Fair Value Measurements

9 Months Ended

Oct. 31, 2022

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:

Level 1 Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The carrying amounts of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity of those instruments.

The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis, based on the three-tier fair value hierarchy (in thousands):


	As of October 31, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	77,275	$	—	$	—	$	77,275
Corporate debt securities	—		1,405		—		1,405
Marketable securities:
U.S. Treasury securities	—		51,780		—		51,780
Corporate debt securities	—		148,508		—		148,508
Commercial paper	—		36,856		—		36,856
Foreign government obligations	—		4,736		—		4,736

Certificates of deposit	—		8,519		—		8,519
Total financial assets	$	77,275	$	251,804	$	—	$	329,079


	As of January 31, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	70,742	$	—	$	—	$	70,742

Marketable securities:
U.S. Treasury securities	—		67,476		—		67,476
Corporate debt securities	—		167,160		—		167,160
Commercial paper	—		19,033		—		19,033
Foreign government obligations	—		7,607		—		7,607
Supranational securities	—		12,922		—		12,922
Certificates of deposit	—		2,313		—		2,313
Total financial assets	$	70,742	$	276,511	$	—	$	347,253

The Company had $0.3 million of restricted cash invested in money market funds that is not included in the tables above as of October 31, 2022 and January 31, 2022, respectively.

In connection with the Loan and Security agreement, discussed in Note 6, the Company issued 32,276 warrants to purchase shares of the Company’s redeemable convertible preferred stock. The Company used a Black-Scholes option valuation model to value its redeemable convertible preferred stock warrant liability at inception and on subsequent valuation dates. Changes in the fair values of the redeemable convertible preferred stock warrant liability were recorded as interest and other income (expense), net in the Company’s condensed consolidated statements of operations. All 32,276 warrants to purchase shares of redeemable convertible preferred stock converted into warrants to purchase common stock upon the closing of the Company’s IPO and the related liability was reclassified to additional paid-in capital in the Company’s condensed consolidated balance sheet. During the nine months ended October 31, 2022, no warrants were exercised. During the nine months ended October 31, 2021, 21,746 warrants were exercised. There were no transfers between levels of the fair value hierarchy during the nine months ended October 31, 2022 and 2021, respectively.

The following is a summary of available-for sale marketable securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheet as of October 31, 2022 and January 31, 2022, respectively (in thousands):


	As of October 31, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value
U.S. Treasury securities	$	52,424	$	—	$	(644)	$	51,780
Corporate debt securities	150,200		4		(1,696)		148,508
Commercial paper	36,977		—		(121)		36,856
Foreign government obligations	4,790		—		(54)		4,736

Certificates of deposit	8,617		—		(98)		8,519
Total marketable securities	$	253,008	$	4	$	(2,613)	$	250,399


	As of January 31, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value
U.S. Treasury securities	$	67,770	$	—	$	(294)	$	67,476
Corporate debt securities	167,693		3		(536)		167,160
Commercial paper	19,052		—		(19)		19,033
Foreign government obligations	7,640		—		(33)		7,607
Supranational securities	12,923		—		(1)		12,922
Certificates of deposit	2,319		—		(6)		2,313
Total marketable securities	$	277,397	$	3	$	(889)	$	276,511

The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, and any adverse conditions specifically related to an issuer of a security or its industry. No impairment loss has been recorded on the securities included in the table above, as the Company believes that the decrease in fair value of these securities is temporary.

The following table presents the contractual maturities of the Company’s marketable securities (in thousands):


	October 31, 2022
Due in one year or less	$	230,482
Due after one year and within five years	19,917
Total marketable securities	$	250,399

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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