As a global business, we are exposed to foreign currency exchange rate risk. Substantially all of our revenue is transacted in U.S. dollars; however, a portion of our cost of revenue and operating expenditures are incurred outside of the United States and are denominated in foreign currencies, making them subject to fluctuations in foreign currency exchange rates. In order to mitigate the impact of foreign currency fluctuations on our future cash flows and earnings, we enter into foreign currency forward contracts, which we designate as cash flow hedges. All cash flow hedges were considered effective during the three and six months ended January 31, 2023 and 2022.

We also use foreign currency forward contracts to mitigate variability in gains and losses generated from the remeasurement of certain monetary assets and liabilities denominated in foreign currencies. The outstanding non-designated derivative instruments are carried at fair value with change in fair value recorded in other expense, net in the condensed consolidated statement of operations in the same period as the changes in fair value from the remeasurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. These foreign exchange contracts typically have maturities of approximately one to four months. Changes in the fair value of these derivatives were not material for the three and six months ended January 31, 2023 and 2022.

As of January 31, 2023 and July 31, 2022, the total notional amount of our outstanding designated foreign currency forward contracts was $409.2 million and $293.4 million, respectively, and for our outstanding non-designated foreign currency forward contracts was $156.2 million and $126.4 million, respectively. The maximum length of time over which forecasted foreign currency denominated operating expenses are hedged is 24 months. As of January 31, 2023, an estimated $2.9 million of the unrealized losses related to our cash flow hedges are expected to be released into earnings over the next 12 months. Refer to Note 4, Fair Value Measurements, for the fair value of our derivative instruments as reported on the condensed consolidated balance sheet as of January 31, 2023 and July 31, 2022.

During the three and six months ended January 31, 2023 and 2022, changes in the fair value of our non-designated derivative instruments recorded within other expense, net in the condensed consolidated statements of operations were not material.

During the three months ended January 31, 2023 and 2022, we recognized a gain of $24.0 million and a loss of $3.2 million, respectively, in accumulated other comprehensive income (loss) ("AOCI") related to our cash flow hedges. During the six months ended January 31, 2023 and 2022, we recognized a gain of $10.0 million and a loss of $4.5 million, respectively, in AOCI related to our cash flow hedges.

The following table presents information about (gains) losses related to our cash flow hedges reclassified from AOCI into the condensed consolidated statement of operations for three and six months ended January 31, 2023 and 2022:


	Three Months Ended January 31,				Six Months Ended January 31,

	2023		2022		2023		2022
	(in thousands)
Classification:
Cost of revenue	$	706	$	64	$	1,413	$	69
Sales and marketing	2,757		760		6,053		1,140
Research and development	583		24		1,047		(2)
General and administrative	221		28		467		24
Total	$	4,267	$	876	$	8,980	$	1,231

Our derivative contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the underlying contracts. We mitigate this credit risk by transacting with major financial institutions with high credit ratings and standards. We periodically assess the creditworthiness of our counterparties to ensure they continue to meet our credit quality requirements. We also enter into master netting arrangements, which permit net settlement of transactions with the same counterparty. The potential impact of these rights of set-off associated with our derivative instruments was not material as of January 31, 2023 and July 31, 2022. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. We do not enter into derivative contracts for trading or speculative purposes.