The following discussion and analysis of our financial condition and results of
operations together should be read in conjunction with our condensed
consolidated financial statements and the related notes appearing elsewhere in
this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the
year ended January 31, 2022, filed with the SEC on March 17, 2022. You should
review the sections titled "Special Note Regarding Forward-Looking Statements"
above in this Quarterly Report on Form 10-Q for a discussion of forward-looking
statements and important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis. Factors that
could cause or contribute to such differences include, but are not limited to,
impacts on our business and general economic conditions due to the current
COVID-19 pandemic, those identified below, and those discussed in the section
titled "Risk Factors" included in Part II, Item 1A below. The last day of our
fiscal year is January 31. Our fiscal quarters end on April 30, July 31, October
31 and January 31.

Overview

PagerDuty is a digital operations management platform that manages urgent and
mission critical work for a modern, digital enterprise. We empower teams to
respond rapidly to incidents to resolve or avoid customer issues, reduce noise,
predict and avoid performance degradation, improve productivity, and accelerate
digital transformation.

Today, nearly every business is a digital business. As such, organizations are
under pressure to enhance their digital operations in order to meet escalating
customer expectations, resolve incidents proactively and free-up time for
innovation projects. This means critical, time sensitive, and unpredictable work
needs to be detected and orchestrated.

We collect data and digital signals from virtually any software-enabled system
or device and leverage powerful machine learning to correlate, process, and
predict opportunities and issues. Using incident response, event management, and
automation, we bring together the right people with the right information so
they can resolve issues and act on opportunities in minutes or seconds from
wherever they are.

Since our founding in 2009, we have expanded our capabilities from a single
product focused on on-call management for developers to a multi-product platform
that crosses silos into IT operations, security, customer service, and executive
stakeholder roles across the organization. We have evolved from an on-call tool
into the platform for digital operations, which resides at the center of a
company's technology ecosystem.

We have spent more than a decade building deep product integrations to our
platform, and our ecosystem now includes over 650 direct integrations to enable
our customers to gather and correlate digital signals from virtually any
software-enabled system or device. This allows technical teams to collect
digital signals from any system or platform in their environment, and without
the effects of context switching. Those same integrations connect with popular
collaboration tools and business applications, as well as all types of
technology stacks to drive automation of work.

We generate revenue primarily from cloud-hosted subscription fees. We also
generate revenue from term-license software subscription fees. We have a
land-and-expand business model that leads to viral adoption of our products and
subsequent expansion. Our online self-service model is the primary mechanism for
landing new customers and enabling teams to get started without assistance. We
complement our self-service model with high-

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velocity inside sales focused on small and medium businesses, a commercial team
focused on mid-market customers, and a field sales team focused on enterprise
customers. Our mid-market and enterprise customers account for the majority of
our revenue today. These teams drive expansion to additional users, new use
cases, and add-on products, as well as upsell to higher value plans.

COVID-19 Update

The COVID-19 pandemic continued during fiscal year 2023.While our revenues,
billings, and earnings are relatively predictable as a result of our
subscription-based business model and the majority of our revenues are generated
from annual subscriptions, the effects of the COVID-19 pandemic may have a
delayed impact on our results of operations. We continue to ascertain the
long-term impact of the COVID-19 pandemic on our business. We continue to focus
on supporting our employees, customers, and community.

As our offices begin to reopen, we expect to incur incremental expenses as we
resume onsite services and related in-office costs. However, the majority of our
employees continue to work remotely in order to minimize the spread of COVID-19
among our employee base and comply with local regulations within the United
States and internationally. As we continue to monitor the local regulations
related to COVID-19, we have begun to release travel restrictions on
business-related travel, allowing certain employees to travel on a voluntary
basis. We also continue to offer local employee assistance programs to employees
if needed. These changes remain in effect and could extend into future quarters.
The impact, if any, of these and any additional operational changes we may
implement to facilitate remote work is uncertain, but changes we have
implemented have not affected and are not expected to affect our ability to
maintain operations, including financial reporting systems, internal control
over financial reporting and disclosure controls and procedures.

Refer to 1A, “Risk Factors” for a more in-depth discussion of the possible impact of the COVID-19 pandemic on our business.

Recent Events

We are closely monitoring the invasion of Ukraine by Russia in February 2022 and
its global impacts. While the conflict is still unfolding and the outcome
remains highly uncertain, we do not believe the Russia-Ukraine conflict will
have a material impact on our business and results of operation. However, if the
Russia-Ukraine conflict continues or worsens, leading to greater global economic
disruptions and uncertainty, our business and results of operations could be
materially impacted. Our customers in Russia represented an immaterial portion
of our net assets and total consolidated revenue both as of and for the three
months ended April 30, 2022 and January 31, 2022.


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Key business indicators

We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

While these numbers are based on what we believe to be a reasonable
representation of our customer base for the applicable period of measurement, we
rely on a third party to validate legal entities, which uses the best available
data at period end, and therefore is subject to change as new information
becomes available. In addition, we are continually seeking to improve our
methodology, which may result in future changes to our key metrics.

Our key metrics include the results of Catalytic, to the extent applicable, from the date of acquisition of March 8, 2022.

Number of clients

We believe that the number of customers using our platform, particularly those
that have subscription agreements for more than $100,000 in annual recurring
revenue ("ARR"), are indicators of our market penetration, particularly within
enterprise accounts, the growth of our business, and our potential future
business opportunities. We define ARR as the annualized recurring value of all
active contracts at the end of a reporting period. We define a customer as a
separate legal entity, such as a company or an educational or government
institution, that has an active subscription with us or one of our partners to
access our platform. In situations where an organization has multiple
subsidiaries or divisions, we treat the parent entity as the customer instead of
treating each subsidiary or division as a separate customer. Increasing
awareness of our platform and its broad range of capabilities, coupled with the
fact that the world is always on and powered by increasingly complex technology,
has expanded the diversity of our customer base to include organizations of all
sizes across virtually all industries. Over time, enterprise and mid-market
customers have constituted a greater share of our revenue.

                                                  As of April 30,
                                              2022                 2021
Customers                                   15,040                13,918
Customers greater than $100,000 in ARR         655                   458


Net retention rate in dollars

We use dollar-based net retention rate to evaluate the long-term value of our
customer relationships, since this metric reflects our ability to retain and
expand the ARR from our existing customers. Our dollar-based net retention rate
compares our ARR from the same set of customers across comparable periods.

We calculate dollar-based net retention rate as of a period end by starting with
the ARR from the cohort of all customers as of 12 months prior to such period
end, or Prior Period ARR. We then calculate the ARR from these same customers as
of the current period end, or Current Period ARR. Current Period ARR includes
any expansion and is net of downgrades or churn over the last 12 months but
excludes ARR from new customers in the current period. We then divide the total
Current Period ARR by the total Prior Period ARR to arrive at the dollar-based
net retention rate. The calculation of dollar-based net retention rate includes
the Current Period ARR of Catalytic customers to the extent that they were
PagerDuty customers as of 12 months prior to period end.

                                                                    Last 12 

Months ended April 30,

                                                                      2022                   2021
Dollar-based net retention rate for all customers                         126  %                 121  %


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Components of operating results

Revenue

We generate revenue primarily from cloud-hosted software subscription fees with
the majority of our revenue from such arrangements. We also generate revenue
from term-license software subscription fees. Our subscriptions are typically
one year in duration but can range from monthly to multi-year. Subscription fees
are driven primarily by the number of customers, the number of users per
customer, and the level of subscription purchased. We generally invoice
customers in advance in annual installments for subscriptions to our software.
Revenue related to our cloud-hosted software subscriptions is recognized ratably
over the related contractual term beginning on the date that our platform is
made available to a customer. For our term-license software subscriptions, we
recognize license revenue upon delivery and software maintenance revenue
ratably, typically beginning on the start of the contractual term of the
arrangement.

Due to the low complexity of implementation and integration of our platform with
our customers' existing infrastructure, revenue from professional services has
been immaterial to date.

Cost of Revenue

Cost of revenue primarily consists of expenses related to providing our platform
to customers, including personnel expenses for operations and global support,
payments to our third-party cloud infrastructure providers for hosting our
software, payment processing fees, amortization of capitalized internal-use
software costs, amortization of acquired developed technology, and allocated
overhead costs for facilities, information technology, and other allocated
overhead costs. We will continue to invest additional resources in our platform
infrastructure and our customer support and success organizations to expand the
capability of our platform and ensure that our customers are realizing the full
benefit of our offerings. The level and timing of investment in these areas
could affect our cost of revenue in the future.

Gross profit and gross margin

Gross profit represents revenue less cost of revenue. Gross margin is gross
profit expressed as a percentage of revenue. Our gross margin may fluctuate from
period to period as our revenue fluctuates, and as a result of the timing and
amount of investments to expand the capacity of our third-party cloud
infrastructure providers and our continued efforts to enhance our platform
support and customer success teams.

Functionnary costs

Our operating expenses consist of research and development, sales and marketing,
and general and administrative expenses. Personnel expenses are the most
significant component of operating expenses and consist of salaries, benefits,
bonuses, stock-based compensation expense, and sales commissions. Operating
expenses also include amortization of acquired intangible assets,
acquisition-related expenses, allocated overhead costs for facilities, shared IT
related expenses, including depreciation expense, and certain company-wide
events and functions.

Research and development

Research and development expenses consist primarily of personnel costs for our
engineering, product, and design teams. Additionally, research and development
expenses include contractor fees, depreciation of equipment used in research and
development activities, acquisition-related expenses, and allocated overhead
costs. We expect that our research and development expenses will increase in
dollar value as our business grows.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs, costs of
general marketing activities and promotional activities, travel related
expenses, amortization of acquired intangible assets, allocated overhead costs,
and bad debt expense. Sales commissions earned by our sales force that are
considered incremental and recoverable costs of obtaining a subscription with a
customer are deferred and amortized on a straight-line basis over the

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expected period of benefit, which we have determined to be four years. We expect
that our sales and marketing expenses will increase in dollar value and continue
to be our largest operating expense for the foreseeable future as we expand our
sales and marketing efforts.

General and administrative

General and administrative expenses consist primarily of personnel costs and
contractor fees for finance, legal, human resources, information technology, and
other administrative functions. In addition, general and administrative expenses
include non-personnel costs, such as legal, accounting, and other professional
fees, hardware and software costs, certain tax, license and insurance-related
expenses, acquisition-related expenses, and allocated overhead costs. We expect
that our general and administrative expenses will increase in dollar value as
our business grows. However, we expect that our general and administrative
expenses will decrease as a percentage of our revenue over the longer term as we
expect our investments to allow for improved efficiency for future growth in the
business.

Interest Income

Interest income consists of income earned on our cash and cash equivalents and
interest earned on our short-term investments which consist of U.S. Treasury
securities, commercial paper, corporate debt securities, and U.S. Government
agency securities.

Interest Expense

Interest expense consists primarily of contractual interest expense and
amortization of debt issuance costs on our 1.25% Convertible Senior Notes (the
"Notes") due 2025. Refer to   Note 10, "Debt and Financing Arrangements"   for
additional details.

Other (expenses) income, net

Other (expense) income, net, primarily includes accretion income and amortization expense on our available-for-sale investments and gains and losses on foreign currency transactions.

Benefit from (provision for) income taxes

Benefit from (provision for) income taxes consists primarily of income taxes in
certain foreign jurisdictions in which we conduct business. We maintain a full
valuation allowance on our net federal and state deferred tax assets as we have
concluded that it is more likely than not that the deferred tax assets will not
be realized. Benefit from (provision for) income taxes also includes the
reduction in our valuation allowance from the increase in the deferred tax
liability associated with acquired intangible assets from our acquisitions.

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Operating results

The following table sets forth our condensed consolidated statements of earnings for the periods indicated:

                                                                        Three Months Ended April 30,
                                                                          2022                  2021
                                                                               (in thousands)
Revenue                                                            $        85,371          $   63,591
Cost of revenue(1)                                                          15,716              10,418
Gross profit                                                                69,655              53,173
Operating expenses:
Research and development(1)                                                 31,289              20,599
Sales and marketing(1)                                                      45,552              37,234
General and administrative(1)                                               25,271              16,578
Total operating expenses                                                   102,112              74,411
Loss from operations                                                       (32,457)            (21,238)
Interest income                                                                548                 818
Interest expense                                                            (1,325)             (1,317)
Other expense, net                                                            (790)               (616)
Loss before benefit from (provision for) income taxes                      (34,024)            (22,353)
Benefit from (provision for) income taxes                                    1,204                (205)
Net loss                                                           $       (32,820)         $  (22,558)


______________

(1) Includes stock-based compensation expense as follows:

                                             Three Months Ended April 30,
                                                  2022                    2021
                                                    (in thousands)
         Cost of revenue              $         1,224                  $    676
         Research and development               8,675                     4,440
         Sales and marketing                    6,381                     3,954
         General and administrative             8,629                     4,542
         Total                        $        24,909                  $ 13,612



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The following table presents data from our condensed consolidated statements of earnings expressed as a percentage of sales:

                                                                      Three Months Ended April 30,
                                                                       2022                   2021
Revenue                                                                    100  %                 100  %
Cost of revenue                                                             18                     16
Gross profit                                                                82  %                  84  %
Operating expenses:
Research and development                                                    37                     32
Sales and marketing                                                         53                     59
General and administrative                                                  30                     26
Total operating expenses                                                   120                    117
Loss from operations                                                       (38)                   (33)
Interest income                                                              1                      1
Interest expense                                                            (2)                    (2)
Other expense, net                                                          (1)                    (1)
Loss before (provision for) benefit from income taxes                      (40)                   (35)
(Provision for) benefit from income taxes                                    1                      -
Net loss                                                                   (38) %                 (35) %


__________

Note: Some numbers may not match due to rounding.

Comparison of the three months ended April 30, 2022 and 2021

Revenue

                   Three Months Ended April 30,
                        2022                    2021         Change       % Change
                             (dollars in thousands)
Revenue     $        85,371                  $ 63,591      $ 21,780           34  %


Revenue increased by $21.8 million, or 34%, for the three months ended April 30,
2022 compared to the three months ended April 30, 2021. The increase in revenue
was attributable to a combination of growth from both new and existing
customers. Growth from existing customers is attributable to both increases in
the number of users and upsell of additional products and services.

Revenue Cost and Gross Margin

                         Three Months Ended April 30,
                        2022                        2021         Change       % Change
                                  (dollars in thousands)
Cost of revenue   $      15,716                  $ 10,418       $ 5,298           51  %
Gross margin                 82   %                    84  %

Cost of sales increased by $5.3 millionor 51%, mainly due to increases in $1.6 million in hosting, software and telecommunications costs and $0.4 million in field services, both of which are related to supporting the

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continued growth of the business and related infrastructure, an increase of $1.4
million in personnel expenses as a result of increased headcount and salaries,
and an increase of $0.9 million in amortization of acquired intangible assets
related to the acquisition of Catalytic.

Research and development

                                  Three Months Ended April 30,
                                 2022                        2021          

Change % Change

                                            (dollars in thousands)
Research and development   $      31,289                  $ 20,599       $ 10,690           52  %
Percentage of revenue                 37   %                    32  %


Research and development expenses increased by $10.7 million, or 52%, for the
three months ended April 30, 2022 compared to the three months ended April 30,
2021. The increase was primarily driven by an increase in personnel expenses of
$8.3 million as a result of increased headcount and salaries to support our
continued investment in our platform, a $1.1 million increase in costs to
support the growth of the business and related infrastructure, which includes
allocated overhead costs, and a $0.7 million acquisition-related impairment
charge related to software development not placed in service.

Sales and Marketing

                               Three Months Ended April 30,
                              2022                        2021         Change       % Change
                                        (dollars in thousands)
Sales and marketing     $      45,552                  $ 37,234       $ 8,318           22  %
Percentage of revenue              53   %                    59  %


Sales and marketing expenses increased by $8.3 million, or 22%, for the three
months ended April 30, 2022 compared to the three months ended April 30, 2021.
This increase was primarily due to an increase of $6.0 million in personnel
expenses driven by headcount growth, increased salaries, and amortization of
deferred contract costs, an increase of $1.9 million in costs to support the
business and related infrastructure which includes allocated overhead costs, and
an increase of $1.8 million in travel and other program related costs as a
result of increased travel due to reduced travel restrictions related to the
COVID-19 pandemic. This was partially offset by a decrease in marketing expenses
of $1.4 million primarily due to decreases in brand campaigns and digital
marketing.

General and Administrative

                                     Three Months Ended April 30,
                                    2022                        2021         Change       % Change
                                              (dollars in thousands)
General and administrative    $      25,271                  $ 16,578       $ 8,693           52  %
Percentage of revenue                    30   %                    26  %


General and administrative expenses increased by $8.7 million, or 52%, for the
three months ended April 30, 2022 compared to the three months ended April 30,
2021. The increase was driven by an increase of $6.8 million in personnel
expenses as a result of increased headcount and salaries, an increase of $1.9
million in outside services related to transaction costs for the acquisition of
Catalytic and increased costs for outside consultants, and an increase of $0.6
million in travel related costs as a result of increased travel due to reduced
travel restrictions related to the COVID-19 pandemic. This was partially offset
by a decrease of $0.8 million in costs to support the business and related
infrastructure which includes allocated overhead costs.

Interest charges

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                            Three Months Ended April 30,
                                  2022                   2021        Change       % Change
                                     (dollars in thousands)
Interest expense     $        1,325                    $ 1,317      $    8             1  %

Interest expense was constant for the three months ended April 30, 2022
compared to the three months ended April 30, 2021 and related to contractual interest and amortization of debt issuance costs for the Senior Convertible Notes.

Interest and other (expense) income, net

                                  Three Months Ended April 30,
                                        2022                     2021       Change      % Change
                                           (dollars in thousands)
     Interest income      $           548                      $  818      $ (270)         (33) %
     Other expense, net   $          (790)                     $ (616)     $ (174)          28  %


Interest income decreased by $0.3 million and other expense, net increased by
$0.2 million for the three months ended April 30, 2022 compared to the three
months ended April 30, 2021, primarily due to lower interest rates on our cash,
cash equivalent and investment balances in the current year, and an increase in
unrealized losses due to fluctuation in foreign currency exchange rates,
respectively.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe
the following non-GAAP financial measures are useful in evaluating our operating
performance. We use the below referenced non-GAAP financial information,
collectively, to evaluate our ongoing operations and for internal planning and
forecasting purposes. We believe that non-GAAP financial information, when taken
collectively, may be helpful to investors because it provides consistency and
comparability with past financial performance and assists in comparisons with
other companies, some of which use similar non-GAAP financial information to
supplement their U.S. GAAP results. The non-GAAP financial information is
presented for supplemental informational purposes only, should not be considered
a substitute for financial information presented in accordance with U.S. GAAP,
and may be different from similarly-titled non-GAAP measures used by other
companies. The principal limitation of these non-GAAP financial measures is that
they exclude significant expenses that are required by U.S. GAAP to be recorded
in our financial statements. In addition, they are subject to inherent
limitations as they reflect the exercise of judgment by our management about
which expenses are excluded or included in determining these non-GAAP financial
measures. A reconciliation is provided below for each non-GAAP financial measure
to the most directly comparable financial measure stated in accordance with U.S.
GAAP.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit as gross profit adjusted for stock-based
compensation expense and related employer taxes, and amortization of acquired
intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a
percentage of revenue.

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                                                                    Three Months Ended April 30,
                                                                      2022                  2021
                                                                           (in thousands)
Gross profit                                                    $      69,655           $   53,173
Add:
Stock-based compensation                                                1,224                  676
Employer taxes related to employee stock transactions                       7                   26
Amortization of acquired intangible assets                              1,209                  280
Non-GAAP gross profit                                           $      72,095           $   54,155

Gross margin                                                               82   %               84  %
Non-GAAP gross margin                                                      84   %               85  %

Non-GAAP operating loss and non-GAAP operating margin

We define non-GAAP operating loss as loss from operations plus our stock-based
compensation expense and related employer taxes, amortization of acquired
intangible assets, and acquisition-related expenses, which include transaction
costs, acquisition-related retention payments and acquisition-related asset
impairment, which are not necessarily reflective of operational performance
during a given period. We define non-GAAP operating margin as non-GAAP operating
loss as a percentage of revenue.

                                                                           Three Months Ended April 30,
                                                                             2022                  2021
                                                                                  (in thousands)
Loss from operations                                                  $      (32,457)          $  (21,238)
Add:
Stock-based compensation                                                      24,909               13,612
Employer taxes related to employee stock transactions                            652                  681
Amortization of acquired intangible assets                                     1,842                  875
Acquisition-related expenses                                                   2,753                  459
Non-GAAP operating loss                                               $     

(2,301) ($5,611)

Operating margin                                                                 (38)  %              (33) %
Non-GAAP operating margin                                                         (3)  %               (9) %


Non-GAAP Net Loss

We define non-GAAP net loss as net loss plus our stock-based compensation
expense and related employer taxes, amortization of debt issuance costs,
amortization of acquired intangible assets, acquisition-related expenses, which
include transaction costs, acquisition-related retention payments and an
acquisition-related asset impairment, which are not necessarily reflective of
operational performance during a given period, and acquisition-related tax
benefit.

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Three months completed April 30,

                                                                          2022                  2021
                                                                               (in thousands)
Net loss                                                           $       (32,820)         $  (22,558)
Add (Less):
Stock-based compensation                                                    24,909              13,612
Amortization of debt discount and issuance costs                               447                 438
Employer taxes related to employee stock transactions                          652                 681
Amortization of acquired intangibles assets                                  1,842                 875
Acquisition-related expenses                                                 2,753                 459
Acquisition-related tax benefit                                             (1,330)                  -
Non-GAAP net loss                                                  $        (3,547)         $   (6,493)


Free Cash Flow

We define free cash flow as net cash (used in) provided by operating activities,
less cash used for purchases of property and equipment and capitalization of
internal-use software costs. In addition to the reasons stated above, we believe
that free cash flow is useful to investors as a liquidity measure because it
measures our ability to generate or use cash in excess of our capital
investments in property and equipment in order to enhance the strength of our
balance sheet and further invest in our business and potential strategic
initiatives. A limitation of the utility of free cash flow as a measure of our
liquidity is that it does not represent the total increase or decrease in our
cash balance for the period. We use free cash flow in conjunction with
traditional U.S. GAAP measures as part of our overall assessment of our
liquidity, including the preparation of our annual operating budget and
quarterly forecasts and to evaluate the effectiveness of our business
strategies.

                                                                       Three Months Ended April 30,
                                                                          2022                  2021
                                                                              (in thousands)
Net cash (used in) provided by operating activities                $        (2,985)         $   1,579
Less:
Purchases of property and equipment                                         (2,078)              (927)
Capitalization of internal-use software costs                                 (772)            (1,002)
Free cash flow                                                     $        (5,835)         $    (350)
Net cash used in investing activities                              $       (70,357)         $ (12,616)
Net cash used in financing activities                              $        

(2,584) $(2,096)

Cash and capital resources

Since its inception, we have funded our business primarily through the sale of our cloud-hosted software subscriptions, the net proceeds we have received from the sale of equity securities, and the issuance of our notes.

On April 15, 2019at the close of our IPO, we received net proceeds of
$213.7 millionafter deduction of discounts and commissions for subscribers of $16.6 million and other issue costs $6.4 million.

On June 25, 2020, we issued $287.5 million aggregate principal amount of
convertible senior notes in a private placement to qualified institutional
buyers pursuant to Rule 144A under the Securities Act. The total net proceeds
from the sale of the Notes, after deducting the initial purchasers' discounts
and debt issuance costs of $9.3 million, and purchases of the Capped Calls of
$35.7 million, were $242.5 million.

From April 30, 2022our main sources of liquidity were cash and cash equivalents and investments totaling $467.5 million. We believe that our existing cash and cash equivalents, our investments and the liquidity provided by

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sales of our subscriptions will be sufficient to support working capital and
capital expenditure requirements for at least the next 12 months. We believe we
will meet longer-term expected future cash requirements and obligations, through
a combination of cash flows from operating activities and available cash and
short-term investment balances. Our future capital requirements will depend on
many factors, including the effects of the COVID-19 pandemic, our subscription
growth rate, subscription renewal activity, including the timing and the amount
of cash received from customers, the timing and extent of spending to support
development efforts, the expansion of sales and marketing activities, the
introduction of new and enhanced product offerings, and the continuing market
adoption of our platform. We may in the future enter into arrangements to
acquire or invest in complementary businesses, services, and technologies. We
may be required to seek additional equity or debt financing. In the event that
we require additional financing, we may not be able to raise such financing on
terms acceptable to us or at all. If we are unable to raise additional capital
or generate cash flows necessary to expand our operations and invest in
continued innovation, we may not be able to compete successfully, which would
harm our business, operations, and financial condition.

A significant majority of our customers pay in advance for our cloud-hosted and
term-license software subscriptions. Therefore, a substantial source of our cash
is from our deferred revenue, which is included in the liabilities section of
our condensed consolidated balance sheet. Deferred revenue consists of the
unearned portion of customer billings, which is recognized as revenue in
accordance with our revenue recognition policy. As of April 30, 2022, we had
deferred revenue of $167.3 million, of which $162.9 million was recorded as a
current liability and expected to be recorded as revenue in the next 12 months,
provided all other revenue recognition criteria have been met.

Cash flow

The following table shows a summary of our cash flows for the periods presented:

                                                                     Three Months Ended April 30,
                                                                       2022                  2021
                                                                            (in thousands)
Net cash (used in) provided by operating activities             $        (2,985)         $    1,579
Net cash used in investing activities                           $       (70,357)         $  (12,616)
Net cash used in financing activities                           $        (2,584)         $   (2,096)


Operating Activities

Our largest source of operating cash is cash collection from sales of our
cloud-hosted and term license software subscriptions to our customers. Our
primary uses of cash from operating activities are for personnel expenses,
marketing expenses and hosting and software expenses. In the last several years,
we have had periods in which we generated negative cash flows from operating
activities and have supplemented working capital requirements through net
proceeds from both private and public sales of equity securities and issuance of
the Notes.

Cash used in operating activities for the three months ended April 30, 2022 of
$3.0 million primarily related to our net loss of $32.8 million, adjusted for
non-cash charges of $35.0 million and net cash outflows of $5.1 million due to
changes in our operating assets and liabilities. Non-cash charges primarily
consisted of stock-based compensation of $24.9 million, amortization of our
deferred contract costs of $4.5 million, depreciation and amortization of
property and equipment, capitalized implementation costs, and acquired
intangible assets of $3.6 million, other charges of $1.8 million, which consist
primarily of the acquisition-related asset impairment and bad debt expense, a
tax benefit related to the release of our valuation allowance of $1.3 million,
and non-cash lease expense of $1.1 million. Changes in operating assets and
liabilities reflected cash outflows from a $7.7 million decrease in accrued
compensation and related benefits, a $5.0 million increase in deferred contract
costs due to commissions paid on new bookings in line with revenue growth, a
$3.8 million decrease in deferred revenue resulting primarily due to timing of
renewals, a $2.0 million increase in prepaid expenses and other assets related
to timing of payments made in advance for future services, and $1.4 million in
payments for operating lease liabilities.

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These amounts were partially offset by cash inflows from a $15.3 million
decrease in accounts receivable due to timing of collections.

Cash provided by operating activities for the three months ended April 30, 2021
of $1.6 million primarily related to our net loss of $22.6 million, adjusted for
non-cash charges of $21.2 million and net cash inflows of $3.0 million due to
changes in our operating assets and liabilities. Non-cash charges primarily
consisted of stock-based compensation of $13.6 million, amortization of our
deferred contract costs of $3.3 million, depreciation and amortization of
property and equipment, capitalized implementation costs, and acquired
intangible assets of $2.0 million, and non-cash lease expense of $1.1 million.
Changes in operating assets and liabilities reflected cash inflows from a $17.4
million decrease in accounts receivable due to timing of cash collections. This
was partially offset by outflows from a $4.4 million decrease in accrued
compensation and related benefits, a $3.9 million decrease in deferred revenue
due to timing of renewals, a $3.7 million increase in deferred contract costs
due to commissions paid on new bookings in line with revenue growth, a $1.6
million increase in prepaid expenses and other assets related to timing of
payments made in advance for future services, and $1.1 million in payments for
operating lease liabilities.

Investing Activities

Cash used in investing activities for the three months ended April 30, 2022 of
$70.4 million consisted primarily cash paid for the Catalytic acquisition, net
of cash acquired, of $66.3 million, purchases of available-for-sale investments
of $41.7 million, purchases of property and equipment of $2.1 million primarily
for purchases of computers for new employees and to support office space for our
San Francisco office, and capitalization of internal-use software of $0.8
million. This was offset by proceeds from sales and maturities of investments of
$40.4 million.

Cash used in investing activities for the three months ended April 30, 2021 of
$12.6 million consisted of purchases of available-for-sale investments of
$77.5 million, capitalization of internal-use software of $1.0 million, and
purchases of property and equipment of $0.9 million primarily to support
additional office space for our San Francisco office. This was partially offset
by proceeds from maturities and sales of investments of $67.0 million.

Fundraising activities

Cash used in financing activities for the three months ended April 30, 2022 of
$2.6 million consisted of $6.2 million in employee payroll taxes paid related to
vesting of restricted stock units, partially offset by proceeds of $3.6 million
from the exercise of stock options.

Cash provided by financing activities for the three months ended April 30, 2021
of $2.1 million consisted $4.9 million in employee payroll taxes paid related to
vesting of restricted stock units. These outflows were partially offset by
proceeds of $2.8 million from the exercise of stock options.

Contractual obligations and commitments

There were no material changes during the three months ended April 30, 2022 to
our contractual obligations and other commitments, as disclosed in the Annual
Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the
SEC on March 17, 2022.

For further information on our commitments and contingencies, refer to   Note
11, "Commitments and Contingencies"   in the condensed consolidated financial
statements contained within this Quarterly Report on Form 10-Q.

Indemnification agreements

In the ordinary course of business, we may agree to indemnify customers,
vendors, lessors, business partners, and other parties with respect to certain
matters, including, but not limited to, losses arising out of the breach of such
agreements, services to be provided by us, or from intellectual property
infringement claims made by third parties. As permitted under Delaware law, we
have entered into indemnification agreements with our directors and certain
officers and employees that will require us, among other things, to indemnify
them against certain liabilities that may arise by reason of their status or
service as directors, officers, or employees. No demands have been made upon

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us to provide indemnification under such agreements, and there are no claims
that we are aware of that could have a material effect on our consolidated
balance sheets, consolidated statements of operations and comprehensive loss, or
consolidated statements of cash flows.

Off-balance sheet arrangements

We do not currently have and, from April 30, 2022 or during the periods presented, had no off-balance sheet financing or relationship with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, which were established for the purpose to facilitate off-balance sheet arrangements or other narrow or limited contractual purposes.

Significant Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with
U.S. GAAP. In the preparation of these condensed consolidated financial
statements, we are required to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, costs and expenses, and
related disclosures. To the extent that there are material differences between
these estimates and actual results, our financial condition or results of
operations would be affected. We base our estimates on past experience and other
assumptions that we believe are reasonable under the circumstances, and we
evaluate these estimates on an ongoing basis. We refer to accounting estimates
of this type as critical accounting policies and estimates.

There have been no significant changes to our critical accounting policies
described in our Annual Report on Form 10-K for the fiscal year ended January
31, 2022, filed with the SEC on March 17, 2022, that had a material impact on
our condensed consolidated financial statements and related notes.

Recent accounting pronouncements

For further information on our recently adopted accounting pronouncements, refer
to   Note 2, "Summary of Significant Accounting Policies"   in the condensed
consolidated financial statements contained within this Quarterly Report on Form
10-Q.

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