many of the companies with which we have strategic alliances may choose to pursue alternative technologies and develop alternative products and services in addition to or in lieu of our platform, either on their own or in collaboration with others, including our competitors. If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer. Even if we are successful in establishing and maintaining these relationships with third parties, we cannot assure you that these relationships will result in increased customer usage of our platform or increased revenue.
The sum of our revenue and changes in deferred revenuecontract liabilities or remaining performance obligations (RPO) may not be an accurate indicator of business activity within a period.
Investors or analysts sometimes look to the sum of ourthe revenue and changes in deferred revenuecontract liabilities or RPO as an indicatorindicators of business activity in a period for businesses such as ours, sometimes referredours. They may use this information to as “estimated billings.”estimate billings or bookings. However, these measures may significantly differ from underlying business activity for a number of reasons including:
•Since a relatively large number of transactions occur at the end of the quarter. Invoicingquarter, and invoicing or enablement of those transactions may or may not occur before the end of the quarter based on a number of factors including receipt of information from the customer, volume of transactions and holidays. Aholidays, a shift of a few days has little economic impact on our business, but willmay shift deferred revenuecontract liabilities or RPO from one period into the next;
multi‑year•multi-year upfront billings that may distort trends;
•subscriptions that have deferred start dates; and
•services that are invoiced upon delivery.delivery; and
•changes in revenue recognition resulting from ASC 606 adoption.
Accordingly, we do not believe that estimated billings is an accurate indicator of future revenue for any given period of time. However, many companies that provide subscriptions report changes in estimated billings as a key operating or financial metric, and it is possible that analysts or investors may view this metric as important. Thus, any changes in our estimated billings could adversely affect the market price of our common stock.

Moreover, estimating bookings from RPO is a newer analytical technique, and it may not be an accurate indicator of future revenue for our company for any given period of time.
If our new products, components andor enhancements to our platform do not achieve sufficient market acceptance, our financial results and competitive position will suffer.
We spend substantial amounts of time and money to research and develop new products, such as CDP. In addition, we spend time and money to research and develop new components and enhancements of our platforms to incorporate additional features, improve functionality or add other enhancements in order to meet our customers’ rapidly evolving demands. When we develop a new product, component or enhancement to our platform, whether open source or proprietary, we typically incur expenses and expend resources upfront to develop, market and promote the new component. Therefore, when we
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develop and introduce new products, components or enhancements to our platform, they must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market. For example, if
We may experience delays in the development and introduction of new or enhanced products due to the direct and indirect effects of the current COVID-19 pandemic. In addition, our new file system based on the open source Kudu project does not garner widespread market adoption and implementation, our growth prospects, future financial results and competitive position could suffer.
Our newproducts, components or enhancements to our platform and changes to our platform could fail to attain sufficient market acceptance for many reasons, including:
•our failure to predict market demand accurately in terms of platform functionality, including curating new open source projects, and to supply a platform that meets this demand in a timely fashion;
•delays in releasing to the market our new components or enhancements to our platform to the market;
•defects, errors or failures;
•complexity in the implementation or utilization of the new components and enhancements;
•negative publicity about theirthe platform’s performance or effectiveness;
•introduction or anticipated introduction of competing platforms by our competitors;
•poor business conditions for our end‑customers,end-customers, causing them to delay IT purchases;purchases, such as those caused by the current COVID-19 pandemic; and
•reluctance of customers to purchase platforms incorporating open source software or to purchase hybrid platforms.
If our new products, such as CDP, or our new components or enhancements and changes do not achieve adequate acceptance in the market, our competitive position will be impaired, and our revenue will be diminished. The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred in connection with the new solutions or enhancements.
If we do not effectively hire, retain, train and oversee our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business may be adversely affected.
We continue to be substantially dependent on our direct sales force to obtain new customers and increase sales with existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth, particularly in international markets.growth. In addition, a large percentage of our sales force is relatively new to our company. New hires require significant training and may take significant time before they achieve full productivity.productivity, especially as new offerings are developed and released. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, growth of our direct sales force leads to increasing difficulty and complexity in its organization, management and leadership, at which we may prove unsuccessful. If we are unable to hire and train a sufficient number of effective sales personnel, we are ineffective at overseeing a growing sales force, or the sales personnel we hire are otherwise unsuccessful in obtaining new customers or increasing sales to our existing customer base, our business will be adversely affected.

We may acquire or invest in companies and technologies, which may divert our management’s attention, and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments.
As part of our business strategy, we have acquired companies in the past and may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. For example, we acquired Gazzang, Inc. in June 2014 and Xplain.io, Inc. in February 2015. We also may enter into relationships with other businesses to expand our solutions or our ability to provide services. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their technology is not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise. Negotiating these transactions can be time‑consuming, difficult and expensive, and our ability to close these transactions may often be subject to conditions or approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close.
Even if we are able to complete acquisitions or enter into alliances and joint ventures that we believe will be successful, such transactions are inherently risky. Acquisitions involve many risks, including the following:
an acquisition may negatively impact our results of operations because it:
–may require us to incur charges, including integration and restructuring costs, both one‑time and ongoing, as well as substantial debt or liabilities, including unanticipated and unknown liabilities,
–may cause adverse tax consequences, substantial depreciation or deferred compensation charges,
–may result in acquired in‑process research and development expenses or in the future may require the amortization, write‑down or impairment of amounts related to deferred compensation, goodwill and other intangible assets, or
–may not generate sufficient financial returns for us to offset our acquisition costs;
we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
an acquisition and integration process is complex, expensive and time consuming, and may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
an acquisition may result in increased regulatory and compliance requirements;
an acquisition may result in increased uncertainty if we enter into businesses, markets or business models in which we have limited or no prior experience and in which competitors have stronger market positions;
we may encounter difficulties in maintaining the key business relationships and the reputations of the businesses we acquire, and we may be dependent on unfamiliar affiliates and partners of the companies we acquire;
we mail fail to maintain sufficient controls, policies and procedures, including integrating any acquired business into our control environment;
we may fail to achieve anticipated synergies, including with respect to complementary software or services;

we may obtain unanticipated or unknown liabilities, including intellectual property or other claims, or become exposed to unanticipated risks in connection with any acquisition; and
an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience.
If we are unable to address these difficulties and challenges or other problems encountered in connection with any future acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment, we might incur unanticipated liabilities or we might otherwise suffer harm to our business generally.
To the extent we pay the consideration for any future acquisitions or investments in cash, the payment would reduce the amount of cash available to us for other purposes. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses, or impairment charges against goodwill on our balance sheet, any of which could harm our financial condition and negatively impact our stockholders.
As we expand internationally, our business will become more susceptible to risks associated with international operations.
We have recently expanded internationally and intend to continue such international expansion. For example, we sell the various editions of our platform through our direct sales force, which is comprised of inside sales and field sales personnel, and is located in a variety of geographic regions, including the United States, Europe and Asia, and have customers located in over 65 approximately 100 countries as of January 31, 2017.2020. We intend to continue to expand internationally.
Conducting international operations subjects us to risks that we have not generally faced in the United States. These risks include:
•challenges caused by distance, language, cultural and ethical differences and the competitive environment;
•heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements;
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•foreign exchange restrictions and fluctuations in currency exchange rates, including that, because a majority of our international contracts are denominated in U.S. dollars, an increase in the strength of the U.S. dollar may make doing business with us less appealing to a non‑U.S.non-U.S. dollar denominated customer;
•application of multiple and conflicting laws and regulations, including complications due to unexpected changes in foreign laws and regulatory requirements;
•risks associated with trade restrictions and foreign import requirements, including the importation, certification and localization of our solutions required in foreign countries, as well as changes in trade, tariffs, restrictions or requirements;
•new and different sources of competition;
•potentially different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;
•management communication and integration problems resulting from cultural differences and geographic dispersion;
•potentially adverse tax consequences, including multiple and possibly overlapping tax structures, the complexities of foreign value‑addedvalue-added tax systems, restrictions on the repatriation of earnings and changes in tax rates;
•greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;

•the uncertainty and limitation of protection for intellectual property rights in some countries;countries and the risk of potential theft or compromises of our technology, data or intellectual property in connection with our international operations, whether by state-sponsored malfeasance or other foreign entities or individuals;
•increased financial accounting and reporting burdens and complexities;
•lack of familiarity with localslocal laws, customs and practices, and laws and business practices favoring local competitors or partners;
•increased exposure to natural disasters, acts of war, terrorism, epidemics, or pandemics and other health crises, including the current COVID-19 pandemic; and
•political, social and economic instability abroad, terrorist attacks and security concerns in general.
The occurrence of any one of these risks could harm our international business and, consequently, our results of operations. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability.
Some of our business partners also have international operations and are subject to the risks described above. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks.
Our business in countries with a history of corruption and transactions with foreign governments increase the risks associated with our international activities.
As we operate and sell internationally, we are subject to the Foreign Corrupt Practices Act (FCPA), the United Kingdom Bribery Act of 2010 (the UK Bribery Act), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties for the purpose of obtaining or retaining business. We have operations, deal with and make sales to governmental customers in countries known to experience corruption, particularly certain emerging countries in Africa, East Asia, Eastern Europe, South America and the Middle East. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or channel partners that could be in violation of various anti‑corruptionanti-corruption laws, even though these parties may not be under our control. While we have implemented policies and controls intended to prevent these practices by our employees, consultants, sales agents and channel partners, our existing safeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents or channel partners may engage in conduct for which we might be held responsible. Violations of the FCPA, the UK Bribery Act and other laws may result in severe criminal or civil sanctions, including
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suspension or debarment from U.S. government contracting, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
We are subject to governmental export control, sanctions and import laws and regulations that could subject us to liability or impair our ability to compete in international markets.
Because we incorporate encryption functionality into our platform (including any products comprising the platform), we are subject to certain U.S. export control laws that apply to encryption items. As such, our platform may be exported outside the United States through an export license exception; an export license is required to certain countries, end‑usersend-users and end‑uses.end-uses. If we were to fail to comply with such U.S. export controls laws, U.S. customs regulations, U.S. economic sanctions, or other similar laws, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of our export or import privileges. Obtaining the necessary export license for a particular sale or offering may not be possible and may be time‑consumingtime-consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions prohibit the export of products to certain U.S. embargoed or sanctioned countries, governments and persons, as well as for prohibited end‑uses.end-uses. Monitoring and ensuring compliance with these complex U.S. export control laws is particularly challenging because our platform and related services are widely distributed throughout the world and are available for download without registration. Even though we take precautions to ensure that we and our reseller partners comply with all relevant export control laws and regulations, any failure by us or our reseller partners to comply with such laws and regulations could have negative consequences for us, including reputational harm, government investigations and penalties.

In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our end‑customers’end-customers’ ability to implement our products in those countries. Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our platform into international markets, prevent our end‑customersend-customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our platform to certain countries, governments or persons altogether. Any change in export or import laws or regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing export, import or sanctions laws or regulations, or change in the countries, governments, persons, or technologies targeted by such export, import or sanctions laws or regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell our platform to, existing or potential end‑customersend-customers with international operations. Any decreased use of our platform or limitation on our ability to export to or sell our platform in international markets could adversely affect our business, financial condition and operating results.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.
Our sales contracts are primarily denominated in U.S. dollars, and therefore substantially allmost of our revenue is not subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of our platform to our customers outside of the United States, which could adversely affect our operating results. In addition, an increasing portion of our operating expenses is incurred and an increasing portion of our assets is held outside the United States. These operating expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.
Our failure to raise additional capital could reduce our ability to compete and could harm our business.
We expect that our existing cash and cash equivalents together with our net proceeds from our initial public offering and our follow-on public offering, will be sufficient to meet our anticipated cash needs for the foreseeable future. However, if we change our business strategy, we may need to raise additional funds in the future, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of common stock, and we may be required to accept terms that restrict our ability to incur additional indebtedness. We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition.
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We are exposed to the credit risk of some of our resellers and customers and to credit exposure in weakened markets, which could result in material losses.
Most of our sales are on an unsecured basis. Although we seek to mitigate these risks, we cannot be certain that these efforts will be effective in reducing our credit risks, especially as we expand our business internationally.internationally and some of our resellers or customers may be impacted by the current COVID-19 pandemic. If we are unable to adequately control these risks, our business, results of operations and financial condition could be harmed.
Federal, state, foreign government and industry regulations, as well as self‑regulationself-regulation related to privacy and data security concerns, pose the threat of lawsuits and other liability.
We collect and utilize demographic and other information, including personally identifiable information, from and about our employees and our existing and potential customers and partners. Such information may be collected from our customers and partners when they visit our website or through their use of our products and interactions with our company and employees such as when signing up for certain services, registering for training seminars, participating in a survey, participating in polls or signing up to receive e‑maile-mail newsletters.
A wide variety of domestic and international laws and regulations (including, for example, the General Data Protection Regulation that became effective in May 2018, and the California Consumer Privacy Act that became effective on January 1, 2020) apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These data protection and privacy‑relatedprivacy-related laws

and regulations are evolving and may result in regulatory and public scrutiny and escalating levels of enforcement and sanctions. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including fines, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have a material adverse effect on our operations, financial performance and business. Evolving and changing definitions of personal data and personal information within the European Union, the United States, and elsewhere may limit or inhibit our ability to operate or expand our business. Even the perception of privacy concerns, whether or not valid, may harm our reputation, inhibit adoption of our products by current and future customers or adversely impact our ability to attract and retain workforce talent.
Loss, retention or misuse of certain information and alleged violations of laws and regulations relating to privacy and data security, and any relevant claims, may expose us to potential liability and may require us to expend significant resources on data security and in responding to and defending such allegations and claims. In addition, future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our customers’ ability to collect, use or disclose data relating to individuals, which could decrease demand for our platform, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.
A portion of our revenue is generated by sales to government entities and heavily regulated organizations, which are subject to a number of challenges and risks.
A portion of our sales are to governmental entities. Additionally, many of our current and prospective customers, such as those in the financial services and health care industries, are highly regulated and may be required to comply with more stringent regulations in connection with subscribing to and deploying our platform. Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will result in a sale. Government and highly regulated entities often require contract terms that differ from our standard arrangements and impose compliance requirements that are complicated, require preferential pricing or “most favored nation” terms and conditions, or are otherwise time consuming and expensive to satisfy. If we undertake to meet special standards or requirements and do not meet them, we could be subject to increased liability from our customers or regulators. Even if we do meet them, the additional costs associated with providing our services to government and highly regulated customers could harm our margins. Moreover, changes in the underlying regulatory conditions that affect these types of customers could harm our ability to efficiently provide our services to them and to grow or maintain our customer base.
Additionally, government certification requirements for platforms like ours may change and in doing so restrict our ability to sell into certain government sectors until we have attained the revised certification. Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Additionally, government entities routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the
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government entity refusing to continue buying our solutions, a reduction of revenue, fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could adversely impact our operating results. Furthermore, engaging in sales activities to foreign governments introduces additional compliance risks specific to the FCPA, the UK Bribery Act and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.
As a public company, weWe are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), the Sarbanes‑OxleySarbanes-Oxley Act of 2002 (the Sarbanes‑OxleySarbanes-Oxley Act), the Dodd‑FrankDodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the Dodd‑Frank Act), the rules and regulations of the listing standards of the New York Stock Exchange and other applicable securities rules and regulations. Compliance with these rules and regulations increaseshave increased our legal and financial compliance costs, makesmade some activities more difficult, time‑consumingtime-consuming or costly and increasesincreased demand on our systems and resources, particularly aftersince we are no longer an “emerging

growth company.”
The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes‑OxleySarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management'smanagement’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue‑generatingrevenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.
However, for as long as we remain an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (the JOBS Act), we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
Further, the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended (Securities Act), registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non‑emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult because of the potential differences in accounting standards used.
We will remain an “emerging growth company” for up to five years. However, among other factors, if the market value of our common stock that is held by non‑affiliates exceeds $700 million as of any July 31 after our first annual report, we would cease to be an “emerging growth company” as of the following January 31.
These new rules and regulations willapplicable to public companies make it more expensive for us as a public company, to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in this Annual Report on Form 10-K and in filings required of a public company, our business and financial condition are more visible, which we believehas resulted in litigation, and may continue to result in additional threatened or actual litigation in the future, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.
If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes‑OxleySarbanes-Oxley Act, and the rules and regulations of the listing standards of the New York Stock Exchange. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time‑consuming,time-consuming, and costly, and place significant strain on our personnel, systems, and resources.
The Sarbanes‑OxleySarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the Securities and Exchange Commission (SEC)SEC is
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recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive officer and principal financial officers.officer. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting‑relatedaccounting-related costs and significant management oversight.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually beare required to include in our periodic reports that will beare filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the applicable stock exchange. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes‑Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10‑K.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined inof the JOBS Act. At such time,end of our fiscal year. Our independent registered public accounting firm mayhas to issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results and could cause a decline in the price of our common stock.

We are an “emerging growth company”If we have material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and we cannotour financial statements may be certain if the reduced disclosure requirements applicablematerially misstated. Moreover, failure to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to complydemonstrate continued compliance with the auditor attestation requirements of Section 404 of the Sarbanes‑OxleySarbanes-Oxley Act reduced disclosure obligations regarding executive compensationcould subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue, cause investors to lose confidence in our periodic reportsthe accuracy and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and exemptions from complying with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. We may take advantage of these exemptions for so long as we are an “emerging growth company,” which could be as long as five years following the effectivenesscompleteness of our initial public offering but we expectfinancial reports, subject us to not be an “emerging growth company” sooner. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractivestockholder or other third-party litigation as a result, there may be a less activewell as investigations and delisting, as applicable, by the New York Stock Exchange, the SEC, or other regulatory authorities, and negatively affect the trading market for our common stock and the price of our common stock may be more volatile.stock.
Our financial results may be adversely affected by changes in accounting principles applicable to us.
Generally accepted accounting principles in the United States (GAAP) are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. For example, in February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (Topic 842), which became effective for us on February 1, 2019. Under the Topic 842 standard, most leases are required to be recognized on the balance sheet as right-of-use assets and corresponding lease liabilities. Refer to Note 2 in the notes to our consolidated financial statements included in the Annual Report on Form 10-K for our fiscal year ended January 31, 2020 filed with the SEC on March 27, 2020 for additional information on Topic 842 and its impact on our consolidated financial statements. Additionally, in May 2014, the FASB issued accounting standards update No. 2014‑092014-09 (Topic 606), Revenue from Contracts with Customers, which supersedes nearly all existingbecame effective for our annual reporting period for the year ended January 31, 2019. Under Topic 606, revenue recognition guidance under GAAP. We will be requiredis recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to implement this guidancereceive in fiscal 2020. We have not selected a transition method and continue to evaluate what effect, if any, the amendments and transition alternatives could have on our financial position and results of operations. Regardless of the transition method selected, applicationexchange for those goods or services. The adoption of Topic 606 may significantlyhas had a material impact on the amount and timing of revenue recognition, such as recognizing revenue from existing contractsrecognition. See Note 2 in periods other than when historically reported under existing GAAP or the revenue recognized under existing GAAP could be eliminated as part“Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2019 filed with the SEC on March 29, 2019 regarding the effect of adoption. Further, adoption of Topic 606new accounting pronouncements on our consolidated financial statements. These or other changes in accounting principles could adversely affect our financial results. Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in changes to the periods when revenue is recognizedregulatory discipline and harm investors’ confidence in the future compared with management’s current expectations under existing GAAP. In addition, Topic 606 may significantly change the timing of when expense recognition will occur related to costs to obtain and fulfill customer contracts. While the adoption of Topic 606 does not change the cash flows received from our contracts with customers, the adoption of Topic 606 could have a material adverse effect on our financial position or results of operations.us.
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.
We are subject to income taxation in the United States and numerous foreign jurisdictions. Determining our provision for income taxes requires significant management judgment. In addition, our provision for income taxes is subject to volatility and could be adversely affected by many factors, including, among other things, changes to our operating or holding structure, changes in the amounts of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws. We could be subject to tax examinations in various jurisdictions.
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Tax authorities may disagree with our use of research and development tax credits, intercompany charges, cross‑jurisdictionalcross-jurisdictional transfer pricing or other matters and assess additional taxes. While we regularly assess the likely outcomes of these examinations to determine the adequacy of our provision for income taxes, there can be no assurance that the outcomes of such examinations will not have a material impact on our operating results and cash flows.
In addition, we may be subject to the examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our results of operations.

The enactment of legislation implementing changes in the United States of taxation of international business activities or the adoption of other tax reform policies could materially impact our financial position and results of operations.
Recent changes to United States tax laws, including limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral of certain tax deductions until earnings outside of the United States are repatriated to the United States, as well as changes to United States tax laws that may be enacted in the future, could impact the tax treatment of our foreign earnings. Due to expansion of our international business activities, any changes in the United States taxation of such activities may increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
In general, under Section 382 of the United StatesU.S. Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre‑changepre-change net operating losses (NOLs) to offset future taxable income. If our existing NOLs are subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. For example, we recently performed an analysis to determine whether an ownership change had occurred since our inception which identified two historical ownership changes. While these limitations did not result in a material restriction on the use of our NOLs, futureFuture changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Under the 2017 Tax Cuts and Jobs Act (the Tax Act), tax losses generated in taxable years beginning after December 31, 2017 may be utilized to offset no more than 80% of taxable income annually. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security, or CARES Act, was signed into law. For taxable years beginning before January 1, 2021, the CARES Act eliminates the limitation on the deduction of NOLs to 80% of current year taxable income. However, that limitation remains for later taxable years. It is also uncertain if and to what extent various states will conform to the Tax Act, as modified by the CARES Act. For these reasons, we may not be able to utilize a portion of the NOLs reflected on our balance sheet, even if we attain profitability.
We have business and customer relationships with certain entities who are stockholders or are affiliated with our directors, or both, and conflicts of interest may arise because of such relationships.
Some of our customers and other business partners are affiliated with certain of our directors or hold shares of our capital stock, or both. For example, we have entered into strategic relationships and/or customer relationships with Intel Corporation or Intel.(Intel). Our director, Rosemary Schooler, is an employee of Intel, and Intel is a stockholder. We believe that the transactions and agreements that we have entered into with related parties are on terms that are at least as favorable as could reasonably have been obtained at such time from third parties.parties and our board of directors has determined that Ms. Schooler as “independent” under the applicable rules, regulations and listing standards of New York Stock Exchange and the applicable rules and regulations promulgated by the SEC. However, these relationships could create, or appear to create, potential conflicts of interest when our board of directors is faced with decisions that could have different implications for us and these other parties or their affiliates. In addition, conflicts of interest may arise between us and these other parties and their affiliates. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public’s perception of us, as well as our relationship with other companies and our ability to enter into new relationships in the future, including with competitors of such related parties, which could harm our business and results of operations.
Adverse economic conditions may negatively impact our business.
Our business depends on the overall demand for information technology and on the economic health of our current and prospective customers. Any significant weakening of the economy in the United States or Europe and of the global economy, more limited availability of credit, a reduction in business confidence and activity, decreased government spending, economic uncertainty and other difficulties, such as the current COVID-19 pandemic, may have affected, and may continue to affect, one or more of the sectors or countries in which we sell our applications. GlobalIn addition, geopolitical developments, such as
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existing and potential trade wars, and other events beyond our control, such as the current COVID-19 pandemic, can increase levels of political and economic unpredictability globally and the volatility of global financial markets. For example, in response to the COVID-19 pandemic, we have shifted certain of our customer events to virtual-only experiences and we may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee or industry events in the future. Moreover, global economic and political uncertaintyuncertainties, such as those due to the current COVID-19 pandemic, may cause some of our customers or potential customers to curtail spending, and may ultimately result in new regulatory and cost challenges to our international operations. In addition, a strong dollar could reduce demand for our products in countries with relatively weaker currencies. These adverse conditions could result in reductions in sales of our applications, longer sales cycles, reductions in subscription duration and value, slower adoption of new technologies and increased price competition. Any of these events could have an adverse effect on our business, operating results and financial position.

Our business is subject to the risks of epidemic or pandemic events, earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man‑mademan-made problems such as terrorism.
A significant health crisis, epidemic or pandemic (including the current COVID-19 pandemic), or a natural disaster, such as an earthquake, fire or a flood, or a significant power outage could have a material adverse impact on our business, financial condition and results of operations. Our corporate headquarters are located in Palo Alto,Santa Clara, California, in a region known for seismic activity, and we have significant offices in San Francisco, Austin and New York City and Austin inin the United States and internationally in Bangalore, Budapest, London, Ireland and Singapore. Further, if an epidemic or pandemic or a natural disaster or terrorist event occurs in a region from which we derive a significant portion of our revenue, customers in that region may delay or forego purchases of our products, which may materially and adversely impact our results of operations for a particular period. For example, the west coast of the United States contains active earthquake zones and the eastern seaboard is subject to seasonal hurricanes while New York and the United Kingdom have suffered significant terrorist attacks. Additionally, we rely on our network and third‑partythird-party infrastructure and enterprise applications, internal technology systems and our website for our development, marketing, finance, customer support, operational support, hosted services and sales activities. In the event of a major epidemic or pandemic, earthquake, hurricane or catastrophic event such as fire, power loss, floods, telecommunications failure, cyber‑attack,cyber-attack, war or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development of solutions, lengthy interruptions in our services, breaches of data security and loss of critical data, all of which could have an adverse effect on our operating results. All of the aforementioned risks may be augmented if the business continuity plans for us and our service providers prove to be inadequate. To the extent that any of the above results in delays or cancellations of customer orders, or the delay in the deployment of our products, our business, financial condition and results of operations could be adversely affected.
Risks Related to Ownership of Our Common Stock
The stock price of our common stock has been, and may continue to be, volatile or may decline regardless of our operating performance.
The market price offor our common stock has been, and will likelymay continue to be, volatile. Since shares of our common stock were sold in our IPOinitial public offering in April 2017 at a price of $15.00 per share, our stock price has ranged from $14.50$4.76 to $23.35, through November 30, 2017. July 31, 2020. The market price of the common stock of many technology companies have fluctuated significantly since the outbreak of COVID-19. The extent to which and for how long COVID-19 may impact the market price of common stock is unclear.
The market price of our common stock may continue to fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors included in this Risk Factors section as well as:
•COVID-19 and any associated economic downturn;
•overall performance of the equity markets;
•actual or anticipated fluctuations in our operating results or net revenue expansion rate;
•changes in the financial projections we may provide to the public or our failure to meet these projections, even if we meet our own projections;
•failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;investors, even if we meet our own projections;
•recruitment or departure of key personnel;
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•the economy as a whole and market conditions in our industry;
•rumors and market speculation involving us or other companies in our industry;
•announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
•actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

•developments or disputes concerning our intellectual property or our offerings, or third‑partythird-party proprietary rights;
•announced or completed acquisitions of businesses or technologies by us or our competitors;
•dilution associated with mergers and acquisitions;
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
•changes in accounting standards, policies, guidelines, interpretations or principles;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
•lawsuits threatened or filed against us;
•other events or factors, including those resulting from war, incidents of terrorism, pandemics, or responses to these events; and
the expiration•repurchases of contractual lock‑up or market standoff agreements;shares of our common stock by us and
sales of shares of our common stock by us or our stockholders.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholdersStockholders have, from time to time, instituted securities class action litigation following periods of marketstock price volatility. IfFor example, after we announced earnings for the quarter ended April 30, 2019, our stock price dropped and several securities litigation lawsuits were toinitiated. The current securities litigation cases, as well as any future securities litigation that we may become involved in, securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.business, results of operations and cash flows.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts initiate research with an unfavorable rating or downgrade our common stock, provide a more favorable recommendation about our competitors, publish inaccurate or unfavorable research about our business or cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
Our directors, executive officers and principal stockholders will continue to have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.
Our directors, executive officers and our stockholders who own greater than 5% of our outstanding common stock, together with their affiliates, beneficially owned,own, in the aggregate, approximately 42.7% 42.4% of our outstanding common stock, based on the number of shares outstanding as of November 30, 2017.August 31, 2020. As a result, these stockholders, if acting together, will be ablehave the ability to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. In addition, these stockholders, acting together, would have the ability to influence or control the governance, management and affairs of our company. They may also have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company,
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could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.
In addition, Intel heldIcahn Enterprises L.P. and certain of its affiliates (collectively, the Icahn Group) holds approximately 18.5%16.9% of our outstanding common stock, based on the number of shares outstanding as of November 30, 2017.August 31, 2020. Intel holds approximately 8.4% of our outstanding common stock, based on the number of shares outstanding as of August 31, 2020. As such, the Icahn Group and Intel could have considerable influence over matters such as approving a potential acquisition of us. The Icahn Group and Intel’s investment in and position in our company, including the various agreements we entered into with them respectively, could also discourage others from pursuing any potential acquisition of us, which could have the effect of depriving the holders of our common stock of the opportunity to sell their shares at a premium over the prevailing market price.

Sales of substantial amounts of our common stock in the public markets, or the perception that they might occur, could cause the market price of our common stock to decline.
Sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
Additionally, as of October 31, 2017, approximately 53,114,415 shares of our common stock outstanding are currently restricted as a result of lock-up agreements entered into in connection with our follow-on public offering of common stock. These shares will become eligible for sale in the public market (i) with respect to all directors, Intel and the stockholders who sold shares in our follow-on public offering, except for Accel and Greylock Partners, on the close of trading on the second full trading day following the public release of our earnings for the quarterly period ended October 31, 2017 and (ii) with respect to our executive officers and Accel and Greylock Partners, with respect to the number of shares of common stock equal to fifty percent of the common stock held by them immediately before the consummation of our follow-on public offering, less any shares sold in the follow-on public offering, after the close of trading on the second full trading day following the public release of our earnings for the quarterly period ended October 31, 2017 and with respect to the remaining fifty percent of the common stock held by them immediately before the consummation of our follow-on public offering, after the close of trading on the second full trading day following the public release of our earnings for the quarterly period ended January 31, 2018. If a large number of shares of our common stock are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our common stock and impede our ability to raise future capital. Shares held by directors, executive officers, and other affiliates will also be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.
In addition, as of October 31, 2017, we had stock options outstanding that, if fully exercised, would result in the issuance of 21,488,742 shares of common stock and RSUs that, if fully vested, would result in the issuance of 16,657,682 shares of common stock. We also granted RSUs settleable for 356,950 shares of our common stock subsequent to October 31, 2017. All of the shares of common stock issuable upon the exercise of stock options or settlement of RSUs, and the shares reserved for future issuance under our equity incentive plans, are registered for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance subject to existing lock‑up or market standoff agreements and applicable vesting requirements.
As of October 31, 2017, the holders of 60,245,446 shares of our common stock will have rights, subject to some conditions, to require us to file registration statements for the public resale of the common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders.
We may also issue our shares of common stock or securities convertible into shares of our common stock from time to time in connection with a financing, acquisition, or investment, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our common stock to decline.
We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Defensive measures in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for

stockholders to elect directors who are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:
•a classified board of directors with three‑yearthree-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
•the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
•the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
•the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our chief executive officer, our lead director, if any, or a majority vote of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
•
the requirement for the affirmative vote of holders of at least 662/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
•the requirement for the affirmative vote of holders of at least 662/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
•the ability of our board of directors to amend theour amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the amended and restated bylaws to facilitate an unsolicited takeover attempt;
•the requirement that in order for a stockholder to be eligible to propose a nomination or other business to be considered at an annual meeting of our stockholders, such stockholder must have continuously beneficially owned at
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least 1% of the Company’sour outstanding common stock for a period of one year before giving such notice, which may discourage, delay or deter stockholders or a potential acquirer from conducting a solicitation of proxies to elect the their own slate of directors or otherwise attempting to obtain control of us or influence over our business; and
•advance notice procedures with which stockholders must comply in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage, delay or deter stockholders or a potential acquirer from conducting a solicitation of proxies to elect the their own slate of directors or otherwise attempting to obtain control of us or influence over our business.
In addition, our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate of incorporation, or our restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
In addition, because we are incorporated in Delaware, we are governed by the provisions of the anti‑takeoveranti-takeover provisions of the Delaware General Corporation Law, which may discourage, delay or prevent a change in control

by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

Our restated certificate of incorporation and amended and restated bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate of incorporation, or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine.
Moreover, Section 22 of the Securities Act of 1933, as amended (Securities Act) creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder and in March 2020, we amended and restated our restated bylaws to provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (a Federal Forum Provision). Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal courts. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit our stockholders’ ability to bring a claim in a judicial forum they find favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation and/or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Unregistered SalesPurchases of Equity Securities by the Issuer and Affiliated Purchasers
On August 31, 2017, we issued 358,206 restricted sharesMarch 3, 2020, our board of ourdirectors authorized a share repurchase program of the Company’s common stock of up to $100 million (the “Share Repurchase Program”), as announced on March 10, 2020 and further discussed in connection with a strategic transaction. These restrictedNote 9 to the Company’s condensed consolidated financial statements in this Quarterly Report on Form 10-Q. No shares will be released through four annual installments subject to certain conditions. The salewere repurchased during the three months ended July 31, 2020. As of the above securities were deemed to be exempt from registrationJuly 31, 2020, there was approximately $74.0 million of authorized funds remaining under the Securities Act in reliance upon Section 4(a)(2)repurchase program. This Share Repurchase Program does not have an expiration date.












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Table of the Securities Act (or Regulation D or Regulation S promulgated thereunder) as transactions by an issuer not involving any public offering.Contents
(b) Use of Proceeds for Initial Public Offering of Common Stock
On April 27, 2017, the SEC declared our registration statement on Form S-1 (File No. 333-217071) for our IPO effective.
There have been no material changes in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on April 28, 2017 pursuant to Rule 424(b)(4).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following documents are filed as exhibits to this report:


Exhibit Index
Incorporated by ReferenceFiled Herewith
Exhibit NumberExhibit DescriptionFormFile No.ExhibitFiling Date
Incorporated by ReferenceFiled Herewith
Exhibit Number10.01Exhibit DescriptionFormFile No.ExhibitFiling DateX
31.01X
31.02X
32.01*X
32.02*X
101.INSXBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentX
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Definition Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Labels Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)X
*This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

* This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CLOUDERA, INC.
CLOUDERA, INC.
September 4, 2020By:/s/ Robert Bearden
Date: December 8, 2017By:/s/ Thomas J. ReillyRobert Bearden
Thomas J. Reilly
Chief Executive Officer and Director
(Principal Executive Officer)
Date: December 8, 2017September 4, 2020By:/s/ Jim Frankola
Jim Frankola
Chief Financial Officer
(Principal Financial Officer)


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