Annual report pursuant to Section 13 and 15(d)

Debt

v3.22.1
Debt
 12 Months Ended
Jan. 31, 2022
Debt Disclosure [Abstract]  
Debt DebtThere was no long-term debt outstanding as of January 31, 2022. The following table summarizes the Company’s long-term debt at January 31, 2021 (in thousands):
January 31,
2021
Senior Subordinated Secured Convertible Note 75,000 
Paid-in-kind interest 5,390 
Principal balance 80,390 
Less: Unamortized debt discounts and issuance costs (1,542)
Revolving credit facility — 
Total Debt $ 78,848 

Senior Subordinated Secured Convertible Notes

On May 20, 2020 (the “NPA Closing Date”), the Company issued senior subordinated convertible notes for an aggregate principal amount of $75.0 million pursuant to the Company’s Senior Subordinated Secured Convertible Note Purchase Agreement, dated May 20, 2020, by and among the Company, its subsidiaries, TPG Specialty Lending Inc., as Administrative Agent and Arranger (“TPG”), and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of May 20, 2025 (the “Notes”). The Notes were issued for face amount net of a closing fee of 1.05% on the entire $150.0 million commitment for all Notes (corresponding to an original issue discount of 2.1% on the Notes) and carried a fixed rate of 9.875% per annum. The interest was paid-in-kind by increasing the principal amount of the Notes.

At the option of the holders, the Notes were convertible into common stock of the Company at a specified price. The Notes were sold at a price and had a value at issuance not significantly in excess of the face amount; accordingly, none of the proceeds were allocated to equity.

The Notes were subject to automatic conversion features upon the occurrence of a liquidity event, including an IPO, as well as optional conversion feature at the option of the holders. The Notes would convert at a specified price as defined within the Note Purchase Agreement.

The Company accounted for the Notes in accordance with ASC 470-20, Debt with Conversion and Other Options, ASC 815, Derivatives and Hedging, and ASC 480, Distinguishing Liabilities from Equity. The Company evaluated the Notes at inception to determine if there were any embedded components that qualified as derivatives to be separately accounted for. The Company’s Initial Notes are deemed to be a conventional convertible debt that may only be settled with common shares. Therefore, the Initial Notes were classified as debt, net of any discounts or issuance costs, on the Consolidated Balance Sheets.

As of January 31, 2021, the total estimated fair value of the Initial Notes was approximately $86.4 million.

Upon the completion of the IPO, the Notes automatically converted pursuant to their terms into 9,694,004 shares of Class B common stock.

Interest Expense

The following table presents the components of interest expense incurred on the Notes for the years ended January 31, 2022, 2021 and 2020 (in thousands):


Year Ended January 31,
2022 2021 2020
Interest expense at coupon rate $ 3,182  $ 5,390  $ — 
Amortization of debt discounts and issuance costs 84  133  — 
Total interest expense $ 3,266  $ 5,523  $ — 


The debt discount was amortized to interest expense at an annual effective interest rate of 10.3% over the contractual terms of the Notes. Interest expense is included in Other expense, net on the consolidated statement of operations.
Credit Agreement

The Company maintains a credit agreement with Silicon Valley Bank (the “SVB Credit Facility”). Under the terms of the SVB Credit Facility, the Company can borrow up to $50.0 million on its revolving credit loan facility at the higher of prime interest rate plus 0.25% or federal funds effective rate plus 0.50% plus 0.25%. The SVB Credit Facility, which expires on June 21, 2022, requires the Company to maintain certain monthly adjusted quick ratio and quarterly minimum consolidated adjusted earnings before income taxes, depreciation and amortization. In addition, the SVB Credit Facility also provides for issuance of letters of credit that reduce the available borrowing capacity, which the Company had approximately $0.7 million of issued but unused letters of credit as of January 31, 2022. As of January 31, 2022 and 2021, the Company had no amounts outstanding under the SVB Credit Facility.