10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2023

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number: 001-35667

 

AMBARELLA, INC.

(Exact name of registrant as specified in its charter)

 

 

Cayman Islands

98-0459628

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

3101 Jay Street

Santa Clara, California

95054

(Address of principal executive offices)

(Zip Code)

(408) 734-8888

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary Shares, $0.00045 Par Value Per Share

AMBA

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of ordinary shares of the Registrant outstanding as of November 30, 2023 was 40,248,073 shares.

 

 

 

 


 

AMBARELLA, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets at October 31, 2023 and January 31, 2023

 

3

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended October 31, 2023 and 2022

 

4

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2023 and 2022

 

5

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended October 31, 2023 and 2022

 

6

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2023 and 2022

 

7

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

 

 

 

Item 4.

Controls and Procedures

 

30

 

 

 

 

PART II. OTHER INFORMATION

 

30

 

 

 

 

Item 1.

Legal Proceedings

 

30

 

 

 

 

Item 1A.

Risk Factors

 

30

 

 

 

 

Item 5.

Other Information

 

60

 

 

 

 

Item 6.

Exhibits

 

60

 

 

 

 

Signatures

 

62

 

 

 

 

2


 

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMBARELLA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

 

 

 

As of

 

 

 

October 31,

 

 

January 31,

 

 

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

143,787

 

 

$

113,541

 

Marketable debt securities

 

 

78,549

 

 

 

93,322

 

Accounts receivable, net

 

 

22,968

 

 

 

51,987

 

Inventories

 

 

30,783

 

 

 

40,486

 

Restricted cash

 

 

7

 

 

 

8

 

Prepaid expenses and other current assets

 

 

3,728

 

 

 

5,288

 

Total current assets

 

 

279,822

 

 

 

304,632

 

Property and equipment, net

 

 

10,917

 

 

 

11,814

 

Deferred tax assets, non-current

 

 

22,952

 

 

 

19,276

 

Intangible assets, net

 

 

58,805

 

 

 

58,497

 

Operating lease right-of-use assets, net

 

 

5,760

 

 

 

8,339

 

Goodwill

 

 

303,625

 

 

 

303,625

 

Other non-current assets

 

 

2,748

 

 

 

4,012

 

Total assets

 

$

684,629

 

 

$

710,195

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

9,298

 

 

 

17,845

 

Accrued and other current liabilities

 

 

57,991

 

 

 

56,655

 

Operating lease liabilities, current

 

 

3,553

 

 

 

3,539

 

Income taxes payable

 

 

2,391

 

 

 

4,112

 

Deferred revenue, current

 

 

2,596

 

 

 

1,311

 

Total current liabilities

 

 

75,829

 

 

 

83,462

 

Operating lease liabilities, non-current

 

 

2,316

 

 

 

5,097

 

Other long-term liabilities

 

 

14,696

 

 

 

15,548

 

Total liabilities

 

 

92,841

 

 

 

104,107

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preference shares, $0.00045 par value per share, 20,000,000 shares authorized and no shares issued and outstanding at October 31, 2023 and January 31, 2023, respectively

 

 

 

 

 

 

Ordinary shares, $0.00045 par value per share, 200,000,000 shares authorized; 40,229,267  and 39,043,000 shares issued and outstanding at October 31, 2023 and January 31, 2023, respectively

 

 

18

 

 

 

18

 

Additional paid-in capital

 

 

667,313

 

 

 

572,076

 

Accumulated other comprehensive loss

 

 

(1,219

)

 

 

(492

)

Retained earnings (accumulated deficit)

 

 

(74,324

)

 

 

34,486

 

Total shareholders’ equity

 

 

591,788

 

 

 

606,088

 

Total liabilities and shareholders' equity

 

$

684,629

 

 

$

710,195

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

3


 

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

50,595

 

 

$

83,096

 

 

$

174,858

 

 

$

254,285

 

Cost of revenue

 

 

20,612

 

 

 

31,418

 

 

 

68,894

 

 

 

94,996

 

Gross profit

 

 

29,983

 

 

 

51,678

 

 

 

105,964

 

 

 

159,289

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

53,702

 

 

 

52,864

 

 

 

163,060

 

 

 

151,892

 

Selling, general and administrative

 

 

18,246

 

 

 

18,944

 

 

 

55,750

 

 

 

58,213

 

Total operating expenses

 

 

71,948

 

 

 

71,808

 

 

 

218,810

 

 

 

210,105

 

Loss from operations

 

 

(41,965

)

 

 

(20,130

)

 

 

(112,846

)

 

 

(50,816

)

Other income, net

 

 

1,900

 

 

 

1,433

 

 

 

3,923

 

 

 

1,493

 

Loss before income taxes

 

 

(40,065

)

 

 

(18,697

)

 

 

(108,923

)

 

 

(49,323

)

Provision (benefit) for income taxes

 

 

1,645

 

 

 

1,112

 

 

 

(113

)

 

 

4,958

 

Net loss

 

$

(41,710

)

 

$

(19,809

)

 

$

(108,810

)

 

$

(54,281

)

Net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(1.04

)

 

$

(0.51

)

 

$

(2.74

)

 

$

(1.42

)

Diluted

 

$

(1.04

)

 

$

(0.51

)

 

$

(2.74

)

 

$

(1.42

)

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,053,251

 

 

 

38,582,584

 

 

 

39,710,248

 

 

 

38,185,421

 

Diluted

 

 

40,053,251

 

 

 

38,582,584

 

 

 

39,710,248

 

 

 

38,185,421

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

4


 

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

 

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(41,710

)

 

$

(19,809

)

 

$

(108,810

)

 

$

(54,281

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized losses on investments

 

 

(289

)

 

 

(1,041

)

 

 

(727

)

 

 

(1,043

)

Other comprehensive loss, net of tax

 

 

(289

)

 

 

(1,041

)

 

 

(727

)

 

 

(1,043

)

Comprehensive loss

 

$

(41,999

)

 

$

(20,850

)

 

$

(109,537

)

 

$

(55,324

)

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

 

5


 

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained Earnings

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

(Accumulated Deficit)

 

 

Total

 

Balance--January 31, 2023

 

 

39,043,000

 

 

$

18

 

 

$

572,076

 

 

$

(492

)

 

$

34,486

 

 

$

606,088

 

Issuance of shares through employee equity plans

 

 

467,996

 

 

 

 

 

 

5,198

 

 

 

 

 

 

 

 

 

5,198

 

Issuance of shares through employee stock purchase plan

 

 

80,207

 

 

 

 

 

 

4,448

 

 

 

 

 

 

 

 

 

4,448

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

26,249

 

 

 

 

 

 

 

 

 

26,249

 

Other comprehensive gain - net of tax

 

 

 

 

 

 

 

 

 

 

 

110

 

 

 

 

 

 

110

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,902

)

 

 

(35,902

)

Balance--April 30, 2023

 

 

39,591,203

 

 

 

18

 

 

 

607,971

 

 

 

(382

)

 

 

(1,416

)

 

 

606,191

 

Issuance of shares through employee equity plans

 

 

279,568

 

 

 

 

 

 

553

 

 

 

 

 

 

 

 

 

553

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

27,320

 

 

 

 

 

 

 

 

 

27,320

 

Other comprehensive loss - net of tax

 

 

 

 

 

 

 

 

 

 

 

(548

)

 

 

 

 

 

(548

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,198

)

 

 

(31,198

)

Balance--July 31, 2023

 

 

39,870,771

 

 

 

18

 

 

 

635,844

 

 

 

(930

)

 

 

(32,614

)

 

 

602,318

 

Issuance of shares through employee equity plans

 

 

286,684

 

 

 

 

 

 

334

 

 

 

 

 

 

 

 

 

334

 

Issuance of shares through employee stock purchase plan

 

 

71,812

 

 

 

 

 

 

3,486

 

 

 

 

 

 

 

 

 

3,486

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

27,649

 

 

 

 

 

 

 

 

 

27,649

 

Other comprehensive loss - net of tax

 

 

 

 

 

 

 

 

 

 

 

(289

)

 

 

 

 

 

(289

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,710

)

 

 

(41,710

)

Balance--October 31, 2023

 

 

40,229,267

 

 

$

18

 

 

$

667,313

 

 

$

(1,219

)

 

$

(74,324

)

 

$

591,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Outstanding

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

Ordinary Shares

 

 

Paid-in

 

 

Comprehensive

 

 

Retained Earnings

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

(Accumulated Deficit)

 

 

Total

 

Balance--January 31, 2022

 

 

37,302,818

 

 

$

17

 

 

$

447,287

 

 

$

 

 

$

99,872

 

 

$

547,176

 

Issuance of shares through employee equity plans

 

 

736,516

 

 

 

 

 

 

8,589

 

 

 

 

 

 

 

 

 

8,589

 

Issuance of shares through employee stock purchase plan

 

 

43,545

 

 

 

 

 

 

3,250

 

 

 

 

 

 

 

 

 

3,250

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

26,155

 

 

 

 

 

 

 

 

 

26,155

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,822

)

 

 

(10,822

)

Balance--April 30, 2022

 

 

38,082,879

 

 

 

17

 

 

 

485,281

 

 

 

 

 

 

89,050

 

 

 

574,348

 

Issuance of shares through employee equity plans

 

 

323,572

 

 

 

 

 

 

1,204

 

 

 

 

 

 

 

 

 

1,204

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

26,211

 

 

 

 

 

 

 

 

 

26,211

 

Other comprehensive loss - net of tax

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,650

)

 

 

(23,650

)

Balance--July 31, 2022

 

 

38,406,451

 

 

 

17

 

 

 

512,696

 

 

 

(2

)

 

 

65,400

 

 

 

578,111

 

Issuance of shares through employee equity plans

 

 

278,687

 

 

 

 

 

 

386

 

 

 

 

 

 

 

 

 

386

 

Issuance of shares through employee stock purchase plan

 

 

61,041

 

 

 

 

 

 

3,386

 

 

 

 

 

 

 

 

 

3,386

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

27,365

 

 

 

 

 

 

 

 

 

27,365

 

Other comprehensive loss - net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,041

)

 

 

 

 

 

(1,041

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,809

)

 

 

(19,809

)

Balance--October 31, 2022

 

 

38,746,179

 

 

$

17

 

 

$

543,833

 

 

$

(1,043

)

 

$

45,591

 

 

$

588,398

 

 

See accompanying notes to condensed consolidated financial statements.

 

6


 

AMBARELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Nine Months Ended October 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(108,810

)

 

$

(54,281

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

18,402

 

 

 

14,426

 

Amortization (accretion) of premium (discount) on marketable debt securities, net

 

 

(957

)

 

 

(281

)

Stock-based compensation

 

 

82,796

 

 

 

82,051

 

Deferred income taxes

 

 

(3,676

)

 

 

755

 

Other non-cash items, net

 

 

1,066

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

29,019

 

 

 

(4,249

)

Inventories

 

 

9,703

 

 

 

(176

)

Prepaid expenses and other current assets

 

 

1,539

 

 

 

80

 

Other non-current assets

 

 

105

 

 

 

841

 

Accounts payable

 

 

(8,553

)

 

 

(2,044

)

Accrued and other current liabilities

 

 

6,938

 

 

 

2,813

 

Income taxes payable

 

 

(1,721

)

 

 

2,537

 

Deferred revenue

 

 

171

 

 

 

(378

)

Operating lease liabilities

 

 

(2,940

)

 

 

(3,254

)

Other long-term liabilities

 

 

(26

)

 

 

135

 

Net cash provided by operating activities

 

 

23,056

 

 

 

39,003

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of investments

 

 

(34,433

)

 

 

(87,641

)

Sales of investments

 

 

5,222

 

 

 

756

 

Maturities of investments

 

 

44,310

 

 

 

 

Purchase of tangible and intangible assets

 

 

(10,047

)

 

 

(13,023

)

Escrow claim associated with business acquisition

 

 

 

 

 

749

 

Net cash provided by (used in) investing activities

 

 

5,052

 

 

 

(99,159

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

6,912

 

 

 

6,834

 

Payment for intangible assets

 

 

(4,775

)

 

 

(4,887

)

Net cash provided by financing activities

 

 

2,137

 

 

 

1,947

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

30,245

 

 

 

(58,209

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

113,549

 

 

 

171,053

 

Cash, cash equivalents and restricted cash at end of period

 

$

143,794

 

 

$

112,844

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

5,499

 

 

$

1,340

 

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

 

Unpaid liabilities related to tangible and intangible assets purchases

 

$

6,868

 

 

$

1,239

 

See accompanying notes to condensed consolidated financial statements.

 

 

7


 

AMBARELLA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Organization and Summary of Significant Accounting Policies

Organization

Ambarella, Inc. (the Company) was incorporated in the Cayman Islands on January 15, 2004. The Company is a leading developer of low-power semiconductor solutions offering high-definition (HD) and Ultra HD compression, image processing, and powerful deep neural network processing. The Company combines its processor design capabilities with its expertise in video and image processing, algorithms and software to provide a technology platform that is designed to be easily scalable across multiple applications and enable rapid and efficient product development. The Company’s system-on-a-chip, or SoC, designs fully integrate high-definition video processing, image processing, artificial intelligence (AI) computer vision algorithms, audio processing and system functions onto a single chip. These low power SoCs deliver exceptional video and image quality and can extract valuable data from high-resolution video and radar streams. The Company is currently addressing a broad range of human and computer vision applications, including video security, advanced driver assistance systems (ADAS), electronic mirrors, drive recorders, driver/cabin monitoring systems, autonomous driving, and industrial and robotic applications.

The Company sells its solutions to leading original equipment manufacturers, or OEMs, who include the Company’s SoCs in their products, and original design manufacturers, or ODMs, who include the Company’s SoCs in the products that they supply to OEMs, globally.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, do not include all information and notes normally provided in audited financial statements. The accounting policies are described in the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the 2023 fiscal year filed with the SEC on March 31, 2023 (the Form 10-K) and updated, as necessary, in this Form 10-Q. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States (U.S. GAAP). In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair statement have been included. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for any other interim period or for a full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Form 10-K.

Basis of Consolidation

The Company’s fiscal year ends on January 31. The condensed consolidated financial statements of the Company and its subsidiaries have been prepared in conformity with U.S. GAAP. All intercompany transactions and balances have been eliminated upon consolidation.

 

Significant Accounting Policies

 

There have been no material changes to the Company’s significant accounting policies described in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

 

Concentration of Risk

The Company’s products are manufactured, assembled and tested by third-party contractors located primarily in Asia. The Company does not have long-term agreements with these contractors. A significant disruption in the operations of one or more of these contractors would impact the production of the Company’s products which could have a material adverse effect on its business, financial condition and results of operations.

 

8


 

A substantial portion of the Company’s revenue is derived from sales through its two major distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, which serves as its non-exclusive sales representative and fulfillment partner in Asia other than Japan, and Hakuto Co., Ltd., or Hakuto, a Japan distributor, and to one ODM, Chicony Electronics Co., Ltd., or Chicony, which manufactures devices incorporating the Company’s solutions on behalf of multiple end-customers. Termination of the relationships with these customers could result in a temporary or permanent loss of revenue. Furthermore, any credit issues from these customers could impair their abilities to make timely payment to the Company. See Note 14 for additional information regarding revenue and credit concentration with these customers.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, marketable debt securities and accounts receivable. The Company maintains its cash primarily in checking accounts with reputable financial institutions. Cash deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on deposits of its cash. In order to limit the exposure of each investment, the cash equivalents and marketable debt securities consist primarily of money market funds, commercial paper, corporate bonds, asset-backed securities and U.S. government securities which management assesses to be highly liquid. The Company does not hold or issue financial instruments for trading purposes.

The Company performs ongoing credit evaluation of its customers and adjusts credit limits based upon payment history and customers’ credit worthiness. The Company regularly monitors collections and payments from its customers.

 

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to secure certain transactions in a foreign entity. As of October 31, 2023 and January 31, 2023, restricted cash was immaterial, respectively. The following table presents cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets, and the totals are presented on the condensed consolidated statements of cash flows:

 

 

 

As of

 

 

 

October 31,
2023

 

 

January 31,
2023

 

 

October 31,
 2022

 

 

January 31,
2022

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

143,787

 

 

$

113,541

 

 

$

112,837

 

 

$

171,043

 

Restricted cash

 

 

7

 

 

 

8

 

 

 

7

 

 

 

10

 

Total as presented in the condensed consolidated statements of cash flows

 

$

143,794

 

 

$

113,549

 

 

$

112,844

 

 

$

171,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recent Accounting Pronouncements

None.

 

9


 

2. Financial Instruments and Fair Value

The Company invests a portion of its cash in money market funds and debt securities that are denominated in United States dollars. The debt security investment portfolio consists of commercial paper, corporate bonds, asset-backed securities and U.S. government securities. All of the investments are classified as available-for-sale securities and reported at fair value in the condensed consolidated balance sheets as follows:

 

 

 

As of October 31, 2023

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

 

 

(in thousands)

 

Money market funds

 

$

1,649

 

 

$

 

 

$

 

 

$

1,649

 

Commercial paper

 

 

22,963

 

 

 

 

 

 

 

 

 

22,963

 

Corporate bonds

 

 

40,667

 

 

 

7

 

 

 

(642

)

 

 

40,032

 

Asset-backed securities

 

 

17,269

 

 

 

 

 

 

(256

)

 

 

17,013

 

U.S. government securities

 

 

22,491

 

 

 

 

 

 

(328

)

 

 

22,163

 

Total cash equivalents and marketable debt securities

 

$

105,039

 

 

$

7

 

 

$

(1,226

)

 

$

103,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 31, 2023

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

 

 

(in thousands)

 

Money market funds

 

$

7,872

 

 

$

 

 

$

 

 

$

7,872

 

Commercial paper

 

 

18,333

 

 

 

 

 

 

 

 

 

18,333

 

Corporate bonds

 

 

23,472

 

 

 

50

 

 

 

(224

)

 

 

23,298

 

Asset-backed securities

 

 

18,753

 

 

 

44

 

 

 

(149

)

 

 

18,648

 

U.S. government securities

 

 

33,256

 

 

 

22

 

 

 

(235

)

 

 

33,043

 

Total cash equivalents and marketable debt securities

 

$

101,686

 

 

$

116

 

 

$

(608

)

 

$

101,194