Viscom : achieves annual forecast for 2020 in difficult market environment
You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed consolidated financial
statements and the related notes and other financial information included
elsewhere in this Quarterly Report on Form 10-Q. Some of the information
contained in this discussion and analysis or set forth elsewhere in this
Quarterly Report on Form 10-Q, including information with respect to our plans
and strategy for our business, includes forward-looking statements that involve
risks and uncertainties. You should review the sections titled "Special Note
Regarding Forward-Looking Statements" and "Risk Factors" 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.
The last day of our fiscal year is January 31. Our fiscal quarters end on April
30, July 31, October 31 and January 31. Our fiscal years ended January 31, 2021
and 2022 are referred to herein as fiscal 2021 and fiscal 2022, respectively.

Overview


Couchbase provides a leading modern database for enterprise applications. Our
mission is to empower enterprises to build, manage and operate modern
mission-critical applications. Enterprises rely on Couchbase to power the core
applications their businesses depend on, with the highest performance,
reliability, scalability and agility requirements and for which there is no
tolerance for disruption or downtime. Any compromise of these requirements could
cause these applications to fail-stopping or delaying package delivery for
shipping companies, interrupting reservations for travel companies or causing
product shortages in stores for retailers.

Our database is versatile and works in multiple configurations, from cloud to
multi- or hybrid-cloud to on-premise environments to the edge in truly
distributed environments with flexibility in and between those environments. We
have architected our database to fuse the trusted strengths of relational
databases with the flexibility, performance and scale of NoSQL in the cloud. Our
cloud-native platform provides a powerful modern database that serves the needs
of both enterprise architects and application developers. Combined with our
performance at scale, we believe this power enables customers to run their most
important applications with the effectiveness they require, with the efficiency
they desire and in the modern infrastructure environments they demand.

With nearly every aspect of our lives being transformed by digital innovation,
enterprises are charged with building applications that enable delightful and
meaningful customer experiences. Enterprises are increasingly reliant on
applications, which in turn rely on databases to store, retrieve and
operationalize data into action. Today, applications are operating at a scale,
speed and dynamism unheard of just a decade ago. There is an increasing
diversity of application types, modalities and delivery and consumption models,
and the volume, velocity and variety of data on which they rely is growing at an
exponential rate. Consequently, the demand on enterprises and their databases is
growing exponentially.

While legacy database technologies were built to the highest performance and
reliability requirements of their generation, they are approaching the limits
for which they were designed. The underlying architecture of these technologies
has not changed significantly, while the requirements of the applications they
need to support are changing dramatically. Legacy database technologies are
buckling under the pressure of digital transformation, as they were not built to
update and respond in microseconds, enable rich, customized user experiences and
perform without latency.

We designed Couchbase to give enterprises a database for the modern cloud world.
Our platform combines the best capabilities of a relational database, like SQL
transactions and ACID guarantees, with the flexibility and scalability of a
NoSQL database. This allows enterprises to confidently accelerate strategic
initiatives such as more quickly moving business-critical applications into the
cloud, improving application flexibility and increasing developer agility. For
our customers, we facilitate a seamless transition from legacy relational
databases to our modern database resulting in better application scalability,
user experience and security at the pace that works for them. We deliver this
modern database as both a customer-managed product and as a fully-managed DBaaS
that is managed by Couchbase. Our DBaaS, called Couchbase Capella, supports a
broad set of use cases, reducing a customer's need to buy, deploy and manage
additional databases or supporting technologies.

We sell our platform through our direct sales force and our growing ecosystem of
partners. Our platform is broadly accessible to a wide range of enterprises, as
well as governments and organizations. We have customers in a range of
industries, including retail and e-commerce, travel and hospitality, financial
services and insurance, software and technology, gaming, media and entertainment
and industrials. We focus our selling efforts on the largest global enterprises
with the most complex data requirements, and we have introduced a new
cloud-based managed offering for enterprises looking for a turnkey version of
our platform.
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We have achieved significant growth over our operating history. For the six
months ended July 31, 2022 and 2021, our revenue was $74.6 million and
$57.7 million, respectively, representing period-over-period growth of 29%. As
of July 31, 2022 and 2021, our annual recurring revenue ("ARR") was $145.2
million and $115.2 million, respectively, representing period-over-period growth
of 26%. For the six months ended July 31, 2022 and 2021, our net loss was
$35.2 million and $29.1 million, respectively, as we continued to invest in the
growth of our business to capture the massive opportunity that we believe is
available to us.

Our Business Model

We generate the substantial majority of our revenue from sales of subscriptions,
which accounted for 92% and 95% for the six months ended July 31, 2022 and 2021,
respectively. We derive substantially all of our subscription revenue from the
Enterprise Edition of our Couchbase platform, which includes Couchbase Server,
our flagship product, and Couchbase Mobile. The Couchbase platform is generally
licensed per node, which we define as an instance of Couchbase running on a
server. Our subscription pricing is based on the computing power and memory per
instance, as well as the chosen service level. We offer three different support
levels: the Platinum level offers 24/7 support and the shortest response time of
30 minutes; the Gold level offers 24/7 support with a response time of 2 hours;
and the Silver level offers 7am-5pm local time support, 5 days a week. These
response times are for incidences of the highest severity level, which we
identify as level P1. The initial response time for levels P2 and P3, which are
less severe, are longer.

The non-cancelable term of our subscription arrangements typically ranges from
one to three years but may be longer or shorter in limited circumstances and is
typically billed annually in advance. The timing and billing of large,
multi-year contracts can create variability in revenue and deferred revenue
between periods.

We also derive subscription revenue from Couchbase Capella, our fully-managed
DBaaS. Couchbase Capella is licensed using an on-demand consumption model or an
annual credit model, which removes the need to license different node types
separately. Couchbase Capella pricing delivers superior customer flexibility
relative to other Cloud Service Providers ("CSPs") as on-demand pricing allows
customers to pay only for what they use based on hourly pricing and the credits
purchased through our annual credit model expire only at the end of a 12-month
period, rather than ratably throughout the year. We also provide automatic
conversion to on-demand consumption when credits expire or are exhausted.
Couchbase Capella credits can be purchased upfront to provide cost savings with
volume discounts available based on credit quantity. We offer three pricing
levels for Couchbase Capella, based on the support response time. Revenue from
Couchbase Capella was not material for the six months ended July 31, 2022 and
2021.

We also generate revenue from services, which represented 8% and 5% of our total
revenue for the six months ended July 31, 2022 and 2021, respectively. Our
services revenue is derived from our professional services related to the
implementation or configuration of our platform and training. We have invested
in building our services organization because we believe it plays an important
role in customer success, ensuring that our customers fulfill their digital
transformation agendas while leveraging our platform, accelerating our
customers' realization of the full benefits of our platform and driving
increased adoption of our platform.

Our go-to-market strategy is focused on large enterprises recognized as leaders
in their respective industries who are attempting to solve complicated business
problems by digitally transforming their operations. As a result, Couchbase
powers some of the largest and most complex enterprise applications worldwide.
Through our highly instrumented "sell-to" go-to-market motion, we have built a
direct sales organization that understands the strategic needs of enterprises as
well as a marketing organization that emphasizes our enablement of digital
transformation through our no-compromises approach to performance, resiliency,
scalability, agility and total cost of ownership ("TCO") savings.

We complement our "sell-to" go-to-market motion with a "buy-from" go-to-market
motion, which is focused on targeting the application developer community to
drive adoption of our platform. To accomplish this, we have and plan to continue
to invest in Couchbase Capella, our fully-managed DBaaS offering, We also offer
free Community Editions of some of our products, free trials of our Enterprise
Edition of Couchbase Server and Couchbase Capella products and a web
browser-based demonstration version of Couchbase Server to further accelerate
application developer adoption. We believe these offerings lead to future
purchases of the Enterprise Edition. While our Community Edition includes the
core functionality of Couchbase Server, it is not suited for mission-critical
deployments, as it offers only limited functionality around the scaled
performance and security that enterprises require and no direct customer support
from Couchbase.

We also continuously grow and cultivate our cloud provider partner and
technology provider ecosystem. A significant portion of our revenue in the six
months ended July 31, 2022 and 2021 was attributable to our partner ecosystem.

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We employ a land-and-expand model centered around our platform offerings, which
have a rapid time to production and time to value for our customers, and our
sales and customer success organizations, which proactively guide customers to
realize strategic and transformative use cases and drive greater adoption of our
platform and services. Our marketing organization is focused on building our
brand reputation and awareness. Our marketing initiatives drive awareness and
demand for Couchbase products, starting at the top of the sales funnel with
trial experiences. As part of these efforts, we host Couchbase Connect, a
technical conference for application developers and enterprise architects, which
showcases compelling customer testimonials and various use cases of our
platform. Our Couchbase Connect event also provides application developers with
helpful resources to help them learn more about our platform, including access
to on-demand instructional workshops. We invest in developer relations and in
building a developer community to connect users and contributors as well as
foster increased sharing, learning and discovery about our platform. These
multifaceted initiatives support and empower our community of users who are
passionate about and experts in Couchbase technology to share their knowledge
with a broader developer audience. We also offer Couchbase Playground, allowing
application developers to access Couchbase's API, and Couchbase Academy, which
includes role-specific training courses. Application developers are also able to
collaborate and discuss specific topics related to our platform on our forum.

Impact of COVID-19


The ongoing COVID-19 pandemic and efforts to mitigate its impact have caused
societal and economic disruption and financial market volatility, resulting in
business shutdowns and reduced business activity. In addition, recessionary
fears, inflation concerns and rising interest rates as a result of government
actions to combat inflation in light of the economic recovery has impacted and
may continue to impact business spending and the economy as a whole. We believe
that the COVID-19 pandemic has previously had a negative impact on our business
and results of operations.

Despite the impacts described above, we have seen continued growth in our
business. We believe that this growth may accelerate as our investments in
Couchbase Capella continue to gain traction and as existing and prospective
COVID-19 impacted customers continue to recover. More broadly, we believe the
COVID-19 pandemic has the longer term potential to accelerate the trend of
enterprises seeking to modernize and re-architect their mission-critical
applications and the building of new applications to allow them to function in
the cloud. The constraining of IT budgets could also further accelerate the
adoption and expansion of our platform, as it can effectively support
mission-critical applications while providing significant TCO benefits. See the
section titled "Risk Factors-Risks Related to Our Industry and Business-The
global COVID-19 pandemic has harmed and could continue to harm our business and
results of operations" for more information regarding risks related to the
COVID-19 pandemic.

Factors Affecting Our Performance

Continuing to Acquire New Customers


We grow our subscription revenue by acquiring new customers. The size of our
customer base may vary from period to period for several reasons, including the
length of our sales cycle, the effectiveness of our sales and marketing efforts,
enterprise application development cycles and the corresponding adoption rates
of modern applications that require database solutions like ours. Additionally,
our revenue has and will vary as new customers purchase our products due to the
fact that we recognize a portion of such subscription revenue upfront. As
digital transformation continues to accelerate, we believe that Couchbase
Capella, our fully-managed DBaaS offering, will become increasingly popular as a
result of its compelling pricing model, ease of operation, lower TCO, time to
market and flexibility. We will continue to offer Couchbase Capella and provide
flexible, highly available and differentiated economical options to capture new
customers.

Continuing to Expand Within Existing Customers


A significant part of our growth has been, and we expect will continue to be,
driven by expansion within our existing customer base. Growth of our revenue
from our existing customers results from increases in the scale of their
deployment for existing use cases, or when customers utilize our platform to
address new use cases. In addition, our professional services organization helps
customers deploy new use cases and optimize their existing implementations. Our
revenue from our subscription offerings varies depending on the scale and
performance requirements of our customers' deployments. We are focusing on
growing our subscription revenue, particularly from enterprises, while
delivering professional services and training to support this growth. We have
been successful in expanding our existing customers' adoption of our platform as
demonstrated by our dollar-based net retention rate of over 115% in seven of the
past eight quarters.
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Our dollar-based net retention rate for any period equals the simple arithmetic
average of our quarterly dollar-based net retention rate for the four quarters
ending with the most recent fiscal quarter. To calculate our dollar-based net
retention rate for a given quarter, we start with the ARR ("Base ARR")
attributable to our customers ("Base Customers") as of the end of the same
quarter of the prior fiscal year. We then determine the ARR attributable to the
Base Customers as of the end of the most recent quarter and divide that amount
by the Base ARR.

Continuing to Invest in Growth


We expect to continue to invest in our offerings, personnel, geographic presence
and infrastructure in order to drive future growth, as well as to pursue
adjacent opportunities. We expend research and development resources to drive
innovation in our proprietary software to constantly improve the functionality
and performance of our platform and to increase the deployment models available
to our customers. We anticipate continuing to increase our headcount to ensure
that our product development organization drives improvements in our product
offerings, our sales and marketing organization can maximize opportunities for
growing our business and revenue and our general and administrative organization
efficiently supports the growth of our business as well as our effective
operation as a public company.

Key Business Metrics

Annual Recurring Revenue


We define ARR as of a given date as the annualized recurring revenue that we
would contractually receive from our customers in the month ending 12 months
following such date. Based on historical experience with customers, we assume
all contracts will be automatically renewed at the same levels unless we receive
notification of non-renewal and are no longer in negotiations prior to the
measurement date. ARR also includes revenue from consumption-based cloud credits
of Couchbase Capella products. ARR for Couchbase Capella products is calculated
by annualizing the prior 90 days of actual consumption, assuming no increases or
reductions in usage. ARR excludes revenue derived from the use of cloud products
only based on on-demand arrangements and services revenue. ARR should be viewed
independently of revenue, and does not represent our revenue under the generally
accepted accounting principles in the United States ("GAAP") on an annualized
basis, as it is an operating metric that can be impacted by contract start and
end dates and renewal dates. ARR is not intended to be a replacement for
forecasts of revenue. Although we seek to increase ARR as part of our strategy
of targeting large enterprise customers, this metric may fluctuate from period
to period based on our ability to acquire new customers and expand within our
existing customers. We believe that our ARR is an important indicator of the
growth and performance of our business. We updated our definition of ARR
beginning in the first quarter of fiscal 2023 to include revenue from
consumption-based cloud credits of Couchbase Capella products by annualizing the
prior 90 days of actual consumption, assuming no increases or reductions in
usage. The reason for this change is to better reflect the ARR for Couchbase
Capella products following the launch of Couchbase Capella in fiscal 2022. ARR
for periods prior to the first quarter of fiscal 2023 has not been adjusted to
reflect this change as it is not material to any period previously presented.

                                         As of July 31,
                                       2022         2021

                                         (in millions)
                               ARR   $ 145.2      $ 115.2


Customers

We calculate our total number of customers at the end of each period. We include
in this calculation each customer account that has an active subscription
contract with us or with which we are negotiating a renewal contract at the end
of a given period. Each party with which we enter into a subscription contract
is considered a unique customer and, in some cases, a single organization may be
counted as more than one customer. Our customer count is subject to adjustments
for acquisitions, consolidations, spin-offs and other market activity. We
believe that our number of customers is an important indicator of the growth of
our business and future revenue trends.

                                            As of July 31,
                                         2022             2021
                           Customers    632               558


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Non-GAAP Financial Measures


In addition to our financial information presented in accordance with GAAP, we
believe certain non-GAAP financial measures are useful to investors in
evaluating our operating performance. We use certain non-GAAP financial
measures, collectively, to evaluate our ongoing operations and for internal
planning and forecasting purposes. We believe that non-GAAP financial measures,
when taken together with the corresponding GAAP financial measures, may be
helpful to investors because they provide consistency and comparability with
past financial performance and meaningful supplemental information regarding our
performance by excluding certain items that may not be indicative of our
business, results of operations or outlook. Non-GAAP financial measures are
presented for supplemental informational purposes only, have limitations as
analytical tools and should not be considered in isolation or as a substitute
for financial information presented in accordance with GAAP and may be different
from similarly-titled non-GAAP financial measures used by other companies. In
addition, other companies, including companies in our industry, may calculate
similarly-titled non-GAAP financial measures differently or may use other
measures to evaluate their performance, all of which could reduce the usefulness
of our non-GAAP financial measures as tools for comparison. Investors are
encouraged to review the related GAAP financial measures and the reconciliation
of these non-GAAP financial measures to their most directly comparable GAAP
financial measures (provided in the financial statement tables included in this
press release), and not to rely on any single financial measure to evaluate our
business.

We define the non-GAAP financial measures below as their respective GAAP
measures, excluding expenses related to stock-based compensation expense and
employer taxes on employee stock transactions. We use these non-GAAP financial
measures in conjunction with GAAP measures to assess our performance, including
in the preparation of our annual operating budget and quarterly forecasts, to
evaluate the effectiveness of our business strategies and to communicate with
our board of directors concerning our financial performance.

Beginning with the first quarter of fiscal 2023, we have excluded employer
payroll taxes on employee stock transactions, which is a cash expense, from our
non-GAAP results. These payroll taxes have been excluded from our non-GAAP
results because they are tied to the timing and size of the exercise or vesting
of the underlying equity awards, and the price of our common stock at the time
of vesting or exercise may vary from period to period independent of the
operating performance of our business. Prior period non-GAAP financial measures
have not been adjusted to reflect this change, and the effect of this change is
not material for any period previously presented.

Non-GAAP Gross Profit and Non-GAAP Gross Margin


We define non-GAAP gross profit and non-GAAP gross margin as gross profit and
gross margin, respectively, excluding stock-based compensation expense and
employer taxes on employee stock transactions. We use non-GAAP gross profit and
non-GAAP gross margin in conjunction with GAAP financial measures to assess our
performance, including in the preparation of our annual operating budget and
quarterly forecasts, to evaluate the effectiveness of our business strategies
and to communicate with our board of directors concerning our financial
performance.

                                               Three Months Ended July 31,                   Six Months Ended July 31,
                                               2022                  2021                   2022                  2021

                                                                        (dollars in thousands)
Total revenue                             $       39,791       $          

29,699 $ 74,644 $ 57,654
Gross profit

                              $       35,010       $          

26,174 $ 65,212 $ 50,737
Add: Stock-based compensation expense

                258                      54                  474                     103
Add: Employer taxes on employee stock
transactions                                          22                       -                   24                       -
Non-GAAP gross profit                     $       35,290       $          26,228       $       65,710       $          50,840
Gross margin                                       88.0%                   88.1%                87.4%                   88.0%
Non-GAAP gross margin                              88.7%                   88.3%                88.0%                   88.2%


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Non-GAAP Operating Loss and Non-GAAP Operating Margin


We define non-GAAP operating loss and non-GAAP operating margin as loss from
operations and operating margin, respectively, excluding stock-based
compensation expense and employer taxes on employee stock transactions. We use
non-GAAP operating loss and non-GAAP operating margin in conjunction with GAAP
measures to assess our performance, including in the preparation of our annual
operating budget and quarterly forecasts, to evaluate the effectiveness of our
business strategies and to communicate with our board of directors concerning
our financial performance.

                                                Three Months Ended July 31,                     Six Months Ended July 31,
                                                 2022                    2021                  2022                     2021

                                                                          (dollars in thousands)
Total revenue                             $            39,791       $       29,699       $         74,644           $     57,654
Loss from operations                      $          (15,233)       $     (13,990)       $       (34,221)           $   (28,099)
Add: Stock-based compensation expense                   6,727                1,981                 12,177                  3,810
Add: Employer taxes on employee stock                     147                    -                    280                      -

transactions

Non-GAAP operating loss                   $           (8,359)       $     (12,009)       $    (21,764)              $ (24,289)
Operating margin                                      (38)  %              (47)  %                (46)  %                 (49) %
Non-GAAP operating margin                             (21)  %              (40)  %                (29)  %                 (42) %


Non-GAAP Net Loss and Non-GAAP Net Loss Per Share


We define non-GAAP net loss attributable to common stockholders as net loss
attributable to common stockholders, excluding stock-based compensation expense
and employer taxes on employee stock transactions. We use non-GAAP net loss
attributable to common stockholders and non-GAAP net loss per share attributable
to common stockholders in conjunction with GAAP measures to assess our
performance, including in the preparation of our annual operating budget and
quarterly forecasts, to evaluate the effectiveness of our business strategies
and to communicate with our board of directors concerning our financial
performance.

                                                 Three Months Ended July 31,                    Six Months Ended July 31,
                                                2022                   2021                   2022                   2021

                                                                   (in thousands, except per share data)
Net loss attributable to common
stockholders                               $     (15,369)       $         

(15,908) $ (35,203) $ (31,986)
Add: Stock-based compensation expense

               6,727                    1,981               12,177                    3,810
Add: Employer taxes on employee stock
transactions                                          147                        -                  280                        -

Non-GAAP net loss attributable to common

  stockholders                             $      (8,495)       $         

(13,927) $ (22,746) $ (28,176)
GAAP net loss per share attributable to
common

  stockholders                             $       (0.34)       $           (1.76)       $       (0.79)       $           (4.16)
Non-GAAP net loss per share attributable
to common
  stockholders                             $       (0.19)       $           (1.54)       $       (0.51)       $           (3.66)
Weighted average shares outstanding, basic
and diluted                                        44,648                    9,045               44,459                    7,696


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Free Cash Flow


We define free cash flow as cash used in operating activities less additions to
property and equipment, which includes capitalized internal-use software costs.
We believe free cash flow is a useful indicator of liquidity that provides our
management, board of directors and investors with information about our future
ability to generate or use cash to enhance the strength of our balance sheet and
further invest in our business and pursue potential strategic initiatives. For
the six months ended July 31, 2022 and 2021, our free cash flow included cash
paid for our unused Credit Facility (as defined below) and interest on our
long-term debt of less than $0.1 million and $0.5 million, respectively.

                                              Three Months Ended July 31,                 Six Months Ended July 31,
                                                2022                  2021                 2022                  2021

                                                                          (

in thousands)
Net cash used in operating activities $ (7,655) $ (15,986) $ (16,262) $ (19,175)
Less: Additions to property and equipment (1,677)

               (20)                 (2,476)              (250)
Free cash flow                            $       (9,332)         $ 

(16,006) $ (18,738) $ (19,425)
Net cash provided by (used in) investing

           5,687              1,668                 (39,142)             4,902

activities

Net cash provided by financing activities            753            216,339                   6,892            216,347


Components of Results of Operations

Revenue


We derive revenue from sales of subscriptions and services. Our subscription
revenue is primarily derived from term-based software licenses to our platform
sold in conjunction with post-contract support ("PCS"). PCS bundled with
software licenses 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. The software license and PCS revenue is
presented as "License" and "Support and other," respectively, in our condensed
consolidated statements of operations. License revenue is recognized upon
transfer when our customer has received access to our software. PCS revenue, or
"Support," is recognized ratably over the term of the arrangement beginning on
the date when access to the subscription is made available to our customer. The
non-cancelable term of our subscription arrangements typically ranges from one
to three years but may be longer or shorter in limited circumstances. "Other"
revenue was not material for the periods presented. Our services revenue is
derived from our professional services related to the implementation or
configuration of our platform and training. Services revenue is recognized over
time based on input measures for professional services and upon delivery for
training.

We expect our revenue may vary from period to period based on, among other
things, the timing and size of new subscriptions, the proportion of term license
contracts that commence within the period, the rate of customer renewals and
expansions and timing and delivery of professional services and training.

Cost of Revenue


Cost of subscription revenue primarily consists of personnel-related costs
associated with our customer support organization, including salaries, bonuses,
benefits and stock-based compensation, expenses associated with software and
subscription services dedicated for use by our customer support organization,
third-party cloud infrastructure expenses, amortization of costs associated with
capitalized internal-use software related to Couchbase Capella and allocated
overhead. There is no cost of revenue associated with our license revenue. We
expect our cost of subscription revenue to increase in absolute dollars as our
subscription revenue increases and as we continue to amortize capitalized
internal-use software costs related to Couchbase Capella.

Cost of services revenue primarily consists of personnel-related costs
associated with our professional services and training organization, including
salaries, bonuses, benefits and stock-based compensation, costs of contracted
third-party partners for professional services, expenses associated with
software and subscription services dedicated for use by our professional
services and training organization, travel-related expenses and allocated
overhead. We expect our cost of services revenue to fluctuate from period to
period depending on the timing and delivery of professional services and
training.
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Gross Profit and Gross Margin


Our gross profit and gross margin have been and will continue to be affected by
various factors, including the average sales price of our subscriptions and
services, the mix of subscriptions and services we sell and the associated
revenue, the mix of geographies into which we sell and transaction volume
growth. We expect our gross profit and gross margin to fluctuate in the near
term depending on the interplay of these factors, and for gross margin to
decline modestly in the long term as we introduce additional platform
capabilities and product offerings and continue to expand our client base
outside of the United States.

Operating Expenses


Our operating expenses consist of research and development, sales and marketing
and general and administrative expenses. Personnel-related costs are the most
significant component of operating expenses and consist of salaries, bonuses,
benefits, sales commissions and stock-based compensation expenses.

Research and Development


Research and development expenses consist primarily of personnel-related costs,
expenses associated with software and subscription services dedicated for use by
our research and development organization, depreciation and amortization of
property and equipment and allocated overhead. We expect that our research and
development expenses will increase in absolute dollars as we continue to invest
in the features and functionalities of our platform. We expect research and
development expenses to fluctuate as a percentage of revenue in the near term,
but to decrease as a percentage of revenue over the long term as we achieve
greater scale in our business.

Sales and Marketing


Sales and marketing expenses consist primarily of personnel-related costs,
expenses associated with software and subscription services dedicated for use by
our sales and marketing organization, costs of general marketing and promotional
activities, amortization of deferred commissions, fees for professional services
related to sales and marketing, travel-related expenses and allocated overhead.
We expect that our sales and marketing expenses will increase in absolute
dollars as we continue to expand our sales and marketing efforts to attract new
customers and deepen our engagement with existing customers. We expect sales and
marketing expenses to fluctuate as a percentage of revenue in the near term as
we continue to invest in growing the reach of our platform through our sales and
marketing efforts, but to decrease as a percentage of revenue over the long term
as we achieve greater scale in our business.

General and Administrative


General and administrative expenses consist primarily of personnel-related costs
associated with our finance, legal, human resources and other administrative
personnel. In addition, general and administrative expenses include
non-personnel costs, such as fees for professional services such as external
legal, accounting and other professional services, expenses associated with
software and subscription services dedicated for use by our general and
administrative organization, certain taxes other than income taxes and allocated
overhead. We expect to incur additional expenses as a result of operating as a
public company, including costs to comply with the rules and regulations
applicable to companies listed on a national securities exchange, costs related
to compliance and reporting obligations and increased expenses for insurance,
investor relations and professional services. We expect that our general and
administrative expenses will increase in absolute dollars as we continue to
invest in the growth of our business and operate as a publicly-traded company.
We expect general and administrative expenses to fluctuate as a percentage of
revenue in the near term, but to decrease as a percentage of revenue over the
long term as we achieve greater scale in our business.

Interest Expense

Interest expense consists primarily of interest on borrowings and unused credit
facility fees related to our Credit Facility.

Other Income (Expense), Net


Other income (expense), net consists primarily of foreign currency gains and
losses related to the impact of transactions denominated in a foreign currency
and interest income.
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Provision for Income Taxes


Provision for income taxes consists primarily of income taxes in certain foreign
jurisdictions in which we conduct business. We recorded a full valuation
allowance against our U.S. deferred tax assets as we have determined that it is
not more likely than not that the deferred tax assets will be realized. The cash
tax expenses are impacted by each jurisdiction's individual tax rates, laws on
the timing of recognition of income and deductions and availability of NOLs and
tax credits. Our effective tax rate could be adversely affected to the extent
earnings are lower than anticipated in countries that have lower statutory rates
and higher than anticipated in countries that have higher statutory rates.

Results of Operations

The following table sets forth our condensed consolidated statements of
operations for the periods indicated (in thousands):

                                                         Three Months Ended July 31,                 Six Months Ended July 31,
                                                           2022                  2021                 2022                  2021
Revenue:
License                                              $        6,382          $   4,416          $       11,389          $   8,694
Support and other                                            30,677             23,613                  57,651             45,800
Total subscription revenue                                   37,059             28,029                  69,040             54,494
Services                                                      2,732              1,670                   5,604              3,160
Total revenue                                                39,791             29,699                  74,644             57,654
Cost of revenue:
Subscription(1)                                               2,521              2,072                   4,917              4,124
Services(1)                                                   2,260              1,453                   4,515              2,793
Total cost of revenue                                         4,781              3,525                   9,432              6,917
Gross profit                                                 35,010             26,174                  65,212             50,737
Operating expenses:
Research and development(1)                                  14,341             12,623                  28,762             25,164
Sales and marketing(1)                                       27,473             22,263                  54,316             42,897
General and administrative(1)                                 8,429              5,278                  16,355             10,775
Total operating expenses                                     50,243             40,164                  99,433             78,836
Loss from operations                                        (15,233)           (13,990)                (34,221)           (28,099)
Interest expense                                                (25)              (252)                    (50)              (497)
Other income (expense), net                                     261                (77)                   (295)                 7
Loss before income taxes                                    (14,997)           (14,319)                (34,566)           (28,589)
Provision for income taxes                                      372                151                     637                480
Net loss                                             $      (15,369)         $ (14,470)         $      (35,203)         $ (29,069)

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

                                                    Three Months Ended July 31,                 Six Months Ended July 31,
                                                      2022                  2021                 2022                  2021

                                                                                (in thousands)
Cost of revenue-subscription                    $          141          $      30          $          263          $      57
Cost of revenue-services                                   117                 24                     211                 46
Research and development                                 2,087                569                   3,986              1,139
Sales and marketing                                      2,463                688                   4,450              1,229
General and administrative                               1,919                670                   3,267              1,339

Total stock-based compensation expense $ 6,727 $ 1,981 $ 12,177 $ 3,810

The following table sets forth our condensed consolidated statements of
operations data expressed as a percentage of revenue:

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                                                         Three Months Ended July 31,                  Six Months Ended July 31,
                                                         2022                  2021                  2022                  2021
Revenue:
License                                                       16  %                 15  %                 15  %                 15  %
Support and other                                             77                    80                    77                    79
Total subscription revenue                                    93                    94                    92                    95
Services                                                       7                     6                     8                     5
Total revenue                                                100                   100                   100                   100
Cost of revenue:
Subscription                                                   6                     7                     7                     7
Services                                                       6                     5                     6                     5
Total cost of revenue                                         12                    12                    13                    12
Gross profit                                                  88                    88                    87                    88
Operating expenses:
Research and development                                      36                    43                    39                    44
Sales and marketing                                           69                    75                    73                    74
General and administrative                                    21                    18                    22                    19
Total operating expenses                                     126                   135                   133                   137
Loss from operations                                         (38)                  (47)                  (46)                  (49)
Interest expense                                                  *                 (1)                       *                 (1)
Other income (expense), net                                    1                        *                     *                     *
Loss before income taxes                                     (38)                  (48)                  (46)                  (50)
Provision for income taxes                                     1                     1                     1                     1
Net loss                                                     (39) %                (49) %                (47) %                (50) %


*  Represents less than 1%
Note: Certain figures may not sum due to rounding.

Comparison of Three and Six Months Ended July 31, 2022 and 2021


Revenue

                                      Three Months Ended July 31,                                                       Six Months Ended July 31,
                                        2022                 2021            $ Change            % Change                 2022                2021            $ Change            % Change

                                                            (dollars in thousands)                                                            (dollars in thousands)
Revenue
License                           $        6,382          $  4,416          $  1,966                    45  %       $      11,389          $  8,694          $  2,695                    31  %
Support and other                         30,677            23,613             7,064                    30  %              57,651            45,800            11,851                    26  %
Total subscription revenue                37,059            28,029             9,030                    32  %              69,040            54,494            14,546                    27  %
Services                                   2,732             1,670             1,062                    64  %               5,604             3,160             2,444                    77  %
Total revenue                     $       39,791          $ 29,699          $ 10,092                    34  %       $      74,644          $ 57,654          $ 16,990                    29  %


Subscription revenue increased by $9.0 million, or 32%, during the three months
ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in subscription revenue was due to an increase in revenue from existing
customers and new customers, as we increased our customer base from 558
customers as of July 31, 2021 to 632 customers as of July 31, 2022.
Approximately 92% of the increase in revenue was attributable to growth from
existing customers, and the remaining increase was attributable to new
customers.

Subscription revenue increased by $14.5 million, or 27%, during the six months
ended July 31, 2022 compared to the six months ended July 31, 2021. The increase
in subscription revenue was due to an increase in revenue from existing
customers and new customers. Approximately 92% of the increase in revenue was
attributable to growth from existing customers, and the remaining increase was
attributable to new customers.
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Services revenue increased by $1.1 million, or 64%, during the three months
ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in services revenue was primarily due to an increase in the number of
professional services hours performed.


Services revenue increased by $2.4 million, or 77%, during the six months ended
July 31, 2022 compared to the three months ended July 31, 2021. The increase in
services revenue was primarily due to an increase in the number of professional
services hours performed.

Cost of Revenue, Gross Profit and Gross Margin


                                    Three Months Ended July 31,                                                       Six Months Ended July 31,
                                      2022                 2021            $ Change            % Change                 2022                2021            $ Change            % Change

                                                          (dollars in thousands)                                                            (dollars in thousands)
Cost of revenue:
Subscription                    $       2,521           $  2,072          $    449                    22  %       $      4,917           $  4,124          $    793                    19  %
Services                                2,260              1,453               807                    56  %              4,515              2,793             1,722                    62  %
Total cost of revenue           $       4,781           $  3,525          $  1,256                    36  %       $      9,432           $  6,917          $  2,515                    36  %
Gross profit                    $      35,010           $ 26,174                                                  $     65,212           $ 50,737
Gross margin                             88.0   %           88.1  %                                                       87.4   %           88.0  %
Headcount (at period end)                      53                59                                                             53                59


Cost of subscription revenue increased by $0.4 million, or 22%, during the three
months ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in cost of subscription revenue was primarily due to an increase of
$0.4 million related to the computing infrastructure costs associated with
Couchbase Capella.

Cost of subscription revenue increased by $0.8 million, or 19%, during the six
months ended July 31, 2022 compared to the six months ended July 31, 2021. The
increase in cost of subscription revenue was primarily due to an increase of
$0.7 million related to the computing infrastructure costs associated with
Couchbase Capella.

Cost of services revenue increased by $0.8 million, or 56%, during the three
months ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in cost of services revenue was primarily due to an increase of $0.5
million in contracted third-party professional services and an increase of $0.2
million in personnel-related costs associated with fluctuations in headcount.

Cost of services revenue increased by $1.7 million, or 62%, during the six
months ended July 31, 2022 compared to the six months ended July 31, 2021. The
increase in cost of services revenue was primarily due to an increase of $1.0
million in contracted third-party professional services and an increase of $0.5
million in personnel-related costs associated with fluctuations in headcount.

Gross margin decreased during the three and six months ended July 31, 2022
compared to the three and six months ended July 31, 2021, primarily due to
changes in the mix of subscription and services revenue as well as costs
associated with Couchbase Capella.


Research and Development

                                     Three Months Ended July 31,                                                       Six Months Ended July 31,
                                       2022                 2021            $ Change            % Change                 2022                2021            $ Change            % Change

                                                           (dollars in thousands)                                                            (dollars in thousands)
Research and development         $      14,341           $ 12,623          $  1,718                    14  %       $     28,762           $ 25,164          $  3,598                    14  %
Percentage of revenue                       36   %             43  %                                                         39   %             44  %
Headcount (at period end)                      254               241                                                            254               241


Research and development increased by $1.7 million, or 14%, during the three
months ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in research and development expenses was primarily due to an increase
of $0.9 million in personnel-related costs associated with increased headcount
and an increase of $0.6 million associated with computing infrastructure costs
dedicated for use by our research and development organization.
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Research and development increased by $3.6 million, or 14%, during the six
months ended July 31, 2022 compared to the six months ended July 31, 2021. The
increase in research and development expenses was primarily due to an increase
of $2.5 million in personnel-related costs associated with increased headcount
and an increase of $0.9 million associated with computing infrastructure costs
dedicated for use by our research and development organization.

Sales and Marketing

                                    Three Months Ended July 31,                                                       Six Months Ended July 31,
                                      2022                 2021            $ Change            % Change                 2022                2021            $ Change            % Change

                                                          (dollars in thousands)                                                            (dollars in thousands)
Sales and marketing             $      27,473           $ 22,263          $  5,210                    23  %       $     54,316           $ 42,897          $ 11,419                    27  %
Percentage of revenue                      69   %             75  %                                                         73   %             74  %
Headcount (at period end)                     297               278                                                            297               278


Sales and marketing increased by $5.2 million, or 23%, during the three months
ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in sales and marketing expenses was primarily due to an increase of
$3.2 million in personnel-related costs associated with increased headcount and
an increase of $0.7 million in travel-related costs. There was an additional
increase of $0.5 million in sales and marketing program expenses primarily
associated with costs of general marketing and promotional activities as we
continue to expand our sales and marketing efforts to attract new customers and
deepen our engagement with existing customers.

Sales and marketing increased by $11.4 million, or 27%, during the six months
ended July 31, 2022 compared to the six months ended July 31, 2021. The increase
in sales and marketing expenses was primarily due to an increase of $6.9 million
in personnel-related costs associated with increased headcount and an increase
of $1.7 million in travel-related costs. There was an additional increase of
$1.0 million in sales and marketing program expenses primarily associated with
costs of general marketing and promotional activities as we continue to expand
our sales and marketing efforts to attract new customers and deepen our
engagement with existing customers.

General and Administrative

                                     Three Months Ended July 31,                                                       Six Months Ended July 31,
                                        2022                 2021           $ Change            % Change                 2022                2021            $ Change            % Change

                                                            (dollars in thousands)                                                           (dollars in thousands)
General and administrative        $       8,429           $ 5,278          $  3,151                    60  %       $     16,355           $ 10,775          $  5,580                    52  %
Percentage of revenue                        21   %            18  %                                                         22   %             19  %
Headcount (at period end)                        68               55                                                             68                55


General and administrative increased by $3.2 million, or 60%, during the three
months ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in general and administrative expenses was primarily due to an increase
of $2.0 million in personnel-related costs associated with increased headcount
and an increase of $1.2 million in additional professional fees and other
corporate expenses associated with being a publicly traded company.

General and administrative increased by $5.6 million, or 52%, during the six
months ended July 31, 2022 compared to the six months ended July 31, 2021. The
increase in general and administrative expenses was primarily due to an increase
of $3.5 million in personnel-related costs associated with increased headcount
and an increase of $1.9 million in additional professional fees and other
corporate expenses associated with being a publicly traded company.

Interest Expense

                              Three Months Ended July 31,                                                      Six Months Ended July 31,
                                  2022               2021            $ Change            % Change                 2022               2021            $ Change            % Change

                                                     (dollars in thousands)                                                          (dollars in thousands)
Interest expense            $         (25)         $ (252)         $     227                   (90) %       $         (50)         $ (497)         $     447                   (90) %


Interest expense decreased during the three and six months ended July 31, 2022
compared to the three and six months ended July 31, 2021. The decrease in
interest expense was primarily due to the repayment of the full outstanding
balance of our Credit Facility in fiscal 2022.

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Other Income (Expense), Net

                                  Three Months Ended July 31,                                                 Six Months Ended July 31,
                                     2022             2021            $ Change            % Change              2022              2021            $ Change            % Change

                                                         (dollars in thousands)                                                     (dollars in thousands)
Other income (expense), net       $    261          $  (77)         $     338                  (439) %       $   (295)         $     7          $    (302)                (4314) %


Other income (expense), net increased by $0.3 million during the three months
ended July 31, 2022 compared to the three months ended July 31, 2021. The
increase in other income (expense), net was attributable to higher interest
income driven by higher short-term investment balances and higher yield in the
current period.

Other income (expense), net decreased by $0.3 million during the six months
ended July 31, 2022 compared to the six months ended July 31, 2021. The decrease
in other income (expense), net was primarily driven by an increase of
$0.8 million in unrealized and realized foreign currency losses due to
remeasurement of monetary assets denominated in non-functional currencies. This
was partially offset by an increase of $0.5 million in interest income primarily
driven by higher short-term investment balances and higher yield in the current
period.

Provision for Income Taxes

                               Three Months Ended July 31,                                                            Six Months Ended July 31,
                                 2022                  2021             $ Change            % Change                 2022                     2021            $ Change            % Change

                                                      (dollars in thousands)                                                              

(dollars in thousands)
Loss before income taxes $ (14,997) $ (14,319) $ (678)

                    5  %       $    (34,566)              $ (28,589)         $ (5,977)                   21  %
Provision for income taxes           372                 151          $     221                   146  %                637                     480          $    157                    33  %
Effective tax rate                  (2.5)  %            (1.1) %                                                        (1.8)  %                (1.7) %


The changes in provision for income taxes during the three and six months ended
July 31, 2022 compared to the three and six months ended July 31, 2021 were not
material.

Liquidity and Capital Resources


We have financed our operations through subscription revenue from customers
accessing our platform and services revenue, and in July 2021, we completed our
initial public offering ("IPO") with net proceeds totaling $214.9 million. We
also have a Credit Facility to obtain up to $40.0 million in debt financing. We
have incurred losses and generated negative cash flows from operations for the
last several years, including fiscal 2021 and 2022 and the six months ended July
31, 2022. As of July 31, 2022, we had an accumulated deficit of $377.2 million.

As of July 31, 2022, we had $192.1 million in cash, cash equivalents and
short-term investments. We believe our existing cash, cash equivalents and
short-term investments, availability under the Credit Facility, which is
described in Note 7 of our notes to the condensed consolidated financial
statements, and cash provided by sales of subscriptions to our platform and
sales of our services will be sufficient to meet our projected operating
requirements and cash expenditures for at least the next 12 months. As a result
of our revenue growth plans, both domestically and internationally, we expect
that losses and negative cash flows from operations may continue in the future.
Our future cash requirements will depend on many factors, including our
subscription revenue growth rate, subscription renewals, billing timing and
frequency, the timing and extent of spending to support development efforts, the
expansion of sales and marketing activities, the introduction of new and
enhanced platform features and functionality and the continued market adoption
of our platform. We may in the future pursue acquisitions of businesses,
technologies, assets and talent.

We may be required to seek additional equity or debt financing. In the event
that additional financing is required from outside sources, we may not be able
to raise it 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 new technologies, our competitive position could weaken, and our
business, financial condition and results of operations could be adversely
affected.
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We typically invoice our subscription customers annually in advance. Therefore,
a substantial source of our cash is from such prepayments, which are included on
our condensed consolidated balance sheets as deferred revenue. Deferred revenue
consists of billed fees for our subscriptions, prior to satisfying the criteria
for revenue recognition, which are subsequently recognized as revenue in
accordance with our revenue recognition policy. As of July 31, 2022, remaining
performance obligations, including both deferred revenue and non-cancelable
contracted amounts, were $166.5 million. We expect to recognize revenue of
$103.1 million on these remaining performance obligations over the next 12
months, with the remaining balance recognized thereafter.

Cash Flows


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

                                              Six Months Ended July 31,
                                                                   2022           2021

                                                   (in thousands)
Net cash provided by (used in):
Operating activities                                            $ (16,262)     $ (19,175)
Investing activities                                            $ (39,142)     $   4,902
Financing activities                                            $   6,892      $ 216,347


Operating Activities

Cash used in operating activities for the six months ended July 31, 2022 of
$16.3 million primarily consisted of our net loss of $35.2 million, adjusted for
non-cash charges of $24.8 million and net cash outflows of $5.8 million from
changes in our operating assets and liabilities. The primary drivers of the
changes in operating assets and liabilities include a $7.7 million increase in
deferred commissions related to increased sales during the period, a $7.3
million decrease in accounts receivable related to timing of billings and
collections, a $5.6 million decrease in accrued compensation primarily due to
the timing of bonus payments and purchases under our employee stock purchase
plan, an increase of $3.5 million in accounts payable, a $2.1 million decrease
in deferred revenue due to timing of billings, and an increase of $1.2 million
in prepaid expenses and other assets.

Cash used in operating activities for the six months ended July 31, 2021 of
$19.2 million primarily consisted of our net loss of $29.1 million, adjusted for
non-cash charges of $11.6 million and net cash outflows of $1.7 million from
changes in our operating assets and liabilities. Changes in operating assets and
liabilities primarily reflected a $15.8 million decrease in accounts receivable
related to timing of billings and collections and a $7.3 million decrease in
deferred revenue due to timing of billings. Additionally, there was an increase
of $7.1 million in deferred commissions related to increased sales during the
period and an increase of $5.8 million in prepaid expenses offset by an increase
in accounts payable of $4.6 million and a decrease of $1.7 million in other
accrued liabilities.

Investing Activities

Cash used in investing activities for the six months ended July 31, 2022 of
$39.1 million consisted of purchases of short-term investments net of maturities
and sales of $36.7 million and additions to property and equipment of $2.5
million
.


Cash provided by investing activities for the six months ended July 31, 2021 of
$4.9 million consisted of maturities of short-term investments net of purchases
of $5.2 million offset by additions to property and equipment of $0.3 million.

Financing Activities


Cash provided by financing activities for the six months ended July 31, 2022 of
$6.9 million was primarily due to $3.5 million in proceeds from the issuance of
common stock under our employee stock purchase plan, and $3.4 million in
proceeds from the issuance of common stock upon exercises of stock options.

Cash provided by financing activities for the six months ended July 31, 2021 of
$216.3 million primarily consisted of proceeds from the completion of our IPO of
$214.9 million, net of underwriters' discounts and commissions, and proceeds
from stock option exercises of $4.3 million offset by the payment of deferred
offering costs of $2.8 million.
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Contractual Obligations and Commitments


Our contractual obligations consist of purchase obligations and operating lease
commitments. Purchase obligations include agreements to purchase goods or
services that are enforceable and legally binding on us and that specify all
significant terms, including fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions and the approximate timing of the
transaction. These obligations relate to third-party cloud infrastructure
agreements and subscription arrangements. Our operating lease commitments relate
primarily to our office facilities.

For further information on our commitments and contingencies, refer to Note 9 in
our unaudited condensed consolidated financial statements included elsewhere in
this Quarterly Report on Form 10-Q. There has been no material change in our
contractual obligations and commitments other than in the ordinary course of
business since our fiscal year ended January 31, 2022. See our Annual Report on
Form 10-K for the fiscal year ended January 31, 2022, which was filed with the
SEC on March 31, 2022, for additional information regarding our contractual
obligations.

Indemnification Agreements


In the ordinary course of business, we enter into agreements of varying scope
and terms pursuant to which we agree to indemnify customers, vendors, lessors
and other business partners 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. Additionally, we entered into indemnification agreements with our
directors and officers that require us, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors or officers. The Company has not incurred material costs to defend
lawsuits or settle claims related to these indemnification agreements nor are we
aware of any such claims that could reasonably be expected to incur material
costs.

Critical Accounting Policies and Estimates


Our condensed consolidated financial statements and the related notes thereto
included elsewhere in this Quarterly Report on Form 10-Q are prepared in
accordance with GAAP. The preparation of condensed consolidated financial
statements also requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, costs and expenses, and
related disclosures. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the
circumstances. Actual results could differ significantly from the estimates made
by management. To the extent that there are differences between our estimates
and actual results, our future financial statement presentation, financial
condition, results of operations, and cash flows will be affected.

There have been no significant changes to our critical accounting policies and
estimates as compared to those described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" set forth in our
Annual Report on Form 10-K for the fiscal year ended January 31, 2022, which was
filed with the SEC on March 31, 2022.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included in Part
I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent
accounting pronouncements.

JOBS Act Accounting Election


We are an "emerging growth company," as defined in the JOBS Act. The JOBS Act
provides that an "emerging growth company" can take advantage of an extended
transition period for complying with new or revised accounting standards. This
provision allows an "emerging growth company" to delay the adoption of some
accounting standards until those standards would otherwise apply to private
companies. We have elected to use the extended transition period under the JOBS
Act 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.


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