# EDGAR Filing Document

**Accession Number:** 0001643269
**File Stem:** 0001643269-23-000016
**Filing Date:** 2023-3
**Character Count:** 764137
**Document Hash:** d84185d14de0b6d2c61a5ef32d88de27
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001643269-23-000016.hdr.sgml**: 20230316

**ACCESSION NUMBER**: 0001643269-23-000016

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 183

**CONFORMED PERIOD OF REPORT**: 20230131

**FILED AS OF DATE**: 20230316

**DATE AS OF CHANGE**: 20230316

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sumo Logic, Inc.
- **CENTRAL INDEX KEY:** 0001643269
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 272234444
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0131

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39502
- **FILM NUMBER:** 23739586

**BUSINESS ADDRESS:**
- **STREET 1:** 855 MAIN STREET, SUITE 100
- **CITY:** REDWOOD CITY
- **STATE:** CA
- **ZIP:** 94063
- **BUSINESS PHONE:** 650-670-8002

**MAIL ADDRESS:**
- **STREET 1:** 855 MAIN STREET, SUITE 100
- **CITY:** REDWOOD CITY
- **STATE:** CA
- **ZIP:** 94063

?xml version="1.0" ? sumo-20230131

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K** 

**(Mark One)**

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

**For the fiscal year ended January 31, 2023** 

**OR**

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

**For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

**Commission File Number 001-39502** 

**Sumo Logic, Inc.**

**(Exact name of registrant as specified in its charter)** 

---

| | |
|:---|:---|
| **Delaware** | **27-2234444** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification No.) |
| **855 Main Street, Suite 100** |  |
| **Redwood City, California** | **94063** |
| (Address of principal executive offices) | (Zip Code) |
| **(650) 670-8002** | **(650) 670-8002** |
| (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) |

---

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

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common stock, par value $0.0001 per share | SUMO | Nasdaq Global Select Market |

---

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 and posted 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 and post 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 | ☐ |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

------

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant §240.1D-1(b). ☐

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

The aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price of the registrant's common stock on July 31, 2022, the last business day of the registrant's most recently completed second fiscal quarter, as reported by the Nasdaq Global Select Market, was approximately $778.2 million. All executive officers and directors of the registrant and all holders of 5% of more of the registrant's outstanding common stock have been deemed, solely for the purpose of the foregoing calculation, to be affiliates of the registrant.

The registrant had outstanding 122,510,379 shares of common stock as of March 3, 2023.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended January 31, 2023.

------

**Table of Contents**

---

| | | | |
|:---|:---|:---|:---|
| | | | **<u>Page</u>** |
| | | <u>[Special Note Regarding Forward-Looking Statements](#ie4a4a1dccd92486a88fcb9a732da7f70_10)</u> | <u>[2](#ie4a4a1dccd92486a88fcb9a732da7f70_10)</u> |
| | | <u>[Risk Factor Summary](#ie4a4a1dccd92486a88fcb9a732da7f70_13)</u> | <u>[3](#ie4a4a1dccd92486a88fcb9a732da7f70_13)</u> |
| **[Part I](#ie4a4a1dccd92486a88fcb9a732da7f70_16)** | **[Part I](#ie4a4a1dccd92486a88fcb9a732da7f70_16)** | | |
| | <u>[Item 1.](#ie4a4a1dccd92486a88fcb9a732da7f70_19)</u> | <u>[Business](#ie4a4a1dccd92486a88fcb9a732da7f70_19)</u> | <u>[5](#ie4a4a1dccd92486a88fcb9a732da7f70_19)</u> |
| | <u>[Item 1A.](#ie4a4a1dccd92486a88fcb9a732da7f70_22)</u> | <u>[Risk Factors](#ie4a4a1dccd92486a88fcb9a732da7f70_22)</u> | <u>[10](#ie4a4a1dccd92486a88fcb9a732da7f70_22)</u> |
| | <u>[Item 1B.](#ie4a4a1dccd92486a88fcb9a732da7f70_25)</u> | <u>[Unresolved Staff Comments](#ie4a4a1dccd92486a88fcb9a732da7f70_25)</u> | <u>[40](#ie4a4a1dccd92486a88fcb9a732da7f70_25)</u> |
| | <u>[Item 2.](#ie4a4a1dccd92486a88fcb9a732da7f70_28)</u> | <u>[Properties](#ie4a4a1dccd92486a88fcb9a732da7f70_28)</u> | <u>[41](#ie4a4a1dccd92486a88fcb9a732da7f70_28)</u> |
| | <u>[Item 3.](#ie4a4a1dccd92486a88fcb9a732da7f70_31)</u> | <u>[Legal Proceedings](#ie4a4a1dccd92486a88fcb9a732da7f70_31)</u> | <u>[41](#ie4a4a1dccd92486a88fcb9a732da7f70_31)</u> |
| | <u>[Item 4.](#ie4a4a1dccd92486a88fcb9a732da7f70_34)</u> | <u>[Mine Safety Disclosures](#ie4a4a1dccd92486a88fcb9a732da7f70_34)</u> | <u>[41](#ie4a4a1dccd92486a88fcb9a732da7f70_34)</u> |
| **[Part II](#ie4a4a1dccd92486a88fcb9a732da7f70_37)** | **[Part II](#ie4a4a1dccd92486a88fcb9a732da7f70_37)** | | |
| | <u>[Item 5.](#ie4a4a1dccd92486a88fcb9a732da7f70_40)</u> | <u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ie4a4a1dccd92486a88fcb9a732da7f70_40)</u> | <u>[42](#ie4a4a1dccd92486a88fcb9a732da7f70_40)</u> |
| | <u>[Item 6.](#ie4a4a1dccd92486a88fcb9a732da7f70_43)</u> | <u>[\[Reserved\]](#ie4a4a1dccd92486a88fcb9a732da7f70_43)</u> | <u>[43](#ie4a4a1dccd92486a88fcb9a732da7f70_43)</u> |
| | <u>[Item 7.](#ie4a4a1dccd92486a88fcb9a732da7f70_46)</u> | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#ie4a4a1dccd92486a88fcb9a732da7f70_46)</u> | <u>[44](#ie4a4a1dccd92486a88fcb9a732da7f70_46)</u> |
| | <u>[Item 7A.](#ie4a4a1dccd92486a88fcb9a732da7f70_97)</u> | <u>[Quantitative and Qualitative Disclosures About Market Risk](#ie4a4a1dccd92486a88fcb9a732da7f70_97)</u> | <u>[59](#ie4a4a1dccd92486a88fcb9a732da7f70_97)</u> |
| | <u>[Item 8.](#ie4a4a1dccd92486a88fcb9a732da7f70_100)</u> | <u>[Financial Statements and Supplementary Data](#ie4a4a1dccd92486a88fcb9a732da7f70_100)</u> | <u>[60](#ie4a4a1dccd92486a88fcb9a732da7f70_100)</u> |
| | <u>[Item 9.](#ie4a4a1dccd92486a88fcb9a732da7f70_163)</u> | <u>[Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ie4a4a1dccd92486a88fcb9a732da7f70_163)</u> | <u>[92](#ie4a4a1dccd92486a88fcb9a732da7f70_163)</u> |
| | <u>[Item 9A.](#ie4a4a1dccd92486a88fcb9a732da7f70_166)</u> | <u>[Controls and Procedures](#ie4a4a1dccd92486a88fcb9a732da7f70_166)</u> | <u>[93](#ie4a4a1dccd92486a88fcb9a732da7f70_166)</u> |
| | <u>[Item 9B.](#ie4a4a1dccd92486a88fcb9a732da7f70_169)</u> | <u>[Other Information](#ie4a4a1dccd92486a88fcb9a732da7f70_169)</u> | <u>[93](#ie4a4a1dccd92486a88fcb9a732da7f70_169)</u> |
| | <u>[Item 9C.](#ie4a4a1dccd92486a88fcb9a732da7f70_172)</u> | <u>[Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ie4a4a1dccd92486a88fcb9a732da7f70_172)</u> | <u>[93](#ie4a4a1dccd92486a88fcb9a732da7f70_172)</u> |
| **Part III** | **Part III** | | |
| | <u>[Item 10.](#ie4a4a1dccd92486a88fcb9a732da7f70_178)</u> | <u>[Directors, Executive Officers and Corporate Governance](#ie4a4a1dccd92486a88fcb9a732da7f70_178)</u> | <u>[94](#ie4a4a1dccd92486a88fcb9a732da7f70_178)</u> |
| | <u>[Item 11.](#ie4a4a1dccd92486a88fcb9a732da7f70_181)</u> | <u>[Executive Compensation](#ie4a4a1dccd92486a88fcb9a732da7f70_181)</u> | <u>[94](#ie4a4a1dccd92486a88fcb9a732da7f70_181)</u> |
| | <u>[Item 12.](#ie4a4a1dccd92486a88fcb9a732da7f70_184)</u> | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ie4a4a1dccd92486a88fcb9a732da7f70_184)</u> | <u>[94](#ie4a4a1dccd92486a88fcb9a732da7f70_184)</u> |
| | <u>[Item 13.](#ie4a4a1dccd92486a88fcb9a732da7f70_187)</u> | <u>[Certain Relationships and Related Transactions and Director Independence](#ie4a4a1dccd92486a88fcb9a732da7f70_187)</u> | <u>[94](#ie4a4a1dccd92486a88fcb9a732da7f70_187)</u> |
| | <u>[Item 14.](#ie4a4a1dccd92486a88fcb9a732da7f70_190)</u> | <u>[Principal Accounting Fees and Services](#ie4a4a1dccd92486a88fcb9a732da7f70_190)</u> | <u>[94](#ie4a4a1dccd92486a88fcb9a732da7f70_190)</u> |
| **Part IV** | **Part IV** | | |
| | <u>[Item 15.](#ie4a4a1dccd92486a88fcb9a732da7f70_196)</u> | <u>[Exhibits, Financial Statement Schedules](#ie4a4a1dccd92486a88fcb9a732da7f70_196)</u> | <u>[95](#ie4a4a1dccd92486a88fcb9a732da7f70_196)</u> |
| | <u>[Item 16.](#ie4a4a1dccd92486a88fcb9a732da7f70_199)</u> | <u>[Form 10-K Summary](#ie4a4a1dccd92486a88fcb9a732da7f70_199)</u> | <u>[96](#ie4a4a1dccd92486a88fcb9a732da7f70_199)</u> |
| <u>[Signatures](#ie4a4a1dccd92486a88fcb9a732da7f70_202)</u> | <u>[Signatures](#ie4a4a1dccd92486a88fcb9a732da7f70_202)</u> | <u>[Signatures](#ie4a4a1dccd92486a88fcb9a732da7f70_202)</u> | <u>[97](#ie4a4a1dccd92486a88fcb9a732da7f70_202)</u> |

---

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<u>[**Table of Contents**](#ie4a4a1dccd92486a88fcb9a732da7f70_7)</u>

**Special Note Regarding Forward-Looking Statements**

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.

Forward-looking statements contained in this Form 10-K include, but are not limited to, statements about our expectations regarding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our proposed acquisition by entities affiliated with Francisco Partners Management, L.P., or Francisco Partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding the timing and completion of the proposed acquisition by entities affiliated with Francisco Partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in sales and marketing, research and development, and general and administrative expenses, and key business metrics, and our ability to achieve and maintain future profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the macroeconomic environment, including inflation and rising interest rates, the war in Ukraine, the ongoing COVID-19 pandemic, and other factors causing significant market volatility in the global economy on our customers, partners, employees, and business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our business model and our ability to effectively manage our growth and associated investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our beliefs about and objectives for future operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market acceptance of our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain and expand our customer base, including by attracting new customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain customers and expand their adoption of our platform, particularly our largest customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effects of increased competition in our markets and our ability to compete effectively;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain the security and availability of our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to develop new platform features and functionality, or enhancements to our existing platform features and functionality, and bring them to market in a timely manner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our relationships with third parties, including channel and technology partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to successfully expand in our existing markets and into new markets, including internationally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to comply with laws and regulations that currently apply or become applicable to our business both in the United States and internationally, including with respect to privacy and data protection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding our ability to obtain, maintain, enforce, defend, and enhance our intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to successfully defend litigation brought against us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the sufficiency of our cash and cash equivalents to meet our liquidity needs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract and retain employees and key personnel; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future acquisitions or investments.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, related to our proposed acquisition by entities affiliated with Francisco Partners and those described in the section titled "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

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<u>[**Table of Contents**](#ie4a4a1dccd92486a88fcb9a732da7f70_7)</u>

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

**Risk Factor Summary**

Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled "Risk Factors," together with the other information in this Annual Report on Form 10-K. If any of the following risks actually occurs (or if any of those listed elsewhere in this Annual Report on Form 10-K occur), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** The announcement and pendency of our agreement to be acquired by entities affiliated with Francisco Partners may have an adverse effect on our business and results of operations and our failure to complete the Merger could have an adverse effect on our business, financial condition, results of operations, and stock price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Litigation may arise in connection with the Merger, which could be costly, prevent consummation of the Merger, divert management's attention, and otherwise harm our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** In connection with the Merger, our current and prospective employees could experience uncertainty about their future with us. As a result, key employees may depart because of issues relating to such uncertainty or a desire not to remain with the Company once it is private following the completion of the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our revenue growth rate and financial performance in recent periods may not be indicative of future performance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have a history of net losses and we may not be able to achieve or maintain profitability in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We face intense competition and could face pricing pressure from, and lose market share to, our competitors, which would adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The markets for our offerings are evolving, and our future success depends on the growth of these markets and our ability to adapt, keep pace, and respond effectively to evolving markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may fail to cost-effectively acquire new customers or obtain renewals, upgrades, or expansions from our existing customers, which would adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes to our packaging and licensing models could adversely affect our ability to attract or retain customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our results of operations vary and are unpredictable from period to period, which could cause the market price of our common stock to decline;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our business could be adversely affected by economic downturns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our sales cycle can be long and unpredictable, and our sales efforts require considerable time and expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The loss of, or a significant reduction in use of our platform by, our largest customers would result in lower revenue and harm our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our business and results of operations are subject to the effects of a rising rate of inflation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depend on our sales force, and we may fail to attract, retain, motivate, or train our sales force, which could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to build and maintain successful relationships with our channel partners or such channel partners may fail to perform, which could adversely affect our business, financial condition, results of operations, and growth prospects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our international operations and continued international expansion subject us to additional costs and risks, which could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may fail to effectively manage our growth, which would adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** The COVID-19 pandemic has caused global economic uncertainty and disruption, and the extent to which it will continue to harm our business and results of operations is difficult to predict;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depend on our management team and other highly skilled personnel, and we may fail to attract, retain, motivate, or integrate highly skilled personnel, which could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to make acquisitions and investments, successfully integrate acquired companies into our business, or our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our reputation and brand are important to our success, and we may not be able to maintain and enhance our reputation and brand, which would adversely affect our business, financial condition, and results of operations;

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<u>[**Table of Contents**](#ie4a4a1dccd92486a88fcb9a732da7f70_7)</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts related to unused subscriptions, which could harm our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A portion of our revenue is generated by sales to government entities, which subject us to a number of challenges and risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business, financial condition, and results of operations could be adversely affected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We utilize free trials and other go-to-market strategies, and we may not be able to realize the benefits of these strategies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ability to increase sales depends, in part, on the quality of our customer support, and our failure to offer high quality support would harm our reputation and adversely affect our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business could be adversely affected by unexpected events such as pandemics, natural disasters, political crises, or social instability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We use certain third-party services to manage and operate our business, and any failure or interruption in the services provided by these third parties could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any actual or perceived security or privacy breach could interrupt our operations, harm our reputation and brand, result in financial exposure, and lead to loss of user confidence in us or decreased use of our platform, any of which could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Real or perceived defects, errors, or vulnerabilities in our platform could harm our reputation and adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** We rely on Amazon Web Services, or AWS, to deliver our platform to our customers, and any disruption of, or interference with, our use of AWS could adversely affect our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could harm our business, financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Claims by others that we infringed their proprietary technology or other intellectual property rights would harm our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to deliver our platform or subject us to litigation or other actions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** We license certain editions of our offerings under an open source licensing model, which may limit our ability to monetize certain of our offerings and present other challenges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** The rapidly evolving framework of privacy, data protection, data transfers, or other laws or regulations worldwide may limit the use and adoption of our services and adversely affect our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We incorporate technology from third parties into our platform, and our inability to maintain rights to such technology would harm our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our platform may not interoperate with our customers' infrastructure or with third-party offerings, which would adversely affect our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** We may be subject to claims that we have wrongfully hired an employee from a competitor, or that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** Remaining performance obligations and calculated billings may not be accurate indicators of business activity within a period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We recognize substantially all of our revenue ratably over the term of the relevant subscription period, and as a result, downturns or upturns in sales may not be immediately reflected in our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** Our metrics and estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our loan and security agreement provides our lender with a first-priority lien against substantially all of our assets and contains restrictive covenants which could limit our operational flexibility and otherwise adversely affect our financial condition; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** Our executive officers, directors, and holders of 5% or more of our common stock continue to have substantial control over us, which will limit your ability to influence the outcome of important transactions, including a change in control.

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**PART I**

**Item 1. Business** 

**Overview** 

Sumo Logic empowers the people who power modern, digital businesses. Our mission is to be the leading software-as-a-service analytics platform for reliable and secure cloud-native applications. With our platform, we help our customers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructure. Our multi-tenant, cloud-native platform – which we refer to as our Continuous Intelligence Platform – provides powerful, real-time, machine data analytics and insights across observability and security solutions.

Nearly every enterprise across every industry is embracing digital transformation. As enterprises seek to transform by building digital services and cloud applications, they often embark upon multiple technology changes. Successful digital businesses adopt modern software development practices to accelerate innovation, use cloud infrastructure for flexibility, and adopt modern architectures like microservices in order to improve reliability and scale. While these changes can deliver agility, speed, and other benefits, they also can create complexity in the form of rapid rate of change, proliferation of technology automation, expanded use of cloud and open source technologies, exponential growth in data, and increased possible points of attack. Challenges managing these complexities can negatively affect application reliability, security, performance, and ultimately customer experience. Thus, enterprises are dependent on machine data analytics for the insights they need to build, manage, and secure their critical cloud applications. By delivering an analytics platform for observability and security for cloud applications, we enable our customers to transform into differentiated, digital businesses and improve digital experiences for their users. Our vision is to make the world's digital experiences reliable and secure.

**Our Platform**

Our Continuous Intelligence Platform is a cloud-native, multi-tenant, secure service that our customers leverage to enable reliability and security of their cloud applications and cloud workloads. We built our platform as a modern, cloud-native, microservices application that implements security-first principles. Our platform was originally built to address complex, unstructured log data at massive scale, optimizing data ingestion and processing while providing powerful analytics. Over time, we extended our platform to other types of machine data for full stack observability and security analytics.

*Modern Architecture*. Our platform runs on AWS using intelligent resource management, auto scaling, and partitioning logic to manage our compute and storage footprint so that we can deliver resiliency and optimal performance while maintaining efficiency. Our platform runs across multiple regions and within each region across multiple AWS data centers, and our microservices are distributed to avoid single points of failure.

*Security-first Principles*. Our platform was designed from the beginning to protect our customers' data through encryption, audits, processes, and adherence to compliance regulations. Our platform encrypts data in transit and at rest, uses customer specific encryption keys, encrypts those keys separately, and applies best practices for processes surrounding access to our platform. Our platform is PCI DSS 3.2.1 Service Provider Level 1 certified, SOC 2 Type 2 attested, HIPAA compliance attested, ISO 27001 certified, and has FedRAMP Moderate authorization. Furthermore, our platform is deployed in AWS regions around the world, allowing customers to comply with data sovereignty rules.

*Machine Data Analytics*. We ingest and analyze machine data generated by applications, infrastructure, and microservices, enabling our customers to derive actionable insights. Our platform is designed to collect and centralize data from a multitude of data sources by integrating seamlessly with other solutions. Our platform leverages our core capabilities to enable reliability and security for cloud applications, including:

*Data Collection and Management*. We support a wide variety of data collection protocols and can collect data from any digital environment, including on-premise and cloud. Our platform supports structured, semi-structured, and unstructured data types across a variety of data formats. Our platform also collects and analyzes unknown and non-premeditated data sets, including custom application logs, metrics, traces, events, and metadata to understand the internal state, security, and business performance of our customers' digital services and applications. We collect data through prepackaged collectors, APIs, and other proprietary or open source integrations. Our platform supports ingest time parsing into a schema, as well as on-demand schema inference, in order to enable analytics on unstructured data. We support ingest time data transformation and enrichment to quickly convert between data formats to optimize for ease of analysis, performance, and cost. In addition, our platform offers data tiering and data budgeting capabilities to provide our customers with an effective and cost-efficient way to manage and grow their data volume and usage. Policies can be set that govern the granularity of data management and

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enable various levels of analytics. Our customers can configure retention policies per data set from days to years to satisfy internal requirements, external regulatory rules, or specific cost and data value requirements.

*Analytics*. The core power of our Continuous Intelligence Platform is our proprietary, state-of-the-art analytics system that can analyze data, at petabyte scale, in real-time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Search*. Our platform enables high-speed search using keywords, full phrases, patterns, Boolean logic, and metadata across one or multiple data sets. Our search engine supports powerful data manipulation operators and constructs in order to help customers rapidly identify and address outages, performance issues, security threats, trends and behaviors. We are also able to infer and extract schema on demand without requiring ingest time parsing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Machine learning*. We have a variety of proprietary algorithms and machine learning technologies that enhance our analytics system, including LogReduce/LogCompare, LogExplain, TimeCompare, Outlier, and Predict.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Correlation rules*. Our Cloud Security Incident and Event Monitoring, or SIEM, technology offers a scalable real-time correlation engine that our customers use to detect threats across multiple sources of data. We provide out-of-the-box correlation rules built around industry standards and best practices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Threat intelligence.* We provide an out-of-the-box threat intelligence data set containing indicators of compromise, which enables customers to analyze their data to assess matches against those indicators and react accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Global intelligence service*. Our multi-tenant platform enables us to analyze data, determine expected behaviors, and create anonymized behavior benchmarks. These benchmarks can be used by our customers to detect and explain unexpected events, threats, and behaviors outside of expected boundaries for our customers' infrastructure. Our global intelligence service enables our customers to improve their security posture, detect vulnerabilities, optimize provisioning, resolve inefficiencies, and remove risk from their applications and infrastructure.

*Visualization and Notifications*. Our platform offers powerful data visualization, filtering, and notification/alerting capabilities to empower users with insights and intelligence extracted from their machine data. Our dashboards are used to visualize data in real-time in order to both monitor and troubleshoot conditions affecting reliability and security of our customers' applications. Our alerts are used to notify users when a specific known or unknown condition is met or detected. Customers can set up alerts themselves or use many out-of-the-box alerts packaged with our solutions. Our alerts can both notify users directly or can trigger workflows, APIs, or orchestration/automation within our own or third party systems. We support a variety of inbound data collection integrations for cloud and traditional systems as well as outbound integrations used to send data and notifications to third party systems. Our integrations also support automated and orchestrated response through our Cloud Security Orchestration, Automation, and Response, or SOAR, technology for many third-party technologies.

*Configuration.* Our platform provides powerful capabilities for configuration and security controls. We offer single sign-on, multi factor authentication, and a robust, enterprise-level role-based access control system, or RBAC.

**Our Solutions**

We empower practitioners and developers – including software engineers, site reliability engineers, cloud application managers, information technology, or IT, operations managers, security and security operations analysts, and cloud architects – to build, manage, and secure their cloud applications. Our Continuous Intelligence Platform enables organizations to address challenges with their cloud applications, including cloud application reliability, cloud application security, and insights into cloud application infrastructure. We have two primary offerings for customers to leverage our platform: our observability solution and our security solution.

*Observability.* We offer our customers an out-of-the-box solution for managing their application reliability through our comprehensive observability solution for cloud applications. Our observability solution combines cloud native log analytics, monitoring, application performance management, or APM, and tracing, and real user monitoring, or RUM, capabilities. Our observability solution also offers cloud application infrastructure monitoring and troubleshooting capabilities that help our customers gain insight into their cloud infrastructure operations, including provisioning, performance, latency, availability, outages, and other issues.

*Security.* Our security solution helps developers, security analysts, and security operation centers detect threats, perform security analysis and forensics, and automate security responses to remediate against those threats for their cloud applications. We offer out-of-the-box packages for compliance with certain industry standards and cloud infrastructure and application security analytics, as well as cloud-native SIEM and cloud-native SOAR solutions.

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**Our Customers**

As of January 31, 2023, we had 2,417 customers worldwide. Our customers range from cloud-native organizations to those who are undergoing digital transformation and range from small and medium-sized enterprises to businesses in the Fortune 500. In addition, we had over 218,000 users on our platform.

**Customer Success**

We view our customer success efforts and our community of customers as key to driving adoption of our solution and creating an unparalleled experience for our customers. Our customer support team uses our own platform to gain customer intelligence before we receive support queries, allowing us to leverage a small number of support personnel across our entire customer base. Relying on our own solutions internally also allows us to continue to iterate and improve our platform for all users. Our customer support organization works closely with our research and development function to ensure that customer feedback and community input is promptly incorporated and addressed as we continuously improve our platform. Additionally, through our multi-level certification program, we support a community of over 24,000 Sumo Logic "certified users" who take advantage of our training services in order to qualify for various tiers of expertise in the capabilities of our platform and hold over 44,000 certifications. Our certified users frequently act as informal advocates and drive adoption of our platform for new use cases, increasing our ability to further engage within an organization and with new customers.

**Sales and Marketing**

Our sales and marketing organizations work together closely to drive market awareness, build a strong sales pipeline, and cultivate customer relationships to drive revenue growth.

We sell subscriptions to our platform and service offerings through our direct and indirect sales organizations. Our direct sales organization is comprised of inside sales and field sales professionals who are segmented by customer size based on either customer headcount or amount of customer spend. These sales teams are dispersed geographically to reach potential customers worldwide. Our direct sales organization also leverages our network of channel partners to expand our reach to additional sectors and industries, especially internationally. Our resellers market and sell our offerings throughout the world and provide a go-to-market channel in regions where we do not have a direct presence. In addition, we generate sales of subscriptions to our platform through our self-service offering, as well as a free version that allows potential customers to use certain functionalities for a limited volume of data and experience the benefits of our platform.

We focus our marketing efforts on building our brand reputation, increasing the awareness of our platform, and driving customer demand through campaigns that leverage our innovation, thought leadership, practitioner use cases, technical resources, and customer success stories. We use various marketing strategies to engage with prospective customers, including account-based, email and event marketing, content marketing, digital advertising, public relations, search engine optimization, social media, and thought leadership in the industry. For example, we host an annual customer conference, Illuminate, which brings together our customers and thought leaders to provide education on observability and security solutions, deliver technical trainings of our platform functionalities, share best practices, and foster a community.

**Technology Partners**

We develop and maintain partnerships that help us market and deliver our platform and solutions to our customers around the world. Our partner network includes the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Cloud providers.*** We work with many of the major cloud providers to increase awareness of, and make it easy for customers to access, our platform and solutions. Our platform is developed to operate on and integrate with leading cloud provider platforms, such as AWS, Microsoft Azure, or Azure, and Google Cloud Platform or GCP. Our customers are also able to subscribe to our platform and solutions through leading cloud service marketplaces.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Solution partners.*** We partner with leading innovative technology organizations to develop integrations, best practices, and extended capabilities that help our customers achieve enhanced value in modern enterprise cloud environments.

**Research and Development**

Our research and development team consists of technical engineering, product management, and user experience, and is responsible for the design, architecture, creation, and quality of our platform. We invest substantial resources in research and development to enhance our platform features and functionalities and expand the services we offer. We believe the timely development of new, and the enhancement of our existing services and platform features is essential to maintaining our competitive

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position, and we continually incorporate suggestions, feedback, and new use cases from our community and customers into our platform. Our research and development team works closely with our technical operations team to ensure the successful deployment and monitoring of our platform to provide a platform that is available, reliable, and stable, as well as with our customer success team to collect user feedback to enhance our development process. We utilize a modern development process to deliver numerous software releases each year and hundreds of minor releases, fixes, and updates. Our research and development organization is distributed across the United States, India, Italy, Poland, and other countries, which we believe is a strategic advantage for us, allowing us to develop our platform capabilities more efficiently.

**Competition**

The markets in which we compete are competitive and characterized by rapid changes in technology, customer requirements, and industry standards, and frequent introductions of improvements to existing service offerings. Our competitors and potential competitors include providers of tools such as analytics, enterprise and open source search, SIEM, SOAR, observability, monitoring, and other software offerings that customers may perceive as substitutes for our platform. Our primary competitors include Splunk and Elastic. Other competitors include Datadog and New Relic, cloud infrastructure providers such as AWS, Azure, and GCP, and various private companies. We expect competition to increase as other established and emerging companies enter this market, as customer requirements evolve, and as new service offerings and technologies are introduced.

The principal competitive factors for companies in our industry are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cloud-native, multi-tenant architecture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to ingest and manage a broad variety and large volume of data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• flexible packaging and total cost of ownership;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• platform functionality, including speed, scale, and relevance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ease of deployment and ease of use;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to address a variety of evolving customer needs and use cases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enterprise-grade technology that is secure and reliable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• scale and reach of customer base and level of platform adoption;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• quality of training, consulting, and customer support;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• strength of sales and marketing efforts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• brand awareness, reputation, and customer satisfaction.

We believe that we compare favorably on the basis of the factors listed above. Our industry requires constant change and innovation, and we plan to continue to evolve our platform technology to empower our customers to monitor and troubleshoot application and infrastructure performance in real time, act on threats instantly, and make smarter business decisions. However, we could face significant risks to our business, financial condition, and results of operations as a result of competition.<sup>1</sup>

**Intellectual Property**

Our success depends in part upon our ability to safeguard our core technology and other intellectual property protection for our technology, inventions, improvements, proprietary rights, and other assets. We seek to accomplish that objective by establishing intellectual property rights in and protecting those assets through a combination of patents, patent applications, registered and unregistered trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual measures. As of January 31, 2023, we owned 43 issued U.S. patents, nine issued non-U.S. patents, 17 U.S. patent applications, no pending U.S. provisional patent applications, and five non-U.S. patent applications. Our issued U.S. patents, and any patents that may issue from our pending applications, would be scheduled to expire at dates ranging between April 2027 and September 2040, excluding any additional term for patent term adjustments or extensions. In addition, as of January 31,

<sup>1</sup> See the section titled "Risk Factors—We face intense competition and could face pricing pressure from, and lose market share to, our competitors, which would adversely affect our business, financial condition, and results of operations" for additional information.

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2023, we owned 17 registered trademarks in the United States, no pending trademark applications in the United States, as well as 41 registered trademarks in non-U.S. jurisdictions, six pending trademark applications in various non-U.S. jurisdictions, and one published trademark in a non-U.S. jurisdiction. We also license software from third parties for integration into our platform, including open source software and other software available on commercially reasonable terms.

Additionally, we rely upon unpatented trade secrets and confidential know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, by entering into confidentiality agreements with our employees, consultants, vendors, and customers, and generally limiting access to and distribution of our proprietary information. However, we cannot assure you that the steps taken by us will prevent misappropriation of our technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our offerings or obtain and use information that we regard as proprietary. Policing unauthorized use of our technology is difficult and time consuming. Third parties may independently develop the same or similar proprietary information or may otherwise gain access to our proprietary information. The laws, procedures, and restrictions on which we rely may provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, or misappropriated. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.

Our industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent and other intellectual property rights. From time to time, third parties may assert claims of infringement, misappropriation, and other violations of intellectual property against us, our customers, or our channel partners, with whom our agreements may obligate us to indemnify against these claims.<sup>2</sup>

**Employees and Human Capital**

We believe having a community of passionate, talented individuals committed to creating significant customer impact and value is critical to our long-term success. As of January 31, 2023, we had a total of 983 employees located in 16 countries. In certain countries in which we operate, we are subject to, and comply with, local labor law requirements which may automatically make employees subject to industry-wide collective bargaining agreements. None of our U.S. employees is represented by a labor union or covered by a collective bargaining agreement with respect to their employment with us. We have not experienced any work stoppages and we consider our relations with our employees to be good.

Our objective is to create the organizational conditions and culture for talented individuals to thrive. We focus on identifying, recruiting, retaining, incentivizing, and engaging our new and existing employees and consultants. Our compensation program is designed to advance our technological innovation, business success, and stockholder value by motivating individuals to perform to the best of their abilities and achieve our corporate objectives. We offer competitive pay and benefits including paid family leave, flexible work schedules, and a comprehensive health and wellness program. In addition to medical, dental. and vision plans that also extend to dependents and family, we provide flexible spending accounts, tax-free commuter and parking expenses, 401(k) plans, and access to multiple other platforms. In addition to traditional employee benefits, we have implemented a number of innovative initiatives to support the well-being of our employee base. We encourage continuous learning and professional development, and have invested in diversity, equity, inclusion, and belonging initiatives, including employee resource groups.

We have also invested in various environmental, social and governance, or ESG, initiatives. We conduct an assessment of our energy, water, and waste footprint at our headquarters in Redwood City, California, assess environmental criteria when evaluating the expansion of our office footprint, and consider environmental management strategies based on the Sustainability Accounting Standards Board frameworks. Furthermore, we do not own or operate any data centers on-premises. Our platform is instead hosted on AWS cloud-based platforms, allowing us to leverage economies of scale regarding carbon emissions and electricity and water usage. We support our local communities through corporate philanthropy and employee volunteer initiatives. We have formalized ESG oversight with our Corporate Governance and Nominating Committee and have developed policies such as supplier code of conduct to support our ESG efforts.

Additional information regarding our human capital programs and ESG initiatives can be found in the Sumo Logic Environmental, Social, and Governance Overview report on our investor relations website, which report is not incorporated by reference into this Annual Report on Form 10-K.

<sup>2</sup> See the section titled "Risk Factors—Claims by others that we infringed their proprietary technology or other intellectual property rights would harm our business" for additional information.

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**Corporate Information**

We were incorporated in Delaware in March 2010. Our principal executive offices are located at 855 Main Street, Suite 100, Redwood City, California 94063, and our telephone number is (650) 670-8002. Our website address is www.sumologic.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information on our website to be part of this Annual Report on Form 10-K.

**Available Information**

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are filed with the Securities and Exchange Commission, or SEC. Such reports and other information filed by us with the SEC are available free of charge on our website at www.investor.sumologic.com when such reports are available on the SEC's website. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing. Further, our references to website URLs are intended to be inactive textual references only.

We announce material information to the public through filings with the SEC, the investor relations page on our website, press releases, our Twitter account (@SumoLogic), our Facebook page, our LinkedIn page, public conference calls, and webcasts in order to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD. We encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

**Item 1A. Risk Factors** 

*You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including our consolidated financial statements and related notes and the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our business, financial condition, results of operations, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.* 

**Risks Related to the Proposed Merger**

***The announcement and pendency of our agreement to be acquired by entities affiliated with Francisco Partners may have an adverse effect on our business and results of operations and our failure to complete the Merger could have an adverse effect on our business, financial condition, results of operations, and stock price.***

On February 9, 2023, we entered into an Agreement and Plan of Merger, or Merger Agreement, with Serrano Parent, LLC, or Parent, and Serrano Merger Sub, Inc., or Merger Sub, pursuant to which Merger Sub will merge with and into Sumo Logic, which we refer to as the Merger, and Sumo Logic will continue as the surviving corporation in the Merger, as a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of Francisco Partners. Completion of the Merger is subject to the satisfaction of certain customary terms and conditions set forth in the Merger Agreement, including, among other things, the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock, the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, and the receipt of other specified regulatory approvals, and the absence of any order or law preventing, materially restraining, or materially impairing the consummation of the Merger. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all.

The Merger may be delayed, and may ultimately not be completed, due to a number of factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to obtain requisite stockholder approval of the Merger:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to obtain regulatory approvals from the requisite governmental entities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential future stockholder litigation and other legal and regulatory proceedings, which could prevent, materially restrain, or materially impair the consummation of the Merger; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to satisfy the other conditions to the completion of the Merger, including the possibility that a company material adverse effect would permit Parent to not close the Merger.

If the Merger does not close, we may suffer other consequences that could adversely affect our business, financial condition, results of operations, and stock price, and our stockholders would be exposed to additional risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to the extent that the current market price of our stock reflects an assumption that the Merger will be completed, the market price of our common stock could decrease if the Merger is not completed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investor confidence in us could decline, stockholder litigation could be brought against us, relationships with existing and prospective customers, service providers, investors, lenders and other business partners may be adversely impacted, we may be unable to retain key personnel, and our operating results may be adversely impacted due to costs incurred in connection with the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any disruptions to our business resulting from the announcement and pendency of the Merger, including adverse changes in our relationships with customers, suppliers, partners and employees, may continue or intensify in the event the Merger is not consummated or is significantly delayed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risks related to the diversion of attention of our management or employees from ongoing operations during the pendency of the Merger, including our ability to timely complete our internal financial reporting processes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the requirement that we pay Parent a termination fee under certain circumstances that give rise to the termination of the Merger Agreement.

There can be no assurance that our business, relationships with other parties, liquidity or financial condition will not be adversely affected, as compared to the condition prior to the announcement of the Merger, if the Merger is not consummated. Even if successfully completed, there are certain risks to our stockholders from the Merger, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of cash to be paid under the Merger Agreement is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or operating results or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• receipt of the all-cash per share merger consideration under the Merger Agreement is taxable to stockholders that are treated as U.S. holders for U.S. federal income tax purposes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if the Merger is completed, our stockholders will forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent company.

***While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business.***

During the period prior to the closing of the Merger and pursuant to the terms of the Merger Agreement, our business is exposed to certain inherent risks and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential uncertainty in the marketplace, which could lead current and prospective customers to purchase products and services from other providers or delay purchasing from us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulties maintaining existing and/or establishing business relationships, including business relationships with significant customers and partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possibility of disruption to our business and operations resulting from the announcement and pendency of the Merger, including diversion of management attention and resources;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to attract and retain key personnel and recruit prospective employees, and the possibility that our current employees could be distracted, and their productivity decline as a result, due to uncertainty regarding the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger, and other restrictions on our ability to conduct our business;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to freely issue securities, incur certain indebtedness, declare or authorize any dividend or distribution, or make certain material capital expenditures without Parent's approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to solicit other acquisition proposals during the pendency of the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the costs, fees, expenses and charges related to the Merger Agreement and the Merger, including but not limited to the cost of any legal proceeding that may be instituted against us, which may materially and adversely affect our financial condition; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other developments beyond our control, including, but not limited to, changes in global economic conditions that may affect the timing or success of the Merger.

If any of these effects were to occur, it could adversely impact our business, cash flow, results of operations, or financial condition, as well as the market price of our common stock and our perceived value, regardless of whether the Merger is completed.

***Litigation may arise in connection with the Merger, which could be costly, prevent consummation of the Merger, divert management's attention, and otherwise harm our business.***

Regardless of the outcome of any future litigation related to the Merger, such litigation may be time-consuming and expensive and may distract our management from running the day-to-day operations of our business. The litigation costs and diversion of management's attention and resources to address the claims and counterclaims in any litigation related to the Merger may adversely affect our business, results of operations, prospects, and financial condition. If the Merger is not consummated for any reason, litigation could be filed in connection with the failure to consummate the Merger. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could adversely affect the price of our common stock, impair our ability to recruit or retain employees, damage our relationships with our customers and channel partners, and other business partners, or otherwise harm our operations and financial performance.

***In connection with the Merger, our current and prospective employees could experience uncertainty about their future with us. As a result, key employees may depart because of issues relating to such uncertainty or a desire not to remain with the Company once it is private following the completion of the Merger.***

In connection with the Merger, our current and prospective employees could experience uncertainty about their future with us or decide that they do not want to continue their employment. As a result, key employees may depart because of issues relating to such uncertainty or a desire not to remain with the Company once it is private following the completion of the Merger. Losses of officers or employees could adversely affect our business, results of operations, and financial condition. Such adverse effects could also be exacerbated by a delay in the completion of the Merger for any reason, including delays associated with obtaining requisite regulatory approvals or the requisite approval of our stockholders. We may also experience challenges in hiring new employees during the pendency of the Merger, or if the Merger Agreement is terminated, which could harm our ability to grow our business, execute on our business plans or enhance our operations. If the Merger is consummated, our current employees may not desire to continue, and prospective employees may not begin, their employment with us once we are a private company, which could harm our business and prospects.

**Risks Related to Our Industry and Business**

***Our revenue growth rate and financial performance in recent periods may not be indicative of future performance.***

We have experienced significant revenue growth in recent periods. For example, our revenue was $202.6 million, $242.1 million, and $300.7 million for the years ended January 31, 2021, 2022 and 2023, respectively. You should not rely on our revenue for any previous quarterly or annual period as any indication of our revenue or revenue growth in future periods. As we continue to grow our business, our revenue growth rates may decline due to a number of reasons, which may include more challenging comparisons to prior periods as our revenue grows, slowing demand for our platform, increasing competition, a decrease in our renewal rates, a decrease in the growth of our overall market or market saturation, and our failure to capitalize on growth opportunities. In addition, our growth rates may experience increased volatility due to the macroeconomic environment, including inflation and rising interest rates, and geopolitical events.

***We have a history of net losses and we may not be able to achieve or maintain profitability in the future.***

We have incurred net losses since our inception, and we expect to continue to incur net losses in the near future. We incurred net losses of $80.3 million, $123.4 million, and $124.8 million for the years ended January 31, 2021, 2022 and 2023, respectively. As of January 31, 2023, we had an accumulated deficit of $646.0 million. Because the market for our platform is rapidly evolving, it is

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difficult for us to predict our future results of operations. We expect our operating expenses to increase over the next several years, as we continue to hire additional personnel, particularly in sales and marketing, expand our operations and infrastructure, both domestically and internationally, and continue to develop our platform features. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. In addition to the expected costs to grow our business, we have incurred and will continue to incur significant additional legal, accounting, and other expenses as a public company. If we fail to increase our revenue to sufficiently offset the increases in our operating expenses, we will not be able to achieve or maintain profitability in the future.

***We face intense competition and could face pricing pressure from, and lose market share to, our competitors, which would adversely affect our business, financial condition, and results of operations.***

The markets in which we operate are competitive and characterized by rapid changes in technology, customer requirements, and industry standards, and frequent introductions of improvements to existing offerings. Our business model of delivering an analytics platform for reliable and secure cloud-native applications through the cloud is still relatively new and has only recently gained market traction. Moreover, many established businesses are aggressively competing against us and have offerings that have functionalities similar to those of our platform. We expect competition to increase as other established and emerging companies enter this market, as customer requirements evolve, and as new offerings and technologies are introduced. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position would weaken, and our business, financial condition, and results of operations would be adversely affected.

Our competitors and potential competitors include providers of tools such as analytics, enterprise and open source search, SIEM, SOAR, observability, monitoring, and other software offerings that customers may perceive as substitutes for our platform. Our primary competitors include Splunk and Elastic. Other competitors include Datadog and New Relic, cloud infrastructure providers such as AWS, Azure, and GCP, and various private companies.

Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• greater name recognition, longer operating histories, and larger customer bases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• larger sales and marketing budgets and resources;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• broader distribution and established relationships with channel partners and customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• greater customer support resources;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• greater resources to make acquisitions and enter into strategic partnerships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lower labor and research and development costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• larger and more mature intellectual property rights portfolios; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• substantially greater financial, technical, and other resources.

Conditions in our market could change rapidly and significantly as a result of technological advancements, the emergence of new entrants into the market, partnering or acquisitions by our competitors, or continuing market consolidation. New start-up companies that innovate and competitors that are making significant investments in research and development may invent similar or superior offerings and technologies that compete with our offerings. Potential customers may also believe that substitute technologies which have similar functionality or features as our platform are sufficient, or they may believe that point solutions that address narrower segments overall are nonetheless adequate for their needs. Some of our current or potential competitors have made or could make acquisitions of businesses or establish cooperative relationships that may allow them to offer more directly competitive and comprehensive offerings than were previously offered and adapt more quickly to new technologies and customer needs.

Additionally, competition continues to increase in the markets in which we operate, and we expect competition to further increase in the future, including from new and emerging companies, which could lead to increased pricing pressures. Our competitors vary in size, and some may have substantially broader and more diverse offerings, which may allow them to leverage their relationships based on other offerings or incorporate functionality into existing offerings to gain business in a manner that discourages users from purchasing access to our platform, including through selling at zero or negative margins, offering concessions, bundling offerings, or maintaining closed technology platforms. In addition, certain customer segments and industries have been more severely impacted by the ongoing effects of the COVID-19 pandemic, which may lead to increased pricing pressure, increased customer churn,

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or a reduced ability or willingness to replace a competitor's offering with our platform. Any decrease in the subscriptions prices for our platform, without a corresponding decrease in costs or increase in volume, would adversely impact our gross profit. Gross profit could also be adversely affected by a shift towards lower-tiered subscription packages. If we are unable to maintain our pricing or market share due to competitive pressures or other factors, our business, financial condition, and results of operations would be adversely affected.

***The markets for our offerings are evolving, and our future success depends on the growth of these markets and our ability to adapt, keep pace, and respond effectively to evolving markets.***

The markets for our offerings are in a relatively early stage of development, and it is uncertain whether these markets will grow, and even if they do grow, how rapidly they will grow, how much they will grow, or whether our platform will be widely adopted. As such, any predictions or forecasts about our future growth, revenue, and expenses may not be as accurate as they would be if we had a longer operating history or operated in more predictable markets. Any expansion in our markets depends on a number of factors, including the cost, performance, and perceived value associated with our platform and the offerings of our competitors.

Our success will depend, in part, on market acceptance and the widespread adoption of our cloud-native platform as an alternative to on-premise offerings, and selection of our platform over competing cloud offerings that may have similar functionality. Cloud technologies are still evolving and we cannot predict marketplace acceptance of our platform or the development of offerings based on entirely new technologies. Many organizations have invested substantial resources into on-premise systems and may be reluctant or unwilling to migrate to our cloud-native platform. Our market is subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements, and preferences. Demand for our offering is affected by a number of factors beyond our control, including the timing of development and release of new offerings by our competitors, technological change, and growth or contraction in our market generally.

We expect the proliferation of data to lead to an increase in the data analysis demands of our customers, and our platform may not be able to meet those demands or may not be chosen by users for those needs. We have in the past experienced delays in launching additional platform features or enhanced functionality because of the swiftly changing technological landscape and evolving customer demands. Particularly as a result of the broadly applicable nature of our platform, innovation across the IT infrastructure, architecture, stack components, or IT environment can all impact the adoption rates for our platform. Our success will depend, in part, on our ability to enhance our platform, including timely developing and introducing new platform features that keep pace with technological and competitive developments, expand the use cases for our platform, and respond to changing customer needs, requirements, and preferences. It is difficult to predict customer demand for our platform or for cloud security and observability offerings generally, the size and growth rate of this market, the success of competitive offerings, or shifts in customer preferences. If the market for cloud security and observability does not grow, or if we are unable to adapt, keep pace, and respond effectively to the evolution of these markets, our business, financial condition, and results of operations would be adversely affected.

***We may fail to cost-effectively acquire new customers or obtain renewals, upgrades, or expansions from our existing customers, which would adversely affect our business, financial condition, and results of operations.***

Our continued growth depends, in part, on our ability to cost-effectively acquire new customers. Numerous factors, however, may impede our ability to add new customers, including our inability to convert new organizations into paying customers, our inability to negotiate terms favorable to us, our failure to attract, effectively train, retain, and motivate sales and marketing personnel, our failure to develop or expand relationships with channel or technology partners, our inability to convert initial adoption into ongoing utilization of our platform, and our failure to successfully deliver our platform and provide quality customer support once delivered.

Our success also depends, in part, on our customers renewing their subscriptions when existing contract terms expire, and our ability to expand our relationships with our existing customers. Our customers have no obligation to renew or upgrade their subscriptions, and in the normal course of business, some customers have elected not to renew. In addition, our customers may decide not to renew their subscriptions with a similar contract period or at the same prices or terms, or may decide to downgrade their subscriptions. For example, the impact of the current macroeconomic environment has caused, and may in the future cause, such customers to request concessions including extended payments terms or better pricing. We believe that the current macroeconomic environment has also caused, and may in the future cause, delays in renewal decisions for some of our existing customers, has reduced effectiveness of our sales and marketing efforts, has lengthened our sales cycle with some of our potential customers, and has reduced the duration of subscriptions. In addition, worsening macroeconomic conditions could result in increased customer churn, hindering the addition of new customers, or reduced contract value with prospective or existing customers. Our customer retention or our customers' use of our platform may decline or fluctuate as a result of a number of factors, including our customers' satisfaction with our platform and our customer support, our packaging and licensing models, the prices, features, or perceived value of competing offerings, changes to our offerings, or general economic conditions. In addition, some customers may not renew in the event such customer is acquired by another entity. We will need to continue to maintain or improve our dollar-based net retention rate to support our growth, and our ability to expand our relationships with customers may require more sophisticated and costly sales efforts. If our

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customers' renewals or expansions fall below expectations, and as a result our dollar-based net retention rate decreases, our business, financial condition, and results of operations would be adversely affected.

In addition, our ability to expand our relationship with our customers depends in large part on our ability to enhance and improve our platform, introduce compelling new features, and address additional use cases. The success of any new or enhanced platform features depends on several factors, including market demand for the enhanced features, timely completion and delivery, adequate quality testing, integration of our platform with existing technologies and applications, and competitive pricing. If we are unable to successfully develop new platform features, enhance our existing platform features to meet customer requirements, or otherwise gain market acceptance, our business, financial condition, and results of operations would be adversely affected. If our customers do not renew, upgrade, or expand their subscriptions, renew their subscriptions on less favorable terms, or fail to increase adoption of our platform, including tiered or premium features, our business, financial condition, and results of operations would be adversely affected.

***Changes to our packaging and licensing models could adversely affect our ability to attract or retain customers.***

We offer flexible, multi-tiered packaging and licensing models for our platform, including subscriptions and premium add-ons. We are continuing to iterate on our packaging and licensing models as we evaluate customer preferences, needs, and use of our platform, and expect that our packaging and licensing models will continue to evolve. Many factors could significantly affect our pricing strategies, including operating costs, our competitors' pricing and marketing strategies, customer use patterns, and general economic conditions. We may face downward pressure from our customers regarding our pricing and competitors with different pricing models may attract customers that are uncomfortable with our multi-tiered packaging and licensing models, which would cause us to lose business or modify our packaging and licensing models, both of which could adversely affect our business, financial condition, and results of operations. Changes to our packaging and licensing models may also affect our revenue recognition and other accounting policies, which may adversely affect our results of operations in any given fiscal period.

Certain of our competitors or potential competitors offer, or may in the future offer, lower-priced point solutions or a broader range of platform features. Similarly, certain competitors may use marketing strategies that enable them to attract or retain new customers at a lower cost than us. Moreover, our customers may demand substantial price discounts as part of the negotiation of subscription contracts. There can be no assurance that we will not be forced to reduce the pricing for our platform or to increase our sales and marketing and other expenses to attract and retain customers in response to competitive pressures. We have launched, and may in the future launch, new pricing strategies and initiatives, or modify existing packaging and licensing models, any of which may not ultimately be successful in attracting and retaining customers. In addition, if the features on our platform change, then we may need to revise our packaging and licensing methodologies. Any such changes to our packaging and licensing models or our ability to efficiently price our platform could adversely affect our business, financial condition, and results of operations.

***Our results of operations vary and are unpredictable from period to period, which could cause the market price of our common stock to decline.***

Our results of operations may fluctuate from period to period as a result of a number of factors, many of which are outside of our control and may be difficult to predict. Some of the factors that may cause our results of operations to fluctuate from period to period include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Merger, the pendency of the Merger or the failure to complete the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market acceptance and the level of demand for our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the quality and level of our execution of our business strategy and operating plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effectiveness of our sales and marketing programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the length of our sales cycle, including the timing of renewals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract new customers and convert our pipeline into paying customers, particularly large enterprises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain customers and expand their adoption of our platform, particularly our largest customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to successfully expand internationally and penetrate key markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• technological changes and the timing and success of new or enhanced platform features by us or our competitors or any other change in the competitive landscape of our market;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in deferred revenue and remaining performance obligations due to seasonality, the timing of renewals, average contract term, or the timing of software revenue recognition, all of which may impact implied growth rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes to our packaging and licensing models, which may impact the timing and amount of revenue recognized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in and the timing of operating expenses that we may incur to grow our operations and to remain competitive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pricing pressure as a result of competition or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• seasonal buying patterns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays in our sales cycle, decreases in sales to new customers, and reductions in upselling and cross-selling to existing customers due to the impact on global business and IT spending as a result of the COVID-19 pandemic and current macroeconomic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the implementation of cost-saving activities as a result of current macroeconomic conditions, including the effect of a hiring pause or headcount reductions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact and costs, including those with respect to integration, related to the acquisition of businesses, talent, technologies, or intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the legislative or regulatory environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse litigation judgments, settlements, or other litigation-related costs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general macroeconomic conditions in either domestic or international markets, including as a result of inflation, rising interest rates, and geopolitical uncertainty and instability such as the recent conflict in Ukraine.

Any one or more of the factors above may result in significant fluctuations in our results of operations. In addition, we generally experience seasonality in terms of when we enter into agreements with customers, and our quarterly results of operations generally fluctuate from quarter to quarter depending on customer buying habits. This seasonality is reflected to a much lesser extent, and sometimes is not immediately apparent, in revenue, due to the fact that we recognize subscription revenue ratably over the term of the subscription, which is generally one to two years, but can be three years or longer. We expect that seasonality will continue to affect our results of operations in the future and may reduce our ability to predict cash flow and optimize the timing of our operating expenses.

The variability of our results of operations or other operating estimates could result in our failure to meet our expectations or those of securities analysts or investors. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline, and we could face costly lawsuits, including securities class action suits.

***Our business could be adversely affected by economic downturns.***

Prolonged economic uncertainties or downturns could adversely affect our business, financial condition, and results of operations. Negative conditions in the general economy in either the United States or abroad, including conditions resulting from financial and credit market fluctuations, changes in economic policy, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other trade restrictions, the occurrence of a natural disaster or global public health crisis, such as the COVID-19 pandemic, or armed conflicts, could continue to cause a decrease in corporate spending on IT offerings in general and negatively affect the growth of our business. We are currently experiencing uncertainty with respect to the macroeconomic environment, including inflation and rising interest rates, and believe that the macroeconomic environment may become more challenging in the future.

These conditions could make it extremely difficult for our customers and us to forecast and plan future business activities accurately and could cause our customers to reevaluate their decision to purchase access to our platform, which could delay and lengthen our sales cycles or result in cancellations of planned purchases. For example, the current macroeconomic environment has caused and may in the future cause our customers to reduce their spending on, or duration of, their contracts with us, or request concessions including extended payment terms or better pricing. Additionally, in the fourth quarter of fiscal 2023, it caused, and may in the future cause, our prospective customers to delay their purchasing decision or decide not to purchase at all. Further, during challenging economic times our customers may face issues in gaining timely access to sufficient credit, which could result in an impairment of their ability to make timely payments to us, if at all. If that were to occur, we may be required to increase our allowance for doubtful accounts, which would adversely affect our results of operations.

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A substantial downturn in any of the industries in which our customers operate may cause firms to react to worsening conditions by reducing their capital expenditures in general or by specifically reducing their spending on IT offerings. Customers in these industries may delay or cancel projects or seek to lower their costs by renegotiating vendor contracts. To the extent purchases of access to our platform are perceived by customers and potential customers to be discretionary, our revenue may be disproportionately affected by delays or reductions in general information technology spending.

We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry or geography. Any economic downturns of the general economy or industries in which we operate, including a downturn resulting in a prolonged recessionary period, would adversely affect our business, financial condition, and results of operations.

***Our sales cycle can be long and unpredictable, and our sales efforts require considerable time and expense.***

Our quarterly results of operations fluctuate, in part, because of the resource intensive nature of our sales efforts and the length and variability of our sales cycle. The length of our sales cycle, from initial contact with our sales team to a contractual commitment from a customer, can vary substantially from customer to customer based on customer size, deal complexity, as well as whether a sale is made directly by us or through a channel partner. Changes that we may make to our packaging and licensing model may affect the length of our sales cycle and our ability to predict the length of our sales cycle or the anticipated size of potential subscriptions. Our sales cycle can vary considerably, and may be lengthened and made more uncertain by regional or global events, such as the COVID-19 pandemic and current macroeconomic conditions. Such events have resulted in and may continue to cause a general reduction in IT spending by our customers, which will further affect our ability to estimate not only the length of the sales cycle, but also the anticipated size of potential subscriptions. Further, our sales cycle has lengthened as we continue to focus our sales efforts on large enterprises. In addition, our results of operations depend, in part, on subscription renewals from customers and increasing sales to our existing customers, which may also be reduced as a result of regional or global events. If a customer does not renew on time or as expected, it can negatively affect our revenue for a given period. It is difficult to predict exactly whether or when we will make a sale to a potential customer or if we can increase sales to our existing customers. As a result, initial sales or renewals have, in some cases, occurred in quarters subsequent to what we anticipated, or have not occurred at all. The loss or delay of one or more transactions in a quarter could impact our results of operations for that quarter and any future quarters for which revenue from that transaction is delayed.

***The loss of, or a significant reduction in use of our platform by, our largest customers would result in lower revenue and harm our results of operations.***

Our future success depends, in part, on establishing and maintaining successful relationships with a diverse set of customers. Our largest customers come from a variety of industries, including industries that are subject to significant fluctuations in their business, which may result in fluctuations in their use of our platform and the revenue we generate from them. Certain larger customers can also have greater variability in the revenue we generate from them because of the nature of their specific contractual arrangements or use cases with us, which could impact our results of operations, as well as ARR, dollar-based net retention rate, and other business metrics. For example, our current largest revenue customer is in the digital entertainment industry, which is characterized by significant revenue volatility and intense competition, and its business is affected by the timing of its feature releases, consumer preferences, and actions by and disputes with other parties in its ecosystem. As a result, we have in the past and may in the future experience revenue variability and unpredictability from this customer from period to period as its business fluctuates. Further, certain customer industries have been more severely impacted by the current macroeconomic environment and the ongoing effects of the COVID-19 pandemic, leading to increased fluctuations in their business and their adoption of our platform. The loss of one or more large customers or a reduction in usage by any such customers would reduce our revenue and negatively impact forecasts of future growth, ARR, dollar-based net retention rate, and other business metrics. The portion of our revenue attributable to individual customers may increase in the future, which would increase our dependency on a limited number of customers for a larger portion of our revenue. If we fail to maintain relationships with existing large customers or develop relationships with new customers that generate significant revenue for us, our business, financial condition, and results of operations would be harmed.

***Our business and results of operations are subject to the effects of a rising rate of inflation.***

The United States has recently experienced higher levels of inflation than historical norms. According to the U.S. Department of Labor, the annual inflation rate for the United States was approximately 6.5% for 2022. If the inflation rate stays at this level or continues to increase, such as increases in the costs of labor, it will likely affect our expenses, especially employee compensation expenses. Additionally, the United States is experiencing an acute workforce shortage, which in turn, has created a hyper-competitive wage environment that may increase our operating costs. Further, inflation is likely to result in rising interest rates and have other adverse effects on the macroeconomic environment, which could adversely impact our customers and their ability to purchase our products and services. As such, inflation could adversely affect our business and results of operations.

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***We depend on our sales force, and we may fail to attract, retain, motivate, or train our sales force, which could adversely affect our business, financial condition, and results of operations.***

We depend on our sales force to obtain new customers and to drive additional sales to existing customers by selling them new subscriptions and expanding the value of their existing subscriptions. We believe that there is significant competition for sales personnel, including sales representatives, sales managers, and sales engineers, with the skills and technical knowledge that we require. Our ability to achieve revenue growth will depend, in part, on our decision to hire and success in recruiting, training, and retaining sufficient numbers of sales personnel to support our growth. New hires require significant training and may take significant time before they achieve full productivity, and our remote and online onboarding and training processes may be less effective and take longer. Further, hiring sales personnel in new countries requires additional set up and upfront costs that we may not recover if the sales personnel fail to achieve full productivity. If we are unable to attract, retain, motivate, and train sufficient numbers of effective sales personnel, our sales personnel do not reach significant levels of productivity in a timely manner, or our sales personnel are not successful in bringing potential customers into the pipeline, converting them into new customers, or increasing sales to our existing customer base, our business, financial condition, and results of operations would be adversely affected.

***We may be unable to build and maintain successful relationships with our channel partners or such channel partners may fail to perform, which could adversely affect our business, financial condition, results of operations, and growth prospects.***

We employ a go-to-market business model whereby a portion of our revenue is generated by sales through our channel partners, such as independent software vendors, resellers, managed service providers, managed security service providers, and cloud infrastructure providers, that further expand the reach of our direct sales force into additional geographies, sectors, and industries. In particular, we have entered, and intend to continue to enter, into strategic sales distributor and reseller relationships in certain international markets where we do not have a local presence. We provide certain of our channel partners with specific training and programs to assist them in selling access to our platform, but there can be no assurance that these steps will be effective. In addition, if our channel partners are unsuccessful in marketing and selling access to our platform, it would limit our expansion into certain geographies, sectors, and industries. If we are unable to develop and maintain effective sales incentive programs for our channel partners, we may not be able to incentivize these partners to sell access to our platform to customers.

Some of these partners may also market, sell, and support offerings that are competitive with ours, may devote more resources to the marketing, sales, and support of such competitive offerings, may have incentives to promote our competitors' offerings to the detriment of our own, or may cease selling access to our platform altogether. Our channel partners could subject us to lawsuits, potential liability, and reputational harm if, for example, any of our channel partners misrepresents the functionality of our platform to customers or violates laws or our or their corporate policies. Our ability to achieve revenue growth in the future will depend, in part, on our success in maintaining successful relationships with our channel partners, identifying additional channel partners, and training our channel partners to independently sell access to our platform. If our channel partners are unsuccessful in selling access to our platform, or if we are unable to enter into arrangements with or retain a sufficient number of high quality channel partners in each of the regions in which we sell access to our platform and keep them motivated to sell access to our platform, our business, financial condition, results of operations, and growth prospects could be adversely affected.

***Our international operations and continued international expansion subject us to additional costs and risks, which could adversely affect our business, financial condition, and results of operations.***

We have a limited history of marketing, selling, and supporting our platform internationally. We generated 16% and 18% of our revenue outside the United States in each of fiscal 2021 and 2022, respectively, and 22% in fiscal 2023. Our growth strategy depends, in part, on our continued international expansion. We are continuing to adapt to and develop strategies to address international markets, but there is no guarantee that such efforts will be successful.

Additionally, our international sales and operations are subject to a number of risks, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• greater difficulty in enforcing contracts and managing collections in countries where our recourse may be more limited, as well as longer collection periods;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• differing labor regulations, especially in the European Union, or EU, where labor laws may be more favorable to employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges inherent to efficiently recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture and employee programs across all of our offices;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic and political conditions in these foreign markets, including political and economic instability in some countries and the effects of the current macroeconomic environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• management communication and integration problems resulting from language and cultural differences and geographic dispersion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• costs associated with language localization of our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our platform that may be required in foreign countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• greater risk of unexpected changes in regulatory requirements, tariffs and tax laws, trade laws, export quotas, customs duties, treaties, and other trade restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• costs of compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations, including, but not limited to data privacy, data protection, and data security regulations, particularly in the EU;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with anti-bribery laws, including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. Travel Act, and the UK Bribery Act 2010, violations of which could lead to significant fines, penalties, and collateral consequences for our company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks relating to the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Assets Control, or OFAC, and other similar trade protection regulations and measures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact our financial condition and result in restatements of, or irregularities in, financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the uncertainty of protection for intellectual property rights in some countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exposure to regional or global public health issues, such as the outbreak of the COVID-19 pandemic, and to travel restrictions and other measures undertaken by governments in response to such issues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges caused by the conflict in Ukraine on countries in the region in which we have operations, such as Poland and Macedonia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate.

These and other factors could harm our ability to generate revenue outside of the United States and, consequently, adversely affect our business, financial condition, and results of operations.

***We may fail to effectively manage our growth, which would adversely affect our business, financial condition, and results of operations.***

We are a rapidly growing company, and our future growth depends, in part, on our ability to continue to meet the expanding needs of our customers and to attract new customers. Our customer count increased from 2,164 as of January 31, 2021, to 2,396 as of January 31, 2022, and 2,417 as of January 31, 2023, respectively. As existing customers gain more experience with our platform, they may broaden their reliance on our platform, which may require that we expand our operations infrastructure as well as our dependence on third parties to support that infrastructure. To manage this growth effectively, we will need to continue to improve and expand our internal IT systems, technological operations infrastructure, financial infrastructure, and operating and administrative systems and controls, which we may not be able to do efficiently in a timely manner, or at all. To do so, we may seek to deploy offerings from third-party providers, which may not be available on commercially reasonable terms, or at all, and may not perform to our expectations. Any future growth would add complexity to our organization and require effective coordination across our organization,

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and failure to manage such future growth effectively could result in increased costs. If we do not accurately predict our architecture requirements, our existing customers may experience delays, interruptions, or service outages that may subject us to financial liabilities or customer losses. If we are unable to effectively manage our growth, our business, financial condition, and results of operations would be adversely affected.

***The COVID-19 pandemic has caused global economic uncertainty and disruption, and the extent to which it will continue to harm our business and results of operations is difficult to predict.***

The COVID-19 pandemic, including the emergence of new variants of the disease and changes in infection rates, has caused global societal, economic, and financial market volatility and has had several effects on our business and results of operations that may continue, including negatively impacting global IT spending, which has adversely affected demand for our platform, lengthening our sales cycle, causing some existing customers to fail to renew subscriptions, reduce their usage, or fail to expand their usage of our platform within their organizations, and restricting our sales operations and marketing efforts. In addition, the COVID-19 pandemic has disrupted and may continue to disrupt the operations of our customers and channel partners.

We have modified our business practices as a result of the COVID-19 pandemic, including permitting our employees to work remotely, limiting business travel, and adopting safety precautions for meetings and events. We have also taken certain measures to manage our operating expenses in light of the uncertainty caused by the COVID-19 pandemic, including implementing headcount reductions and a reduction in executive salaries. These shifts may affect our ability to attract and retain employees and expose us to increased risks of security breaches or incidents.

The extent to which the COVID-19 pandemic continues to impact our business and results of operations will depend on future developments that are highly uncertain and cannot be predicted.

To the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it is likely to also have the effect of heightening many of the other risks described in this "Risk Factors" section.

***We depend on our management team and other highly skilled personnel, and we may fail to attract, retain, motivate, or integrate highly skilled personnel, which could adversely affect our business, financial condition, and results of operations.***

We depend on the continued contributions of our management team, key employees, and other highly skilled personnel. Our management team and key employees are at-will employees, which means they may terminate their relationship with us at any time. The loss of the services of any of our key personnel or delays in hiring required personnel, particularly within our research and development and engineering teams, could adversely affect our business, financial condition, and results of operations.

Our future success also depends, in part, on our ability to continue to attract and retain highly skilled personnel. Competition for these personnel is intense, and the industry in which we operate is generally characterized by significant competition for skilled personnel as well as high employee attrition. We may not be successful in attracting, retaining, training, or motivating qualified personnel to fulfill our current or future needs. Additionally, the former employers of our new employees may attempt to assert that our new employees or we have breached their legal obligations, which may be time-consuming, distracting to management, and may divert our resources. Current and potential personnel also often consider the value of equity awards they receive in connection with their employment, and to the extent the perceived value of our equity awards declines relative to our competitors, our ability to attract and retain highly skilled personnel may be harmed. If we fail to attract and integrate new personnel or retain and motivate our current personnel, our business, financial condition, and results of operations could be adversely affected.

***We may be unable to make acquisitions and investments, successfully integrate acquired companies into our business, or our acquisitions and investments may not meet our expectations, any of which could adversely affect our business, financial condition, and results of operations.***

We have in the past acquired, and we may in the future acquire or invest in, businesses, offerings, technologies, or talent that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. We may not be able to fully realize the anticipated benefits of such acquisitions or investments. For example, we acquired DFLabs S.p.A., or DFLabs, and Sensu, Inc., or Sensu, in the second quarter of fiscal 2022. We may not successfully integrate DFLabs's or Sensu's people or solutions with ours, or achieve market acceptance of our combined solutions. The pursuit of potential acquisitions may divert the attention of management and cause us to incur significant expenses related to identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated.

There are inherent risks in integrating and managing acquisitions. If we acquire additional businesses, we may not be able to assimilate or integrate the acquired personnel, operations, solutions, and technologies successfully, or effectively manage the

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combined business following the acquisition. We also may not achieve the anticipated benefits or synergies from the acquired business due to a number of factors, including, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated costs or liabilities associated with the acquisition, including the failure to adequately identify or assess significant problems, liabilities or other issues, including issues with the acquired company's technology or intellectual property, product quality, data security, privacy practices, accounting practices, employees, customers or partners, regulatory compliance, or legal or financial contingencies, particularly when the acquired company operates in international jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incurrence of acquisition-related expenses, which would be recognized as a current period expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to generate sufficient revenue to offset acquisition or investment costs, including addressing issues related to the availability of offerings on multiple platforms and from cross-selling and up-selling our products to the acquired company's installed customer base or the acquired company's products to our installed customer base;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to maintain relationships with customers and partners of the acquired business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges with incorporating acquired products, technologies, and rights into our platform and maintaining quality and security standards consistent with our brand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges and costs associated with successfully integrating or incorporating the acquired company's services, employees, customers, partners, business operations and administrative systems with ours, particularly when the acquired company operates in international jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to identify security vulnerabilities in acquired technology prior to integration with our technology and platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to achieve anticipated synergies or unanticipated difficulty with integration into our corporate culture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure to accurately predict how the acquired company's pipeline will convert into sales or revenues following the acquisition, as conversion rates post-acquisition may be quite different from the acquired company's historical conversion rates and can be affected by changes in business practices that we implement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays in customer purchases due to uncertainty related to any acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the need to integrate or implement additional controls, procedures, and policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any difficulties in consolidating the acquired company's financial results with ours, in particular as a result of different accounting principles or financial reporting standards, and the adverse consequences to us of any delay in obtaining the necessary financial information for such consolidation, any unanticipated change in financial information previously reported to us, or the impact the acquired company's financial performance has on our financial performance as a result of such consolidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges caused by distance, language, and cultural differences;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• harm to our existing business relationships with business partners and customers as a result of the acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential loss of key employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• use of resources that are needed in other parts of our business and diversion of management and employee resources;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to recognize acquired deferred revenue in accordance with our revenue recognition policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the disruption of our ongoing business and the diversion of management's attention by transition or integration issues; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition.

Acquisitions also increase the risk of unforeseen legal liability, including for potential violations of applicable law or industry rules and regulations, arising from prior or ongoing acts or omissions by the acquired businesses that are not discovered by due diligence during the acquisition process. We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any

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future acquisitions, each of which could adversely affect our financial condition or the market price of our common stock. The sale of equity or issuance of equity-linked debt to finance any future acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. Any of the foregoing could adversely affect our business, financial condition, and results of operations.

***Our reputation and brand are important to our success, and we may not be able to maintain and enhance our reputation and brand, which would adversely affect our business, financial condition, and results of operations.***

We believe that maintaining and enhancing our reputation as a leader in security and reliability for cloud applications is critical to our relationship with our existing customers, users, and channel partners and our ability to attract new customers and channel partners. The successful promotion of our brand will depend on a number of factors, including our marketing efforts, our ability to continue to develop high-quality features for our platform, our ability to successfully differentiate our platform from those of our competitors, our ability to maintain the reputation of our platform for data security, and our ability to obtain, maintain, protect and enforce our intellectual property and proprietary rights. Our brand promotion activities may not be successful or yield increased revenue. In addition, independent industry analysts often provide reports of our platform, as well as the offerings of our competitors, and perception of our platform in the marketplace may be significantly influenced by these reports. If these reports are negative, or less positive as compared to those of our competitors, our reputation and brand may be adversely affected. Additionally, the performance of our channel partners may affect our reputation and brand if customers do not have a positive experience with our platform as implemented by our channel partners or with the implementation generally. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. Additionally, our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks, or if we are otherwise unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive, as we expand into new geographies and markets and as more sales are generated through our channel partners. Any increase in revenue from such brand promotion initiatives may not offset the increased expenses we incur. If we do not successfully maintain and enhance our reputation and brand, our business, financial condition, and results of operations would be adversely affected.

***We provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts related to unused subscriptions, which could harm our business, financial condition, and results of operations.***

Our customer contracts contain service level commitments, which contain specifications regarding the availability and performance of our platform. Any failure of or disruption to our infrastructure could impact the performance of our platform and the availability of services to customers. If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our platform, we may be contractually obligated to provide affected customers with service credits for future subscriptions, and, in certain cases, face contract termination with refunds of prepaid amounts related to unused subscriptions. If we suffer performance issues or downtime that exceeds the service level commitments under our contracts with our customers, our business, financial condition, and results of operations would be adversely affected.

***A portion of our revenue is generated by sales to government entities, which subject us to a number of challenges and risks.***

We have historically derived a small portion of our revenue from contracts with federal, state, local, and foreign governments, and we believe that the future success and growth of our business will depend in part on our ability to continue to procure government contracts. Sales to public sector customers include additional challenges that affect our ability to enter into agreements, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in fiscal or contracting policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decreases in available government funding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in government programs or applicable requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in government sanctions programs and related policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the adoption of new laws or regulations or changes to existing laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• noncompliance with contract provisions or government procurement or other applicable regulations;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an extended government shutdown or other potential delays or changes in the government appropriations or other funding authorization processes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays in the payment of our invoices by government payment offices.

Additionally, although we have achieved FedRAMP Moderate Authorization, any change in our FedRAMP certification would impede our ability to enter into contracts with government entities. If we do not successfully manage our FedRAMP certification, our sales to governments and governmental agencies could be delayed or limited, and as a result, our business, financial condition, and results of operations would be adversely affected.

***If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business, financial condition, and results of operations could be adversely affected.***

Our success depends, in part, on our ability to attract users through unpaid Internet search results. The number of potential customers that we attract to our website from search engines is due in large part to how and where our website ranks in unpaid search results. These rankings can be affected by a number of factors, many of which are not in our direct control, and they may change frequently. For example, a search engine may change its ranking algorithms, methodologies, or design layouts. As a result, links to our website may not be prominent enough to drive traffic to our website, and we may not know how or otherwise be in a position to influence the results. Any reduction in the number of users directed to our website could negatively impact our ability to attract new customers or require us to increase our customer acquisition expenditures, which could adversely affect our business, financial condition, and results of operations.

***We utilize free trials and other go-to-market strategies, and we may not be able to realize the benefits of these strategies.***

We utilize lead generation and other go-to-market strategies, including offering free trials of our platform, to encourage awareness, usage, familiarity with, and adoption of our platform. We spend a substantial amount of time and resources on our sales efforts without any assurance that our efforts will produce a sale. We also rely on our sales and marketing teams to promote and market our platform. These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue. Many users of free trials of our platform never become paying customers. To the extent that users do not become, or we are unable to successfully attract, paying customers, we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected.

***Our ability to increase sales depends, in part, on the quality of our customer support, and our failure to offer high quality support would harm our reputation and adversely affect our business and results of operations.***

Our customers sometimes depend on our technical support services to resolve issues relating to our platform. If we do not succeed in helping our customers quickly resolve issues or provide effective ongoing education related to our platform, our reputation could be harmed and our existing customers may not renew or upgrade their subscriptions. To the extent that we are unsuccessful in hiring, training, and retaining adequate customer support resources, our ability to provide adequate and timely support to our customers, and our customers' satisfaction with our platform, will be adversely affected. Our failure to provide and maintain high quality customer support would harm our reputation and brand and adversely affect our business, financial condition, and results of operations.

***Our business could be adversely affected by unexpected events such as pandemics, natural disasters, political crises, or social instability.***

A significant natural disaster, such as an earthquake, fire, hurricane, tornado, flood, or significant power outage, could disrupt our operations, mobile networks, the Internet, or the operations of our third-party technology providers. In particular, our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity. In addition, any unforeseen public health crises, political crises, such as terrorist attacks, war, and other political instability, or other catastrophic events, whether in the United States or abroad, can continue to adversely affect our operations or the economy as a whole. For example, the impact of the ongoing conflict in Ukraine on global economic conditions and our business are unknown at this time. The impact of any natural disaster, act of terrorism, or other disruption to us or our third-party providers' abilities could result in decreased demand for our platform or a delay in the provision of our platform, which would adversely affect our business, financial condition, and results of operations. All of the aforementioned risks would be further increased if our disaster recovery plans prove to be inadequate.

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***We use certain third-party services to manage and operate our business, and any failure or interruption in the services provided by these third parties could adversely affect our business, financial condition, and results of operations.***

We use a number of third-party services to manage and operate our business, including pricing software to assist our sales and marketing teams and our finance and accounting teams. These services are critical to our ability to increase our sales to customers, operate, and maintain our platform, and accurately maintain books and records. Any disruption in these services could impair our ability to execute on our operating plan and disrupt our business. Further, if these services cease to be available to us on commercially reasonable terms, or at all, we may be required to use additional or alternative services, or to develop additional capabilities within our business, any of which could require significant resources and adversely affect our business, financial condition, and results of operations.

***We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term.***

We believe our long-term value as a company will be greater if we focus on growth over short-term results. As a result, our results of operations may be negatively impacted in the near term compared to if our strategy were to maximize short-term profitability. Significant expenditures on sales and marketing efforts, developing and enhancing our platform, and expanding our research and development efforts may not ultimately grow our business or lead to expected long-term results. If our strategy does not lead to expected growth or if we are ultimately unable to achieve results of operations at the levels expected by securities analysts and investors, the market price of our common stock could decline.

**Risks Related to Privacy, Cybersecurity, Intellectual Property, and Technical Infrastructure**

***Any actual or perceived security or privacy breach could interrupt our operations, harm our reputation and brand, result in financial exposure, and lead to loss of user confidence in us or decreased use of our platform, any of which could adversely affect our business, financial condition, and results of operations.***

The use of our platform involves the collection, storage, processing, and transmission of customers' data. In addition, we collect, process, store, and transmit our own data as part of our business operations. Our data or our customers' data may include personal data, or confidential or proprietary information. Increasingly, threats from computer malware, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, employee theft or misuse, and general hacking have become more prevalent in our industry, particularly against cloud-native services and vendors of security solutions. Any of these security incidents could result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our customers' data, or disrupt our ability to provide our platform. Any actual or perceived security breach or incident could interrupt our operations, harm our reputation and brand, result in remediation and cybersecurity protection costs, result in lost revenue, lead to litigation and legal risks, increase our insurance premiums, result in any other financial exposure, lead to loss of user confidence in us or decreased use of our platform, and otherwise damage our competitiveness, business, financial condition, and results of operations.

We engage third-party vendors and service providers to store and otherwise process some of our and our customers' data, including sensitive and personal information. There have been and may continue to be significant supply chain cyberattacks generally, and our third-party vendors and service providers may be targeted or impacted by such attacks. We cannot guarantee that our or our third-party vendors and service providers' systems and networks have not been breached or impacted by security incidents or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our services. Our ability to monitor our third-party vendors and service providers' data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, disclosure, loss or destruction of our and our customers' data, including sensitive and personal information.

We have taken steps to protect the data that we have access to, but our security measures or those of our third-party service providers could be insufficient and breached as a result of third-party action, employee errors, technological limitations, defects or vulnerabilities in our offerings or those of our third-party service providers, malfeasance, or otherwise. Additionally, with a majority of our employees currently working remotely, we may be exposed to increased risks of security breaches or incidents. As a result of the war in the Ukraine, there may also be a heightened risk of potential cyberattacks by state actors or others since Russia's invasion of Ukraine. We may need to enhance the security of our platform, our data, and our internal IT infrastructure, which may require additional resources and may not be successful. Furthermore, because we do not control our third-party service providers and our ability to monitor their data security is limited, we cannot ensure the security measures they take will be sufficient to protect our and our customers' data. There can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. We have developed systems and processes to protect the integrity, confidentiality, and security of our data and our customers' data, but our security measures or those of our third-party service providers could fail and result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of,

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modification of, destruction of, or loss of such data. Further, because there are many different security breach techniques and such techniques continue to evolve and are generally not detected until after an incident has occurred, we may be unable to implement adequate preventative measures, anticipate attempted security breaches or other security incidents, or react in a timely manner. In addition, we continue to receive phishing attempts and spam emails.

Any security breach or other security incident that we or our third-party service providers experience, or the perception that one has occurred, could result in a loss of customer confidence in the security of our platform, harm our reputation and brand, reduce the demand for our platform, disrupt normal business operations, require us to spend material resources to investigate or correct the breach and to prevent future security breaches and incidents, expose us to legal liabilities, including litigation, regulatory enforcement and orders, disputes, investigations, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and significant costs for remediation, any of which could adversely affect our results of operations. In addition, our remediation efforts may not be successful. We cannot ensure that any limitation of liability provisions in our customer and user agreements, contracts with third-party vendors and service providers, and other contracts for a security lapse or breach or other security incident would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. These risks may increase as we continue to grow and collect, process, store, and transmit increasingly large amounts of data.

Many governments have enacted laws requiring companies to notify individuals of data security incidents or unauthorized transfers involving certain types of personal data. Accordingly, security incidents experienced by our competitors, by our customers or by us may lead to negative publicity. Further, if a security breach occurs with respect to another SaaS provider, our customers and potential customers may lose trust in the security of software delivered through the cloud generally, which could adversely impact our ability to retain existing customers or attract new ones, which could adversely affect our business, financial condition, and results of operations.

Moreover, our insurance coverage may not be adequate for liabilities incurred or cover any indemnification claims against us relating to any security incident or breach or an insurer may deny coverage of claims. In the future, we may not be able to secure insurance for such matters on commercially reasonable terms, or at all. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, financial condition, and results of operations.

***Real or perceived defects, errors, or vulnerabilities in our platform could harm our reputation and adversely affect our business, financial condition, and results of operations.***

Our platform is complex and, despite extensive testing and quality control, has in the past and may in the future contain defects, errors, or vulnerabilities, or may not perform as contemplated. These defects, errors, or vulnerabilities could result in exposure of data, data loss, data leakage, unanticipated downtime, or other events that would result in harm to our reputation, loss of customers or revenue, refunds, order cancellations, service terminations, or lack of market acceptance of our platform. Cloud-based services often contain undetected defects, errors, or vulnerabilities when first introduced or when new versions or enhancements are released. As the use of our platform, including features that were recently developed, expands to more sensitive, secure, or mission critical uses by our customers, we may be subject to increased scrutiny, reputational risk, or liability should our platform fail to perform as contemplated in such deployments. In addition, the wide availability of open source software used in our solutions could expose us to security vulnerabilities. In addition, we make the source code of some of our proprietary platform features available to facilitate collaboration, but this may also enable others to compete more effectively. Public availability of such software may make it easier for others to compromise our platform. We have in the past and may in the future identify defects, errors, or vulnerabilities, which inadvertently permit access to or exposure of customer data. Any such defects, errors, or vulnerabilities would require us to make corrections to our platform, which could require us to allocate significant research and development and customer support resources to address any such problems. Further, as we make acquisitions, we may encounter difficulties in integrating acquired technologies into our services and in augmenting those technologies to meet the quality standards that are consistent with our brand and reputation.

Our agreements with customers, channel partners, and other third parties may include indemnification provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred in connection with any such defects or errors on our platform, or other liabilities relating to or arising from our platform. Some of these indemnity agreements provide for uncapped liability for which we would be responsible, and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, financial condition, and results of operations. Although we attempt to contractually limit our liability with respect to such indemnity obligations, we are not always successful and may still incur substantial liability related to such claims. In addition, although we carry general liability insurance, our insurance against this liability may not be adequate to cover a potential claim, and such coverage may not be available to us on acceptable terms, or at all. Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with such customer or

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other third party, our reputation, or demand for our platform. Any of the foregoing could adversely affect our business, financial condition, and results of operations.

***We rely on Amazon Web Services, or AWS, to deliver our platform to our customers, and any disruption of, or interference with, our use of AWS could adversely affect our business, financial condition, and results of operations.***

AWS is a third-party provider of cloud infrastructure services. We outsource substantially all of the infrastructure relating to our cloud-native platform to AWS. Our customers need to be able to access our platform at any time, without interruption or degradation of performance. Our platform depends, in part, on the virtual cloud infrastructure hosted in AWS. Although we have disaster recovery plans that utilize multiple AWS locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake or other natural disasters, power loss, telecommunications failures, cyber-attacks, terrorist or other attacks, and other similar events beyond our control, could adversely affect our cloud-native platform. Additionally, AWS may experience threats or attacks from computer malware, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, employee theft or misuse and general hacking have become more prevalent in our industry, particularly against cloud-native services and vendors of security solutions. Any of these security incidents could result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our customers' data or disrupt our ability to provide our platform or service. A prolonged AWS service disruption affecting our cloud-native platform for any of the foregoing reasons would adversely impact our ability to serve our customers and could damage our reputation with current and potential customers, expose us to liability, result in substantial costs for remediation, cause us to lose customers, or otherwise harm our business, financial condition, or results of operations. We may also incur significant costs for using alternative hosting sources or taking other actions in preparation for, or in reaction to, events that damage the AWS services we use.

Our commercial agreement with AWS will remain in effect until the completion of its term or if terminated by AWS or us for cause upon a breach of the agreement. Termination upon a material breach is subject to providing the breaching party prior notice and a 30-day cure period. In the event that our AWS service agreements are terminated, or there is a lapse of service, elimination of AWS services or features that we utilize, or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging for or creating new facilities or re-architecting our platform for deployment on a different cloud infrastructure service provider, which would adversely affect our business, financial condition, and results of operations.

***Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could harm our business, financial condition, and results of operations.***

Our success depends, in part, upon our ability to obtain, maintain, protect, and enforce our intellectual property rights, including our proprietary technology, know-how, and our brand. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws, and contractual provisions in an effort to establish and protect our proprietary rights. However, the steps we take to obtain, maintain, protect, and enforce our intellectual property rights may be inadequate, and if we fail to protect or enforce our intellectual property rights adequately, our competitors might gain access to our proprietary technology and develop and commercialize similar services or technologies, and our business, financial condition, results of operations, or prospects could be adversely affected. While we have been issued patents in the United States and have additional patent applications pending, there can be no assurance that our patent applications will result in issued patents. Even if we continue to seek patent protection in the future, we may be unable to obtain or maintain patent protection for our technology. In addition, any patents issued from pending or future patent applications or licensed to us in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Any of our patents, trademarks, or other intellectual property rights may be challenged or circumvented by others or invalidated or held unenforceable through administrative process or litigation in the United States, or in foreign jurisdictions. There can be no guarantee that others will not infringe on our trademarks or patents, independently develop similar offerings, duplicate any of our offerings, or design around our patents or other intellectual property rights. Further, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Moreover, policing unauthorized use of our technologies, trade secrets, and intellectual property may be difficult, expensive, and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating, or otherwise violating our intellectual property rights.

We rely, in part, on trade secrets, proprietary know-how, and other confidential information to maintain our competitive position. While we generally enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances and other third parties, we cannot assure you that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets. Further, these agreements do not prevent our competitors or partners from independently developing offerings that are substantially equivalent or superior to ours. These agreements may be breached, and we may not have adequate remedies for any such breach. Enforcing a claim

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that a party illegally disclosed or misappropriated a trade secret or know-how is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets and know-how.

We may be required to spend significant resources in order to monitor and protect our intellectual property rights, and some violations may be difficult or impossible to detect. Litigation may be necessary in the future to enforce our intellectual property rights, and such litigation could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights, and, if such defenses, counterclaims, and countersuits are successful, we could lose valuable intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management's attention and resources, could impair the functionality of our platform, delay introductions of enhancements to our platform, result in our substituting inferior or more costly technologies into our platform, or harm our reputation and brand. In addition, we may be required to license additional technology from third parties to develop and market new platform features, which may not be on commercially reasonable terms, or at all, and would adversely affect our ability to compete.

***Claims by others that we infringed their proprietary technology or other intellectual property rights would harm our business.***

We may become subject to intellectual property disputes. Our success depends, in part, on our ability to develop and commercialize our platform and services without infringing, misappropriating, or otherwise violating the intellectual property rights of third parties. However, we may not be aware if our platform is infringing, misappropriating, or otherwise violating third-party intellectual property rights, and such third parties may bring claims alleging such infringement, misappropriation, or violation. Companies in the software and technology industries, including some of our current and potential competitors, are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights. In addition, certain companies and rights holders seek to enforce and monetize patents or other intellectual property rights they own, have purchased, or otherwise obtained. Many potential litigants, including some of our competitors and patent-holding companies, have the ability to dedicate substantial resources to assert their intellectual property rights and to defend claims that may be brought against them.

Any claim of infringement by a third party, even those without merit, against us or for which we are required to provide indemnification could cause us to incur substantial costs defending against the claim, could distract our management from our business, and could require us to cease use of such intellectual property. Further, because of the substantial amount of discovery required in connection with intellectual property litigation, we risk compromising our confidential information during this type of litigation. We may be required to make substantial payments for legal fees, settlement fees, damages, royalties, or other fees in connection with a claimant securing a judgment against us, we may be subject to an injunction or other restrictions that cause us to cease selling subscriptions to our platform, we may be required to redesign any allegedly infringing portion of our platform or we may agree to a settlement that prevents us from distributing our platform or a portion thereof, any of which could adversely affect our business, financial condition, and results of operations.

With respect to any intellectual property rights claim, we may have to seek out a license to continue operations found to be in violation of such rights, which may not be available on favorable or commercially reasonable terms and may significantly increase our operating expenses. Some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If a third party does not offer us a license to its intellectual property on commercially reasonable terms, or at all, we may be required to develop alternative, non-infringing technology, which could require significant time (during which we would be unable to continue to offer our affected platform features), effort, and expense, and may ultimately not be successful. Any of these events would adversely affect our business, financial condition, and results of operations.

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and results of operations. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it would have a substantial adverse effect on our business, results of operations, or the market price of our common stock.

***Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to deliver our platform or subject us to litigation or other actions.***

Our platform contains software modules licensed to us by third-party authors under "open source" licenses, and we expect to continue to incorporate such open source software in our platform in the future. We also contribute to the open source developer community and encourage integration and development around our platform. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification, or other contractual protections regarding infringement claims or the quality of the code.

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Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property. We seek to ensure that our proprietary software is not combined with, and does not incorporate, open source software in ways that would require the release of the source code of our proprietary software to the public. However, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software. Our platform incorporates software that is licensed under an open source license which would require release of proprietary code if such platform was distributed to third parties. We take steps to ensure that our platform is not distributed, but business conditions could arise that make such distribution necessary or advisable. Additionally, some open source projects have known vulnerabilities and architectural instabilities and are provided on an "as-is" basis, which, if not properly addressed, could negatively affect the performance of our platform.

Although we monitor our use of open source software to avoid subjecting our platform to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their platform, and the licensors of such open source software provide no warranties or indemnities with respect to such claims. As a result, we and our customers could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our platform will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, or if an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations, could be subject to significant damages, enjoined from the sale of subscriptions to our platform or other liability, or be required to seek costly licenses from third parties to continue providing our platform on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our platform if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which would adversely affect our business, financial condition, and results of operations.

***We license certain editions of our offerings under an open source licensing model, which may limit our ability to monetize certain of our offerings and present other challenges.***

With the acquisition of Sensu, an edition of one of our offerings, Sensu Go, is freely available under a permissive open source software license, the MIT license. That version is complemented by paid versions of Sensu under proprietary or other limited license terms, employing a business strategy called open-core licensing model, which has spurred adoption of paid offerings with additional features or commercial benefits. We may in the future have additional open source editions of our paid offerings. However, open source editions typically have very low conversion rates to paid editions, and we may not be able to convert users to customers at a rate high enough to offset the expense of maintaining the open source edition. While open source offerings can enjoy the benefit of community contributions and support, we may not be able to engage the community sufficiently to take advantage of this potential benefit. Moreover, open source offerings under a permissive license can be freely used by competitors without any consideration. Competitors can, for example, easily copy the project and create a competing one that may divert potential customers from our open source or paid offerings. This may result in our expending significant effort and expense maintaining an offering that will benefit our competitors. In addition, managing trademark and branding rights for open source offerings can be difficult, because the law regarding the interaction of trademark rights and open source licensing is evolving and uncertain. It may therefore be risky or difficult to enforce our trademark and branding rights for open source offerings. Finally, in the event we later wish to cease support of an open source edition in favor of paid editions, that decision may draw criticism, result in negative public relations, and reduce the popularity of the paid offerings.

***The rapidly evolving framework of privacy, data protection, data transfers, or other laws or regulations worldwide may limit the use and adoption of our services and adversely affect our business.***

We are subject to a variety of federal, state, local, and international laws, directives, and regulations, as well as contractual obligations, relating to the collection, use, retention, security, disclosure, transfer, and other processing of personal information and other data. The regulatory framework for privacy, data protection, and data transfers worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. For example, the European Court of Justice in 2020 struck down the EU-US Privacy Shield framework, which provided companies with a mechanism to comply with data protection requirements when transferring personal data from the EU to the United States. In some cases, data privacy laws and regulations, such as the EU's General Data Protection Regulation, or GDPR, which took effect in May 2018, impose additional obligations directly on us as both a data controller and a data processor, as well as on many of our customers. The European Commission approved revised standard contractual clauses

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for the transfer of personal data outside the European Economic Area, or EEA, in June 2021 which impose a range of new requirements on organizations exporting or importing personal data subject to the GDPR and which are required to be implemented. The United Kingdom enacted a Data Protection Act in May 2018 that substantially implemented the GDPR, and has implemented legislation referred to as the "UK GDPR" that generally provides for implementation of the GDPR in the United Kingdom. On June 28, 2021, the European Commission announced a decision that the United Kingdom is an "adequate country" to which personal data could be exported from the EEA, but this decision must be renewed and may face challenges in the future, creating uncertainty regarding transfers of personal data to the United Kingdom from the EEA. On February 2, 2022, the UK's Information Commissioner's Office issued new standard contractual clauses to support personal data transfers out of the UK, which became effective March 21, 2022, and are required to be implemented. Additionally, we cannot fully predict how the Data Protection Act, the UK GDPR, and other United Kingdom data protection laws or regulations may develop in the medium to longer term nor the effects of divergent laws and guidance regarding how data transfers to and from the United Kingdom will be regulated in the future. We may, in addition to other impacts from evolving laws, regulations, and guidance relating to cross-border data transfer, experience additional costs associated with increased compliance burdens and be required to engage in new contract negotiations with third parties that aid in processing personal data on our behalf or localize certain personal data. In addition, domestic data privacy laws continue to evolve and could expose us to further regulatory or operational burdens. For example, the California Consumer Privacy Act, or CCPA, which took effect in January 2020, and the California Privacy Rights Act, or CPRA, which was approved by voters in November 2020 and took effect in January 2023, and similar legislation recently enacted or proposed in other states, require new disclosures, afford consumers new abilities, or otherwise create new obligations. The U.S. federal government also is contemplating privacy legislation. Some countries also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of delivering our platform. Complying with the GDPR, CCPA, CPRA, or other laws, regulations, amendments to or re-interpretations of existing laws and regulations, and contractual or other obligations relating to privacy, data protection, data transfers, data localization, or information security may require us to make changes to our services to enable us or our customers to meet new legal requirements, incur substantial operational costs, modify our data practices and policies, and restrict our business operations. Any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.

In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on our ability to provide our services globally. Our customers expect us to meet certain voluntary certification and other standards established by third parties. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our services to certain customers and could harm our business. Furthermore, the uncertain and shifting regulatory environment may cause concerns regarding data privacy and may cause our customers or our customers' customers to resist providing the data necessary to allow our customers to use our services effectively. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our services and limit adoption of our platform. Additionally, some statutory requirements, both in the United States and abroad, such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, include obligations for companies to notify individuals of security breaches involving particular personal information, which could result from breaches experienced by us or our service providers. Although we may have contractual protections with our service providers, any actual or perceived security breach or incident could harm our reputation and brand, expose us to potential liability, or require us to expend significant resources on data security and in responding to any such actual or perceived breach or incident.

These laws, regulations, standards, or other obligations relating to privacy, data protection, data transfers, data localization, or information security could require us to take on more onerous obligations in our contracts, restrict our ability to store, transfer, and process data or, in some cases, impact our ability to offer our services in certain locations, to deploy our solutions, to reach current and prospective customers, or to derive insights from customer data globally. If we are obligated to fundamentally change our business activities and practices or modify our platform, we may be unable to make such changes and modifications in a commercially reasonable manner, or at all, and our ability to develop new platform features could be limited. The costs of compliance with, and other burdens imposed by, these laws, regulations, standards, and obligations, or any inability to adequately address privacy, data protection, or information security-related concerns, even if unfounded, may limit the use and adoption of our services, reduce overall demand for our services, make it more difficult to meet expectations from or commitments to customers, impact our reputation, or slow the pace at which we close sales transactions, any of which could harm our business, financial condition, and results of operations.

***We incorporate technology from third parties into our platform, and our inability to maintain rights to such technology would harm our business and results of operations.***

We license software and other technology from third parties that we incorporate into or integrate with our platform. We cannot be certain that our licensors are not infringing the intellectual property rights of third parties or that our licensors have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell access to our platform. In addition, many licenses are non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Some of our agreements with our

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licensors may be terminated for convenience by them, or otherwise provide for a limited term. If we are unable to continue to license any of this technology for any reason, our ability to develop and sell access to our platform containing such technology could be harmed. Similarly, if we are unable to license necessary technology from third parties now, or in the future, on commercially reasonable terms or at all, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner, or at all, and we may be required to use alternative technology of lower quality or performance standards, which would adversely affect our business, financial condition, and results of operations.

***Our platform may not interoperate with our customers' infrastructure or with third-party offerings, which would adversely affect our business and results of operations.***

Our platform is often operated in large scale, complex technology environments. Our platform must interoperate with our customers' existing network and security infrastructure. These complex systems are developed, delivered, and maintained by our customers, myriad vendors, and service providers. As a result, the components of our customers' infrastructure have different specifications, rapidly evolve, utilize multiple protocol standards, include multiple versions and generations of offerings, and may be highly customized. We must be able to interoperate and provide our platform to customers with highly complex and customized networks, which requires careful planning and execution. Our customers and some channel partners require training and experience in the proper use of and the benefits that can be derived from our platform to maximize their potential. Further, when new or updated elements of our customers' infrastructure or new industry standards or protocols are introduced, we may have to update or enhance our platform to continue to effectively serve our customers. We offer prebuilt integrations with a variety of third-party cloud and software providers to allow customers to consolidate data across their infrastructure onto our platform, and we will need to continue to maintain existing integrations as other providers upgrade their offerings and develop new integrations with emerging technologies. Our competitors or other vendors may refuse to work with us to allow their offerings to interoperate with our platform, which could make it difficult for our platform to function properly in customer networks that include these third-party offerings.

We may not deliver or maintain interoperability quickly or cost-effectively, or at all. These efforts require capital investment and engineering resources. If we fail to maintain the compatibility of our platform with our customers' network and security infrastructures, our customers may not be able to fully adopt our platform, and we may, among other consequences, experience reduced demand for our platform, which could adversely affect our business, financial condition, and results of operations. Further, the incorrect or improper implementation or use of our software, our failure to train customers on how to benefit from full utilization of our platform, or our failure to provide support services to our customers may result in errors or loss of data and as a result, dissatisfied customers, negative publicity, and harm to our reputation and brand, or legal claims against us. All of the foregoing would result in lost opportunities for additional sales to these customers, any of which would adversely affect our business, financial condition, results of operations, and growth prospects.

**Risks Related to Legal and Regulatory Matters**

***We may be subject to claims that we have wrongfully hired an employee from a competitor, or that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.***

Many of our employees, consultants, and advisors, or individuals that may in the future serve as our employees, consultants, and advisors, are currently or were previously employed at companies including our competitors or potential competitors. Although we try to ensure that our employees, consultants, independent contractors, and advisors do not use the confidential or proprietary information, trade secrets, or know-how of others in their work for us, we have in the past received notices from former employers and we may be subject to claims that we or have inadvertently or otherwise used or disclosed confidential or proprietary information, trade secrets, or know-how of these third parties, or that our employees, consultants, independent contractors, or advisors have inadvertently or otherwise used or disclosed confidential information, trade secrets, or know-how of such individual's current or former employer. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees. Claims that we, our employees, consultants, or advisors have misappropriated the confidential or proprietary information, trade secrets, or know-how of third parties could have a material adverse effect on our business, financial condition, results of operations, and prospects.

***Our business is subject to a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations could harm our business, financial condition, and results of operations.***

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing privacy and data protection laws and regulations, employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws, and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than in the United

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States. These laws and regulations impose added costs on our business. Noncompliance with applicable regulations or requirements could subject us to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investigations, enforcement actions, orders, and sanctions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• mandatory changes to our Continuous Intelligence Platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• disgorgement of profits, fines, and damages;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• civil and criminal penalties or injunctions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• claims for damages by our customers or channel partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• termination of contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of intellectual property rights; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• temporary or permanent debarment from sales to government organizations.

If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, and results of operations could be adversely affected. In addition, responding to any action will likely result in a significant diversion of management's attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially harm our business, financial condition, and results of operations.

We endeavor to comply with all applicable employment laws. However, the scope and interpretation of these laws are often uncertain and may be conflicting, including varying standards and interpretations between state and federal law, between individual states, and even at the city and municipality level. As a result, their application in practice may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state, and local administrative agencies. From time to time, we may be subject to litigation or threats of litigation regarding such varying rules and standards. For example, in September 2019, attorneys representing a purported class of current and former employees in various sales roles alleged potential claims of employee misclassification and related federal and state law claims, which we disputed. In response, we mediated the dispute, and in August 2020, we entered into a settlement agreement with the purported class counsel to resolve the dispute, which was handled in arbitration and resulted in us paying approximately $4.5 million in the first quarter of fiscal 2022 to resolve the class-wide claims, which included claims for employee misclassification and related federal and state claims, civil penalties under California's Private Attorneys General Act of 2004, as well as claims for failure to pay overtime, provide meal and rest breaks, pay timely wages, and provide accurate wage statements, and claims for alleged unlawful business practices.

In addition, we must comply with laws and regulations relating to the formation, administration, and performance of contracts with the public sector, including U.S. federal, state, and local governmental organizations, which affect how we and our channel partners do business with governmental agencies. Selling access to our platform to the U.S. government, whether directly or through channel partners, also subjects us to certain regulatory and contractual requirements. Failure to comply with these requirements by either us or our channel partners could subject us to investigations, fines, and other penalties, which would have an adverse effect on our business, financial condition, results of operations, and prospects. Violations of certain regulatory and contractual requirements, or failure to maintain required certifications, could also result in us being suspended or debarred from future government contracting. Any of these outcomes would adversely affect our business, financial condition, results of operations, and growth prospects.

***We are subject to governmental export and import controls that would impair our ability to compete in international markets or subject us to liability if we are not in compliance with applicable laws.***

Our software may be subject to U.S. export control laws and regulations including the Export Administration Regulations and trade and economic sanctions maintained by the OFAC. As such, an export license may be required to export or re-export our platform to certain countries, end-users, and end-uses. Because we incorporate encryption functionality into our platform, we also are subject to certain U.S. export control laws that apply to encryption items. If we were to fail to comply with such U.S. export controls laws and regulations, U.S. economic sanctions, or other similar laws, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of our export or import privileges. Obtaining the necessary export license for a particular sale or offering may not be possible and may be time-consuming and may result in the delay or loss of sales opportunities. Further, U.S. export control laws and economic sanctions prohibit the export of offerings to certain U.S. embargoed or sanctioned countries, governments, and persons, as well as for prohibited end-uses. Even though we take precautions to ensure that we and our channel partners comply with all relevant export control laws

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and regulations, any failure by us or our channel partners to comply with such laws and regulations could have negative consequences for us, including reputational harm, government investigations, and penalties.

In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our customers' ability to implement our platform in those countries. Changes in our platform or changes in export and import regulations in such countries may create delays in the introduction of our platform into international markets, prevent our customers with international operations from deploying our platform globally or, in some cases, prevent or delay the export or import of our platform to certain countries, governments, or persons altogether. Any change in export or import laws or regulations, economic sanctions, or related legislation, shift in the enforcement or scope of existing export, import, or sanctions laws or regulations, or change in the countries, governments, persons, or technologies targeted by such export, import, or sanctions laws or regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell access to our platform to, existing or potential end-customers with international operations. Any decreased use of our platform or limitation on our ability to export to or sell access to our platform in international markets would adversely affect our business, financial condition, and results of operations.

***We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines, harm our reputation, and adversely affect our business, financial condition, results of operations, and growth prospects.***

We are subject to the FCPA, the U.K. Bribery Act 2010, and other anti-corruption, anti-bribery, and anti-money laundering laws in various jurisdictions both domestic and abroad. We leverage third parties, including channel partners, to sell access to our platform and conduct our business abroad. We and our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. While we have policies and procedures to address compliance with such laws, we cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, any of which could harm our reputation and adversely affect our business, financial condition, results of operations, and growth prospects.

***Changes in U.S. tax laws and regulations and those which we are subject to in various tax jurisdictions could adversely affect our business, financial condition, and results of operations.***

In December 2017, the legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act, was enacted, which contains significant changes to U.S. tax law. Beginning in January 2022, the Tax Act eliminated the right to deduct research and development expenditures for tax purposes in the period the expenses were incurred and instead requires all U.S. and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively, and as a result, we recognized a deferred tax asset for the future tax benefit of the amortization deductions of the capitalized research and development expenditures. However, since we have recorded a full valuation allowance against our deferred tax assets, these changes did not have a material impact on our consolidated financial statements. The impact of the Tax Act will likely be subject to ongoing technical guidance and accounting interpretation, which we will continue to monitor and assess. As we expand the scale of our international business activities, any changes in the U.S. or foreign taxation of such activities may increase our worldwide effective tax rate and harm our business, financial condition, and results of operations.

In August, 2022, the Inflation Reduction Act of 2022 was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income, effective for tax years beginning after December 31, 2022, and a 1% excise tax on share repurchases occurring after December 31, 2022. These and other changes to tax laws and regulations, or interpretation thereof, in the United States or other tax jurisdictions in which we do business do not currently impact us but could in the future adversely impact our business, financial condition, and results of operations.

***Our international operations subject us to potentially adverse tax consequences.***

We generally conduct our international operations through subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. The relevant taxing authorities may disagree with our determinations as to the value of assets sold or acquired or income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.

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There is also a high level of uncertainty in today's tax environment stemming from both global initiatives put forth by the Organisation for Economic Co-operation and Development, or the OECD, and unilateral measures being implemented by various countries due to a lack of consensus on these global initiatives. As an example, the OECD has put forth two proposals—Pillar One and Pillar Two—that revise the existing profit allocation and nexus rules (profit allocation based on location of sales versus physical presence) and ensure a minimal level of taxation, respectively. The Council of the European Union has adopted the global corporate 15% minimum tax as provided for in Pillar Two and has directed EU member states to implement legislation enacting Pillar Two by December 31, 2023. Further, unilateral measures such as digital services tax and corresponding tariffs in response to such measures are creating additional uncertainty. If these proposals are passed, it is likely that we will have to pay higher taxes in countries where such rules are applicable.

***We are subject to tax examinations by the Internal Revenue Service, or the IRS, and other domestic and foreign tax authorities. An adverse outcome of any such audit or examination by the IRS or other tax authority could have a material adverse effect on our financial condition and results of operations.***

We are, and expect to continue to be, subject to review and audit by the IRS and other tax authorities in various domestic and foreign jurisdictions. As a result, we may receive assessments in multiple jurisdictions on various tax-related assertions. Taxing authorities may challenge our tax positions and methodologies on various matters, including our positions regarding the collection of sales and use taxes and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes. We assess the likelihood of adverse outcomes resulting from any ongoing tax examinations to determine the adequacy of our provision (benefit) for income taxes. These assessments can require considerable judgments and estimates. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a variety of jurisdictions. There can be no assurance that our tax positions and methodologies or calculation of our tax liabilities are accurate or that the outcomes from tax examinations will not have an adverse effect on our financial condition and results of operations. A difference in the ultimate resolution of tax uncertainties from what is currently estimated could have an adverse effect on our financial condition and results of operations.

***Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.***

As of January 31, 2023, we had $522.1 million of federal and $362.2 million of state net operating loss carryforwards, or NOLs, available to reduce future taxable income, which will begin to expire in 2030 for federal and California purposes. It is possible that we will not generate taxable income in time to use NOLs before their expiration, or at all. Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an "ownership change," the corporation's ability to use its pre-change NOLs to offset its post-change income may be limited. In general, an "ownership change" will occur if there is a cumulative change in our ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Company has performed a Section 382 ownership change analysis through January 31, 2022. Based on the results of this analysis, we concluded that the Company did experience an ownership change on December 31, 2021 and that our utilization of net operating loss carryforwards will be subject to an annual limitation. However, it is not expected that the annual limitation will result in the expiration of tax attribute carryforwards prior to utilization.

The Tax Act, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, among other things, includes changes to U.S. federal tax rates and the rules governing NOLs. Unused U.S. federal NOLs for taxable years beginning before January 1, 2018, may be carried forward to offset future taxable income, if any, until such unused NOLs expire which have a twenty-year carryforward period. Under current law, U.S. federal NOLs incurred in taxable years after December 31, 2017, can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs incurred in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. NOLs arising in taxable years beginning after December 31, 2020, may not be carried back. As we maintain a full valuation allowance against our U.S. NOLs, these changes did not impact our consolidated balance sheet as of January 31, 2022 or 2023. However, in future years, if and when a net deferred tax asset is recognized related to our NOLs, the changes in the carryforward/carryback periods as well as the new limitation on the use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.

There is also a risk that due to federal or state regulatory changes, such as suspensions on the use of NOLs, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

***Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations.***

We do not collect sales and use, value added, and similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties, interest, or future

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requirements would adversely affect our financial condition and results of operations. Further, in June 2018, the Supreme Court held in *South Dakota v. Wayfair, Inc.* that states could impose sales tax collection obligations on out-of-state sellers even if those sellers lack any physical presence within the states imposing the sales taxes. Under *Wayfair*, a person requires only a "substantial nexus" with the taxing state before the state may subject the person to sales tax collection obligations therein. An increasing number of states (both before and after the publication of *Wayfair*) have considered or adopted laws that attempt to impose sales tax collection obligations on out-of-state sellers. The Supreme Court's *Wayfair* decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which would adversely impact our business, financial condition, and results of operations.

***We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.***

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, product liability, employment, class action, whistleblower, and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management's attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations.

**Risks Relating to Financial and Accounting Matters**

***Remaining performance obligations and calculated billings may not be accurate indicators of business activity within a period.***

Investors or analysts may look to both remaining performance obligations and the sum of revenue and changes in deferred revenue, sometimes referred to as "calculated billings," as indicators of business activity in a period for businesses such as ours. However, these measures may significantly differ from underlying business activity for a number of reasons including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a relatively large number of transactions occur at the end of the quarter. Invoicing of those transactions may or may not occur before the end of the quarter based on various factors including receipt of information from the customer and volume of transactions. A shift of a few days has little economic impact on our business, but will shift deferred revenue from one period into the next;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• multi-year contracts and multi-year upfront billings may distort trends;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• some subscriptions may have deferred start dates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• some services may only be invoiced upon delivery.

Accordingly, we do not believe that remaining performance obligations or calculated billings are necessarily accurate indicators of future performance for any given period. Analysts or investors may view these measures as important as many subscription-based companies report these as key metrics. Thus, any changes in our remaining performance obligations or calculated billings could be different from the expectations of investors or analysts, and thus may adversely affect the market price of our common stock.

***We recognize substantially all of our revenue ratably over the term of the relevant subscription period, and as a result, downturns or upturns in sales may not be immediately reflected in our results of operations.***

We recognize substantially all of our revenue ratably over the term of our subscription agreements with our customers, which is generally one to two years, but can be three years or longer. As a result, a substantial portion of the revenue that we report in each period will be derived from the recognition of deferred revenue relating to agreements entered into in prior periods. Consequently, a decline in new sales or renewals in any one period may not be immediately reflected in our results of operations for such period. Any such decline, however, would be reflected in future periods. Accordingly, the effect of significant downturns in sales and market acceptance of and demand for our platform and changes in our rate of renewals, or customer churn, may not be fully reflected in our results of operations until future periods. Our subscription-based model also makes it difficult to rapidly increase our revenue through additional sales in any period, as revenue from new customers generally will be recognized over the term of the applicable agreement.

We also intend to increase our investment in research and development, sales and marketing, and general and administrative functions, and other areas to grow our business. These costs are generally expensed as incurred (with the exception of sales

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commissions), as compared to our revenue, substantially all of which is recognized ratably in future periods. We may recognize the costs associated with such increased investments earlier than some of the anticipated benefits and the return on these investments may be lower, or may develop more slowly, than we expect, which could adversely affect our financial condition and results of operations.

***Our metrics and estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business.***

We regularly review and may adjust our processes for calculating our metrics used to evaluate our growth, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been evaluated by a third party. Our metrics and estimates may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or the assumptions on which we rely. Additionally, the metrics and forecasts we disclose relating to the size and expected growth of our addressable market may prove to be inaccurate. Even if the markets in which we compete meet the size estimates and growth we have forecasted, our business could fail to grow at similar rates, if at all. If securities analysts or investors do not consider our metrics to be accurate representations of our business, or if we discover material inaccuracies in our estimates, then the market price of our common stock could decline, our reputation and brand could be harmed, and our business, financial condition, and results of operations could be adversely affected.

***Our loan and security agreement provides our lender with a first-priority lien against substantially all of our assets and contains restrictive covenants which could limit our operational flexibility and otherwise adversely affect our financial condition.***

Our loan and security agreement contains a number of covenants that limit our ability to incur debt, grant liens, make acquisitions, undergo a change in control, make investments, make certain dividends or distributions, repurchase or redeem stock, dispose of or transfer assets, and enter into transactions with affiliates. Our loan and security agreement is secured by substantially all of our assets. The terms of our loan and security agreement may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs or to execute preferred business strategies. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions. Additionally, our obligations to repay principal and interest on our indebtedness make us vulnerable to economic or market downturns. As of January 31, 2023, we had no outstanding loan balance under this facility.

Our failure to comply with the covenants or payment requirements, or other events specified in our loan and security agreement, could result in an event of default and our lender may accelerate our obligations under our loan and security agreement and foreclose upon the collateral, or we may be forced to sell assets, restructure our indebtedness, or seek additional equity capital, which would dilute our stockholders' interests. Our failure to comply with any covenant could result in an event of default under the agreement and the lender could make the entire debt immediately due and payable. If this occurs, we might not be able to repay our debt or borrow sufficient funds to refinance it. Even if new financing is available, it may not be on terms that are acceptable to us. Any of the foregoing could adversely affect our business, financial condition, or results of operations.

***We may require additional capital, which may not be available on terms acceptable to us, or at all.***

Historically, we have funded our operations and capital expenditures primarily through equity issuances and cash generated from our operations. To support our growing business, we must have sufficient capital to continue to make significant investments in our platform. If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to those of common stock, and our existing stockholders may experience dilution. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

We evaluate financing opportunities from time to time, and our ability to obtain financing will depend on, among other things, our development efforts, business plans, and operating performance, and the condition of the capital markets at the time we seek financing. We cannot be certain that additional financing will be available to us on favorable terms, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business, financial condition, and results of operations would be adversely affected.

***Our results of operations may be adversely affected by changes in accounting principles applicable to us.***

Generally accepted accounting principles in the United States, or GAAP, are subject to interpretation by the Financial Accounting Standards Board, or the FASB, the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. Changes in accounting principles applicable to us, or varying interpretations of current accounting principles, in particular, with respect to revenue recognition of our packaging and licensing model, could have a significant effect on our reported results of operations. Further, any difficulties in the implementation of changes in accounting principles, including the ability to

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modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors' confidence in us.

***Our estimates or judgments relating to our critical accounting policies may be based on assumptions that change or prove to be incorrect, which could cause our results of operations to fall below expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.***

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." The results of these estimates form the basis for making judgments about the recognition and measurement of certain assets and liabilities and revenue and expenses that is not readily apparent from other sources. Our accounting policies that involve judgment include those related to revenue recognition, the period of benefit for deferred sales commissions, assumptions used for estimating the fair value of common stock to calculate stock-based compensation (prior to the closing of the IPO), capitalization of internal-use software costs, valuation of goodwill and intangible assets, allowance for doubtful accounts, and valuation allowances associated with income taxes. If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations could be adversely affected, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

***We may fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.***

In connection with the audit of our consolidated financial statements as of and for the fiscal year ended January 31, 2020, we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness that we identified occurred because we had not designed and maintained effective controls over certain aspects of our information technology systems. More specifically, we did not design and maintain effective user access controls to adequately restrict user and privileged access to financial enterprise resource planning applications, including ensuring appropriate segregation of duties as it relates to the preparation and review of journal entries and the monitoring of system changes. This material weakness did not result in any errors to the consolidated financial statements as of and for the fiscal year ended January 31, 2020, nor did we find any evidence of management override of entries in our financial reporting process. To address this material weakness, we took actions to improve our control environment related to certain aspects of our information technology systems. As of the year ended January 31, 2021, we concluded that our remediation efforts have been successful, and that the previously-identified material weakness in our internal control over financial reporting has been remediated. However, while the material weakness has been remediated, we continue to seek improvements to enhance our control environment and to strengthen our internal controls to provide reasonable assurance that our financial statements continue to be fairly stated in all material respects.

We can give no assurance that additional material weaknesses will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock.

***We may fail to maintain an effective system of disclosure controls and internal control over financial reporting, which could impair our ability to produce timely and accurate financial statements or comply with applicable regulations.***

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the listing standards of the Nasdaq Global Select Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

Our current controls and any new controls that we develop may become inadequate because of changes in the conditions in our business, including increased complexity resulting from any international expansion, the expanded work-from-home practices of our

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employees, new product offerings or from strategic transactions. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely adversely affect the market price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Global Select Market.

Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have an adverse effect on our business, financial condition, and results of operations, and could cause a decline in the market price of our common stock.

***We may face fluctuations in currency exchange rates, which could adversely affect our financial condition and results of operations.***

As we continue to expand internationally, we will become more exposed to fluctuations in currency exchange rates. A portion of our operating expenses are incurred outside of the United States and denominated in foreign currencies. Geopolitical or macroeconomic events may cause volatility in currency exchange rates between the U.S. dollar and the other currencies, such as the Euro.The strengthening of the U.S. dollar relative to foreign currencies, as we are currently experiencing, increases the real cost of our platform for our customers outside of the United States, which could lead to the lengthening of our sales cycle or reduced demand for our platform. As we continue our international expansion, increased international sales may result in foreign currency denominated sales, increasing our foreign currency risk. Moreover, this continued expansion will increase operating expenses incurred outside the United States and denominated in foreign currencies. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations would be adversely affected. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure, which would adversely affect our financial condition and results of operations.

**Risks Relating to Ownership of our Common Stock and Governance Matters**

***Our executive officers, directors, and holders of 5% or more of our common stock continue to have substantial control over us, which will limit your ability to influence the outcome of important transactions, including a change in control.***

Our executive officers, directors, and our stockholders who own 5% or more of our outstanding common stock and their affiliates, in the aggregate, beneficially own a substantial portion of the outstanding shares of our common stock. As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company, and might ultimately affect the market price of our common stock.

***The market price of our common stock may be volatile, and you could lose all or part of your investment.***

The market price of our common stock may be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our common stock. Factors that could cause fluctuations in the market price of our common stock include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Merger, the pendency of the Merger or the failure to complete the Merger;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• price and volume fluctuations in the overall stock market from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• volatility in the market prices and trading volumes of technology stocks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of shares of our common stock by us or our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of new offerings or platform features;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the public's reaction to our press releases, other public announcements, and filings with the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• rumors and market speculation involving us or other companies in our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• short selling of our common stock or related derivative securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated changes in our results of operations or fluctuations in our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated developments in our business, our competitors' businesses, or the competitive landscape generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announced or completed acquisitions of businesses, offerings, or technologies by us or our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments or disputes concerning our intellectual property or other proprietary rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• new laws or regulations, or new interpretations of existing laws or regulations applicable to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in accounting standards, policies, guidelines, interpretations, or principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any significant change in our management; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic conditions and slow or negative growth of our markets.

In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, would result in substantial costs and a diversion of our management's attention and resources.

***Sales of substantial amounts of our common stock in the public market, or the perception that such sales might occur, could cause our stock price to decline and impair our ability to raise capital through the sale of additional equity securities.***

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, a substantial amount of our common stock in the public market, the market price of our common stock could decline and our ability to raise capital through the sale of additional equity securities could be impaired. Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold, and may take, or attempt to take, steps to sell, directly or indirectly, their shares or otherwise secure, or limit the risk to, the value of their unrecognized gains on those shares.

In addition, certain of our stockholders are entitled, under our investors' rights agreement, to require us to register shares owned by them for public sale in the United States. Sales of our common stock pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause the market price of our common stock to fall and make it more difficult for you to sell shares of our common stock.

***The issuance of additional stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute all other stockholders.***

Our amended and restated certificate of incorporation authorizes us to issue up to 1,000,000,000 shares of common stock and up to 100,000,000 shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject to compliance with applicable rules and regulations, we may issue shares of common stock or securities convertible into shares of our

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common stock from time to time in connection with a financing, acquisition, investment, our equity incentive plans, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our common stock to decline.

***Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our common stock.***

Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our board of directors is classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• certain amendments to our amended and restated certificate of incorporation require the approval of at least 66 <sup>2</sup>⁄3% of our then-outstanding common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our stockholders are only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our amended and restated certificate of incorporation does not provide for cumulative voting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• vacancies on our board of directors are able to be filled only by our board of directors and not by stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer, or a majority of our board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• certain litigation against us can only be brought in Delaware;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.

These provisions, alone or together, could discourage, delay, or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

***Our amended and restated bylaws designate a state or federal court located within the State of Delaware and the federal district courts of the United States as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to choose the judicial forum for disputes with us or our directors, officers, or employees.***

Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (iii) any action arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws, or (iv) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants. Our amended and restated bylaws further provide that the federal district courts of the United States will be the exclusive forum for resolving any complaints asserting a cause of action arising under the Securities Act of 1933, as amended, or the Securities Act.

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Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to this provision. This exclusive-forum provision may limit a stockholder's ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. This exclusive forum provision will not apply to any causes of action arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. If a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.

***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the market price and trading volume of our common stock could decline.***

The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. The analysts' estimates are based upon their own opinions and are often different from our estimates or expectations. If any of the analysts who cover us change their recommendation regarding our common stock adversely, provide more favorable relative recommendations about our competitors, or publish inaccurate or unfavorable research about our business, the price of our securities would likely decline. If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets and demand for our securities could decrease, which could cause the price and trading volume of our common stock to decline.

***We do not intend to pay dividends for the foreseeable future.***

We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Additionally, our ability to pay cash dividends on our common stock is limited by restrictions under the terms of our credit facility with Silicon Valley Bank. As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment.

**General Risk Factors**

***Operating as a public company requires us to incur substantial costs and will require substantial management attention.***

As a public company, we incur substantial legal, accounting, and other expenses that we did not incur as a private company. For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules and regulations of the SEC, and the listing standards of the Nasdaq Global Select Market. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business, financial condition, and results of operations. As a result of disclosure of information in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors. In addition, as a public company, we have been and may continue to be subject to stockholder activism, which can lead to additional substantial costs, distract management, cause concern to our current or potential customers, employees, investors, strategic partners and other constituencies, and impact the manner in which we operate our business in ways we cannot currently anticipate. For example, in connection with the negotiation and entry into a cooperation agreement in May 2022 with Scaler Gauge Fund, L.P., one of our stockholders, we appointed two new directors and we incurred additional general and administrative expenses during the year ended January 31, 2023 of $2.6 million related thereto. In addition, our stock price could experience periods of increased volatility as a result of stockholder activism.

Certain members of our management team have limited experience managing a publicly traded company, and certain members joined us more recently. As such, our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.

**Item 1B. Unresolved Staff Comments**

Not applicable.

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**Item 2. Properties**

Our corporate headquarters is in Redwood City, California, where we currently lease approximately 56,000 square feet under a lease agreement that expires in 2023. We decided not to renew our corporate headquarters lease and will sublease approximately 24,000 square feet at a new location in Redwood City, California under a sublease agreement that begins in February 2023 and expires in May 2027. As of January 31, 2023, we also lease and license facilities in the United States in Austin; Denver; and Raleigh; and internationally in Noida, India; Milan, Italy; Tokyo, Japan; Skopje, Macedonia; Warsaw and Krakow, Poland; and Seoul, South Korea.

We believe that our facilities are suitable to meet our current needs. However, we may expand or reduce our facilities as we continue to evaluate our real estate needs, which may lead to the incurrence of additional expenses.

**Item 3. Legal Proceedings** 

From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of business, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. For example, in September 2019, attorneys representing a purported class of current and former employees in various sales roles alleged potential claims of employee misclassification and related federal and state law claims, which we disputed. In response, we mediated the dispute, and in August 2020, we entered into a settlement agreement with the purported class counsel to resolve the dispute, which was handled in arbitration and resulted in us paying approximately $4.5 million in the first quarter of fiscal 2022 to resolve the class-wide claims, which included claims for employee misclassification and related federal and state claims, civil penalties under California's Private Attorneys General Act of 2004, as well as claims for failure to pay overtime, provide meal and rest breaks, pay timely wages, and provide accurate wage statements, and claims for alleged unlawful business practices.

We are not currently a party to any legal proceedings that, if determined adversely to us, would, in our opinion, have a material adverse effect on our business, results of operations, financial condition or cash flows. Future litigation may be necessary to defend ourselves, our partners, and our customers by determining the scope, enforceability, and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

**Item 4. Mine Safety Disclosures**

Not applicable.

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**PART II**

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities** 

**Market Information for Common Stock**

Our common stock began trading on The Nasdaq Global Select Market under the symbol "SUMO" on September 17, 2020. Prior to that date, there was no public market for our common stock.

**Holders of Record**

As of January 31, 2023, there were approximately 120 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

**Dividend Policy**

We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.

**Sales of Unregistered Securities**

We did not sell any equity securities which were not registered under the Securities Act during the fiscal year ended January 31, 2023 that were not otherwise disclosed in our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K.

**Issuer Purchases of Equity Securities**

We did not purchase any shares of our common stock or other securities during the fourth quarter of our fiscal year ended January 31, 2023.

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**Stock Performance Graph**

*This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC, for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.*

The following graph compares (i) the cumulative total stockholder return on our common stock from September 17, 2020 (the date our common stock commenced trading on the Nasdaq Global Select Market) through January 31, 2023 with (ii) the cumulative total return of the S&P 500 Index and S&P 500 Software & Services Select Industry Index over the same period, assuming the investment of $100 in our common stock and in both of the other indices on September 17, 2020 and the reinvestment of dividends. The graph uses the closing market price on September 17, 2020 of $26.88 per share as the initial value of our common stock. As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future.

![sumo-20230131_g1.jpg](sumo-20230131_g1.jpg)

**Item 6. [Reserved]**

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**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, 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, 2023 and 2022 are referred to herein as fiscal 2023 and fiscal 2022, respectively. This section of our Annual Report on Form 10-K discusses our financial condition and results of operations and year-to-year comparisons for our fiscal years ended January 31, 2023 and 2022, respectively. A discussion of our financial condition and results of operations and year-to-year comparisons for our fiscal years ended January 31, 2022 and 2021 that is not included in this Annual Report on Form 10-K can be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the SEC on March 14, 2022, and is incorporated by reference herein.*

**Overview** 

Sumo Logic empowers the people who power modern, digital businesses. Our mission is to be the leading software-as-a-service analytics platform for reliable and secure cloud-native applications. With our platform, we help our customers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructure. Our multi-tenant, cloud-native platform – which we refer to as our Continuous Intelligence Platform – provides powerful, real-time, machine data analytics and insights across observability and security solutions.

We generate revenue through the sale of subscriptions to customers that enable them to access our cloud-native platform. We recognize subscription revenue ratably over the term of the subscription, which is generally one to two years, but can be three years or longer. We offer multi-tiered paid subscription packages for access to our platform, the pricing for which differs based on a variety of factors, including volume of data to be ingested, duration of data retention, and breadth of access to platform features and functionalities. Our subscription packages encourage customers to expand their adoption of our platform by providing them with the flexibility to ingest and analyze large volumes of data and the ability to access a broad suite of platform features and functionalities without incurring overage fees, as well as insights into their usage patterns. We also deliver basic customer support with each of our paid subscription packages, and customers have the ability to purchase subscriptions to our premium support service. We recognize revenue from premium support service ratably over the term of the subscription.

Our go-to-market strategy consists of self-service adoption through our website, an inside sales team, a field sales team, and a partner channel. We offer free trials that enable potential customers to experience the benefits of our platform. Although we have seen successful conversion from our trial users to paid customers in prior years, we de-emphasized this sales motion in fiscal 2023 to shift our go-to-market strategy towards accounts acquired directly through our inside field sales team and partner channel, which generally have higher annualized recurring revenue. We leverage our user community to proactively identify trends, gather global insights, and create new use cases, thereby empowering us to deliver out-of-the-box value to our customers. We employ a land-and-expand business model centered around our platform offerings, which have a rapid time to value for our customers and are easily extensible to multiple use cases across a business. We utilize the analytical capabilities of our platform and our customer success team to understand how our customers use, and how they would benefit from expanding their use of our platform. This understanding helps us successfully upsell and cross sell to our existing customers.

The power of our platform, and the benefits that it delivers to customers, has driven rapid growth in our revenue. For fiscal 2023 and 2022, our revenue was $300.7 million and $242.1 million, respectively, representing a year-over-year growth rate of 24%. For fiscal 2023 and 2022, our annualized recurring revenue, or ARR, was $301.6 million and $258.8 million, respectively, representing a year-over-year growth rate of 17%. We generated GAAP operating losses of $126.9 million and $121.3 million for fiscal 2023 and 2022, respectively. We define non-GAAP operating loss as loss from operations excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, expenses related to a cooperation agreement, expenses related to a U.S. Department of Justice antitrust interlock inquiry, and transaction costs related to the Merger. We generated non-GAAP operating losses of $37.6 million and $48.2 million for fiscal 2023 and 2022, respectively. See "Key Factors Affecting Our Performance" for a definition of ARR. See "Non-GAAP Financial Measures" for the reconciliation of GAAP operating loss to non-GAAP operating loss.

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**Pending Merger**

On February 9, 2023, we entered into the Merger Agreement with Parent and Merger Sub, pursuant to which Merger Sub will merge with and into Sumo Logic and Sumo Logic will continue as the surviving corporation in the Merger, as a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of Francisco Partners.

Pursuant to the Merger Agreement, at the effective time of the Merger, each share of our common stock outstanding immediately prior to such effective time (except for certain shares specified in the Merger Agreement) will automatically be converted into the right to receive $12.05 in cash without interest thereon, subject to applicable withholding taxes.

Completion of the Merger is subject to customary closing conditions set forth in the Merger Agreement, including, among other things the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock, the expiration or early termination of the applicable waiting period under the HSR Act, and the receipt of other specified regulatory approvals, and the absence of an order or law preventing, materially restraining, or materially impairing the consummation of the Merger.

We are subject to customary restrictions on our ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, subject to customary exceptions.

If the Merger Agreement is terminated in certain circumstances, including by us in order to enter into a superior proposal or by Parent because the Board withdraws its recommendation in favor of the Merger, we would be required to pay Parent a termination fee of $52.0 million.

The Merger is expected to close in the second calendar quarter of 2023. Upon consummation of the Merger, we will cease to be a publicly traded company and our common stock will be delisted from the Nasdaq Global Select Market.

**Impact from Current Economic Conditions and COVID-19**

Recent global events and the ongoing COVID-19 pandemic have adversely affected and are continuing to affect organizations, workforces, financial markets, and economies, leading to increased market volatility and economic uncertainties, which could adversely affect our business operations and financial results. These uncertain macroeconomic conditions have caused and may continue to affect how our customers, partners, and we operate our business such as a reduction in corporate spending, operating margins, expenses, and cashflows. We believe this has and may continue to negatively affect the growth of our business, cause delays in renewal decisions for some of our existing customers, cause customers to request concessions such as extended payment terms or better pricing, and affect contraction or churn rates for our customers. Since March 2020, we have continued to support many of our employees and contractors in working remotely, and have reduced business travel, all of which contribute to a business disruption in how we operate our business. We continue to evaluate our real estate needs including the need for our employees to return to the office for work. As we continue our assessment, we have exited and may continue to exit office leases, which could result in losses associated with our real estate. We believe the duration and extent of COVID-19 pandemic continues to be dependent on future developments that cannot be accurately predicted at this time, such as the duration and spread of the outbreak, the emergence of variants of the virus, the extent and effectiveness of containment actions, the effectiveness of vaccination efforts, and the ultimate societal and economic impact of the COVID-19 pandemic continues to remain unknown. However, we believe that the current macroeconomic environment and COVID-19 pandemic may continue to accelerate customer transformation into digital businesses, which we anticipate could generate additional opportunities for us in the future. While we are unable to accurately predict the full impact from these global events and the COVID-19 pandemic, we continue to closely monitor its effect on our business.

**Key Factors Affecting Our Performance** 

***New Customer Acquisition***

Our business depends, in part, on our ability to add new customers. We believe the continued trend of digital transformation and increase in digital services and cloud applications across all organizations will continue to drive demand for our platform and broaden our customer base. Since our platform has offerings for organizations of all sizes and across industries, including organizations of all stages of cloud maturity, we believe these market changes present a significant opportunity for growth. As of January 31, 2023, we had 2,417 customers worldwide, spanning organizations of a broad range of sizes and industries. However, we anticipate that continued economic uncertainty, including expectations that the macroeconomic environment may become more challenging in the future, may adversely affect our ability to add new customers in the future. We will continue to focus on new customer acquisition by investing in sales and marketing to build brand awareness, expanding our community, and driving adoption of our platform as we further capture the opportunity in our addressable market.

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We define a customer as a separate legal entity, such as a company or an educational or government institution, that is under a paid contract with us or with which we are negotiating a renewal contract at the end of a given period. Given our historical experience of customer renewals, if we are in active discussions for a renewal or upgrade, we continue to include customers with expired contracts in our customer count until the customer either renews its contract or negotiations terminate without renewal. In situations where an organization has multiple subsidiaries or divisions that separately contract with us, we typically treat only the parent entity as the customer instead of treating each subsidiary or division as a separate customer. However, we count each purchaser of our self-service offering as a unique customer, regardless of other subscriptions such organization may have.

***Expanding within our Existing Customer Base***

Our business depends, in part, on the degree to which our land-and-expand strategy is successful. Our customers often initially adopt our platform for a specific use case and subsequently increase their adoption as they realize the benefits and flexibility of our platform. We have been successful in expanding our existing customers' adoption of our platform as demonstrated by our dollar-based net retention rate, which we consider an indicator of our ability to retain and expand revenue from existing customers over time. Our dollar-based net retention rate as of January 31, 2023 and 2022, was 109% and 112%, respectively. Due to both the realignment of our sales force, which will likely result in a relatively higher focus on new customer acquisitions, and the current macroeconomic environment, which could result in increased customer churn, or reduced contract value with existing customers, we expect it will take several quarters before we start to see a sustained improvement in our dollar-based net retention rate.

Our efficient land-and-expand model has helped us accelerate adoption within our largest customers, as evidenced by our customers with over $100,000 of ARR, which was 505 and 456 as of January 31, 2023 and 2022, respectively. In addition, we saw growth in customers with greater than $1 million of ARR, which was 53 and 44 as of January 31, 2023 and 2022, respectively.

We define ARR as the annualized recurring revenue run-rate from all customers that are under contract with us at the end of the period or with which we are negotiating a renewal contract. Given our historical experience of customer renewals, if we are in active discussions for a renewal, we continue to include customers with expired contracts in our ARR until the customer either renews its contract or negotiations terminate without renewal. For certain customers whose revenue may fluctuate from month to month based upon their specific contractual arrangements, we calculate ARR using the annualized monthly recurring revenue, or MRR, run-rate (MRR multiplied by 12). This enables us to calculate our anticipated recurring revenue for all customers based on our packaging and licensing models, which we believe provides a more accurate view of our anticipated recurring revenue.

Our dollar-based net retention rate is calculated as of a period end by starting with the ARR from all subscription customers as of 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same subscription customers as of the current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of contraction or churn over the trailing 12 months but excludes ARR from new subscription customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at our dollar-based net retention rate.

***Continued Investment in Technology Leadership and Innovation***

We intend to extend our leadership position by continuing to innovate, bringing new technologies to market, honing best practices, and driving thought leadership. Our success depends, in part, on our ability to sustain innovation and technology leadership in order to maintain a competitive advantage. We expect to continue to invest in research and development to increase our revenue and achieve long-term profitability, and we intend to continue extending the applicability of our platform as well as improving the value of our offerings for our customers. We believe that our platform is highly differentiated and has broad applicability to a wide variety of observability and security use cases, and we will continue to invest in developing and enhancing platform features and functionality to further extend the adoption of our platform. Additionally, we will continue to evaluate opportunities to acquire or invest in businesses, offerings, technologies, or talent that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. Once we complete acquisitions, we must successfully integrate and manage these acquisitions to realize their benefits.

***International Expansion***

We intend to continue to invest in our international operations to grow our business outside of the United States. We generated 22% and 18% of our revenue outside the United States during fiscal 2023 and 2022, respectively. We believe that global demand for observability and security analytics will continue to increase as international businesses undergo digital transformations and adopt cloud-based technologies. We currently have a sales presence throughout Asia-Pacific-Japan, and Europe, with sales offices in Sydney, Australia, Tokyo, Japan, and London, United Kingdom, and we further increase our global reach with our international channel partners. International expansion over the long term represents a significant opportunity and we plan to continue to invest in growing our presence internationally, both through expanding our sales and marketing efforts and leveraging channel and other ecosystem partners.

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**Acquisition of Sensu, Inc.**

On June 10, 2021, we completed the acquisition of Sensu, a privately-held software company that is a leader in open source monitoring. The addition of Sensu is expected to accelerate our observability strategy by providing customers with an affordable and scalable end-to-end solution for infrastructure and application monitoring. The aggregate amount recorded as purchase consideration was $32.7 million, of which $8.6 million was paid or to be paid in cash, and $24.1 million was comprised of 1,123,697 shares of common stock. Additionally, 71,644 shares of common stock were issued and will be recorded as stock-based compensation over the requisite service period, and we assumed 33,267 options to purchase shares of common stock granted under Sensu's equity plan. See Note 5 to our consolidated financial statements.

**Acquisition of DF Labs S.p.A.**

On May 24, 2021, we completed the acquisition of DFLabs, a privately-held Italian corporation and a leader in SOAR technology. The combination of our Cloud SIEM and DFLabs' solution will provide customers with comprehensive cloud-native security intelligence solutions. The aggregate amount recorded as purchase consideration was $41.7 million, of which $35.3 million was paid in cash, and $6.4 million was comprised of 334,815 shares of common stock. Additionally, 143,492 shares of common stock were issued and will be recorded as stock-based compensation over the requisite service period. See Note 5 to our consolidated financial statements.

**Components of Results of Operations**

***Revenue***

We generate subscription revenue through the sale of subscriptions to customers that enable them to access our cloud-native platform. Subscription terms are generally one to two years, but can be three years or longer, and a substantial majority of our contracts are non-cancelable. Subscription revenue is driven by sales of our multi-tiered paid subscriptions, the pricing for which differs based on a variety of factors, including volume of data expected to be ingested, duration of data retention, and breadth of access to our platform features and functionalities. We deliver basic customer support with each of our paid subscription packages, and customers have the ability to purchase subscriptions to our premium support service. Due to the ease of using our platform, professional services revenue from configuration, implementation, and training services constituted approximately 1% of our total revenue for fiscal 2023 and 2022.

***Cost of Revenue***

Cost of revenue includes all direct costs to deliver and support our platform, including personnel and related costs, third-party cloud infrastructure costs for hosting our cloud platform, amortization of internal-use software and acquired developed technology, as well as allocated facilities and IT costs.

As new customers purchase access to our platform and our existing customer base expands their utilization of our platform, we will incur greater cloud infrastructure costs related to the increased volume of data being hosted. We will continue to invest additional resources in our platform infrastructure and customer support organizations to expand the capabilities of our platform features and ensure that our customers are realizing the full benefit of our platform. The level and timing of investment in these areas could affect our cost of revenue in the future.

***Gross Profit and Gross Margin***

Gross profit represents revenue less cost of revenue, and gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period as our revenue fluctuates, and has been and will continue to be affected by various factors, including the timing and amount of investments to maintain or expand our cloud infrastructure, the continued growth of data being hosted on our platform and customer support teams, increased compensation expenses, as well as amortization of costs associated with capitalized internal-use software and acquired intangible assets. We expect our gross profit to increase and our gross margin to modestly increase over the near term due to the continued growth in the use of our platform coupled with cost efficiencies related to our cloud infrastructure, although our gross margins could fluctuate from period to period depending on the interplay between the factors described above.

***Operating Expenses***

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel and related expenses are the most significant component of operating expenses and consist of salaries, employee benefit costs, payroll taxes, bonuses, sales commissions, travel-related expenses, and stock-based compensation expense, as well as the

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allocated portion of overhead costs for facilities and IT. Operating expenses also include cloud infrastructure fees and other services related to staging and development efforts for our platform.

*Research and Development*

Research and development expenses consist primarily of costs related to research, design, maintenance, and minor enhancements of our platform that are expensed as incurred. These costs consist primarily of personnel and related expenses, including allocated overhead costs, contractor and consulting fees related to the design, development, testing, and enhancement of our platform, and software, hardware, and cloud infrastructure fees for staging and development related to research and development activities necessary to support growth in our employee base and in the adoption of our platform. We expect that our research and development expenses will increase in dollar value as we continue to increase our investments in our platform. However, we anticipate research and development expenses will decrease as a percentage of our revenue over the long term, although they may fluctuate as a percentage of our revenue from period to period depending on the timing of expenses.

*Sales and Marketing*

Sales and marketing expenses consist primarily of personnel and related expenses including allocated overhead costs and commissions, costs of general marketing and promotional activities, including free trials of our platform, fees for professional services related to marketing, and software and hardware to support growth in our employee base. Sales commissions earned by our sales force that are considered incremental costs of obtaining a subscription with a customer are deferred and amortized on a straight-line basis over the expected period of benefit, which we have determined to be five years. We expect that our sales and marketing expenses will increase in dollar value over the long term, though the dollar value of such expenses may fluctuate in the near term. We believe that sales and marketing expenses will continue to be our largest operating expense for the foreseeable future as we expand our sales and marketing efforts. We expect that our sales and marketing expenses will be relatively flat as a percentage of our revenue over the near term, but decrease over the long term, although they may fluctuate as a percentage of revenue from period to period depending on the timing of expenses.

*General and Administrative*

General and administrative expenses consist primarily of personnel and related expenses associated with our executive, finance, legal, human resources, information technology and security, 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 consulting services, hardware and software costs, certain taxes other than income taxes, insurance, and overhead costs not allocated to other departments.

We expect that our general and administrative expenses will increase in dollar value as our business grows. However, we expect that our general and administrative expenses will decrease as a percentage of our revenue as our revenue grows over the long term, although they may fluctuate as a percentage of revenue from period to period depending on the timing of expenses.

***Interest and Other Income (Expense), Net***

Interest and other income (expense), net primarily consists of interest earned from our cash, cash equivalents, and marketable securities, and foreign currency transaction gains (losses).

***Interest Expense***

Interest expense primarily consists of interest incurred in connection with our previous borrowings under our revolving line of credit facility.

***Provision (Benefit) for Income Taxes***

Provision (benefit) for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

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**Results of Operations** 

The following table sets forth our consolidated statements of operations data for the periods indicated:

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| Revenue | $300668 | $242125 |
| Cost of revenue<sup>(1)(2)(3)</sup> | 97551 | 78308 |
| Gross profit | 203117 | 163817 |
| Operating expenses: |  |  |
| Research and development<sup>(1)(3)</sup> | 104949 | 94652 |
| Sales and marketing<sup>(1)(2)(3)</sup> | 153383 | 131311 |
| General and administrative<sup>(1)(3)(4)(5)(6)</sup> | 71649 | 59129 |
| Total operating expenses | 329981 | 285092 |
| Loss from operations | (126864) | (121275) |
| &nbsp;&nbsp;&nbsp;Interest and other income (expense), net | 5031 | 10 |
| &nbsp;&nbsp;&nbsp;Interest expense | (173) | (174) |
| Loss before provision for income taxes | (122006) | (121439) |
| &nbsp;&nbsp;&nbsp;Provision (benefit) for income taxes | 2809 | 1926 |
| Net loss | $(124815) | $(123365) |

---

____________

(1)Includes stock-based compensation expense and related employer payroll taxes as follows:

---

| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| Cost of revenue | $1455 | $854 |
| Research and development<sup>(a)</sup> | 28700 | 24363 |
| Sales and marketing | 18230 | 16397 |
| General and administrative | 16038 | 14279 |
| &nbsp;&nbsp;&nbsp;Total stock-based compensation expense and related employer payroll taxes | $64423 | $55893 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)See Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for the capitalized stock-based compensation expense related to internal-use software development costs.

(2)Includes amortization of acquired intangible assets as follows:

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| Cost of revenue | $12380 | $11753 |
| Sales and marketing | 600 | 383 |
| &nbsp;&nbsp;&nbsp;Total amortization of acquired intangible assets | $12980 | $12136 |

---

(3)Includes acquisition-related expenses as follows:

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| Cost of revenue | $325 | $230 |
| Research and development | 721 | 777 |
| Sales and marketing | 378 | 278 |
| General and administrative |  | 3756 |
| &nbsp;&nbsp;&nbsp;Total acquisition-related expenses | $1424 | $5041 |

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(4)Includes third-party advisory and professional services expenses associated with a cooperation agreement as follows:

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| General and administrative | $2627 | $— |
| &nbsp;&nbsp;&nbsp;Total expenses related to a cooperation agreement | $2627 | $— |

---

(5)Includes third-party advisory and professional services expenses associated with a U.S. Department of Justice antitrust interlock inquiry as follows:

---

| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| General and administrative | $350 | $— |
| &nbsp;&nbsp;&nbsp;Total expenses related to a U.S. Department of Justice antitrust interlock inquiry | $350 | $— |

---

(6)Includes professional services expenses associated with the Merger as follows:

---

| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(in thousands)* | *(in thousands)* |
| General and administrative | $7500 | $— |
| &nbsp;&nbsp;&nbsp;Total transaction costs related to the Merger | $7500 | $— |

---

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

---

| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
| Revenue | 100% | 100% |
| Cost of revenue | 32 | 32 |
| Gross profit | 68% | 68% |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 35 | 39 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 51 | 54 |
| &nbsp;&nbsp;&nbsp;General and administrative | 24 | 24 |
| Total operating expenses | 110% | 118% |
| Loss from operations | (42) | (50) |
| &nbsp;&nbsp;&nbsp;Interest and other income (expense), net | 1 |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  |
| Loss before provision for income taxes | (41) | (50) |
| &nbsp;&nbsp;&nbsp;Provision (benefit) for income taxes | 1 | 1 |
| Net loss | (42)% | (51)% |

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____________

Note: Certain figures may not sum due to rounding.

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**Comparison of Fiscal 2023 and Fiscal 2022** 

***Revenue***

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* |
| Revenue | $300668 | $242125 | $58543 | 24% |

---

Revenue increased by $58.5 million, or 24%, for fiscal 2023 compared to fiscal 2022 primarily due to customer growth from both existing and new customers. Approximately 90% of the revenue was attributable to existing customers and approximately 10% was attributable to new customers for the year ended January 31, 2023. The number of customers with greater than $100,000 of ARR increased to 505 as of January 31, 2023 from 456 as of January 31, 2022.

***Cost of Revenue, Gross Profit, and Gross Margin***

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* |
| Cost of revenue | $97551 | $78308 | $19243 | 25% |
| Gross profit | 203117 | 163817 | 39300 | 24% |
| Gross margin | 68% | 68% |  |  |

---

Cost of revenue increased by $19.2 million, or 25%, for fiscal 2023 compared to fiscal 2022. The increase in cost of revenue was primarily due to an $18.8 million increase in third-party cloud infrastructure and personnel costs related to providing access to and supporting our platform and a $0.6 million increase in amortization of acquired developed technology as a result of our acquisitions of Sensu and DFLabs in the second quarter of fiscal 2022. Gross profit increased $39.3 million as a result of the growth in revenue, resulting in flat gross margins compared to fiscal 2022.

***Research and Development***

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* |
| Research and development | $104949 | $94652 | $10297 | 11% |
| Percentage of revenue | 35% | 39% |  |  |

---

Research and development expenses increased by $10.3 million, or 11%, for fiscal 2023 compared to fiscal 2022. The increase in research and development expenses was primarily driven by a $10.7 million increase in personnel and related expenses directly associated with an increase in average headcount as we hire and increase resources to develop and expand the functionality of our software offerings, of which $4.3 million was related to stock-based compensation expense and related employer payroll taxes. In addition, software, hardware, and cloud infrastructure fees for staging and development increased $1.8 million, partially offset by a $1.4 million increase in capitalized internal-use software.

***Sales and Marketing***

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* |
| Sales and marketing | $153383 | $131311 | $22072 | 17% |
| Percentage of revenue | 51% | 54% |  |  |

---

Sales and marketing expenses increased by $22.1 million, or 17%, for fiscal 2023 compared to fiscal 2022. The increase in sales and marketing expenses was primarily driven by a $16.0 million increase in personnel and related expenses associated with an

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increase in average headcount as well as an increase in the average cost per head as we continue to invest in our go-to-market coverage, capacity, and expansions into new markets, of which $1.8 million was related to stock-based compensation expense and related employer payroll taxes. In addition, advertising and promotional costs, and third-party public relations and marketing services increased $3.3 million, software subscription costs increased $0.7 million as we continue to increase our efforts to execute our market expansion strategy, and amortization of referral fees and customer relationships increased $1.5 million.

***General and Administrative***

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* | *(dollars in thousands)* |
| General and administrative | $71649 | $59129 | $12520 | 21% |
| Percentage of revenue | 24% | 24% |  |  |

---

General and administrative expenses increased by $12.5 million, or 21%, for fiscal 2023 compared to fiscal 2022. The increase in general and administrative expenses was primarily driven by a $7.8 million increase in personnel and related expenses associated with an increase in average headcount as we invested in personnel to support the growth of our business, reporting, and compliance requirements, a $7.5 million increase in third party fees incurred during the fourth quarter of fiscal 2023 related to the Merger, and a $2.6 million increase in third-party fees incurred during fiscal 2023 related to a cooperation agreement. These increases were partially offset by a $1.1 million decrease in professional service fees, a $1.2 million decrease in insurance related costs, and the absence of $3.8 million in acquisition-related expenses incurred during fiscal 2022.

***Interest and Other Income (Expense), Net***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* |
| Interest and other income (expense), net | $5031 | $10 | $5021 | **N/M**<sup>(a)</sup> |

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____________

(a) Not meaningful

Interest and other income (expense), net increased by $5.0 million for fiscal 2023 compared to fiscal 2022. The increase in interest and other income (expense), net was primarily driven by an increase in interest income due to higher yield on invested funds.

***Interest Expense***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | | |
| | **2023** | **2022** |<br>**Change** |<br>**% Change** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* | &nbsp;&nbsp;&nbsp;&nbsp;*(dollars in thousands)* |
| Interest expense | $(173) | $(174) | $1 | (1)% |

---

Interest expense consists of amortization of costs related to our line of credit facility. The change between fiscal 2023 and fiscal 2022 was immaterial.

**Non-GAAP Financial Measures** 

In addition to our financial information presented in accordance with GAAP and the key business metrics presented above, we believe the following non-GAAP financial measures are useful to investors in evaluating our operating performance. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes, including 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. 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. The non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be

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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, and not to rely on any single financial measure to evaluate our business.

***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 related employer payroll taxes, amortization of acquired intangible assets, and acquisition-related expenses. The following table sets forth our non-GAAP gross profit and non-GAAP gross margin for the periods indicated.

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(dollars in thousands)* | *(dollars in thousands)* |
| Gross profit | $203117 | $163817 |
| &nbsp;&nbsp;Add: Stock-based compensation expense and related employer payroll taxes | 1455 | 854 |
| &nbsp;&nbsp;Add: Amortization of acquired intangible assets | 12380 | 11753 |
| &nbsp;&nbsp;Add: Acquisition-related expenses | 325 | 230 |
| Non-GAAP gross profit | $217277 | $176654 |
| Gross margin | 68% | 68% |
| Non-GAAP gross margin | 72% | 73% |

---

***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 related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, expenses related to a cooperation agreement, expenses related to a U.S. Department of Justice antitrust interlock inquiry, and transaction costs related to the Merger. The following table sets forth our non-GAAP operating loss and non-GAAP operating margin for the periods indicated.

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(dollars in thousands)* | *(dollars in thousands)* |
| Loss from operations | $(126864) | $(121275) |
| &nbsp;&nbsp;Add: Stock-based compensation expense and related employer payroll taxes | 64423 | 55893 |
| &nbsp;&nbsp;Add: Amortization of acquired intangible assets | 12980 | 12136 |
| &nbsp;&nbsp;Add: Acquisition-related expenses | 1424 | 5041 |
| &nbsp;&nbsp;Add: Expenses related to a cooperation agreement | 2627 |  |
| &nbsp;&nbsp;Add: Expenses related to a U.S. Department of Justice antitrust interlock inquiry | 350 |  |
| &nbsp;&nbsp;Add: Transaction costs related to the Merger | 7500 |  |
| Non-GAAP operating loss | $(37560) | $(48205) |
| Operating margin | (42)% | (50)% |
| Non-GAAP operating margin | (12)% | (20)% |

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***Non-GAAP Net Loss***

We define non-GAAP net loss as loss from operations, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, expenses related to a cooperation agreement, expenses related to a U.S. Department of Justice antitrust interlock inquiry, and transaction costs related to the Merger. The following table sets forth our non-GAAP net loss for the periods indicated.

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(dollars in thousands)* | *(dollars in thousands)* |
| Net loss | $(124815) | $(123365) |
| &nbsp;&nbsp;Add: Stock-based compensation expense and related employer payroll taxes | 64423 | 55893 |
| &nbsp;&nbsp;Add: Amortization of acquired intangible assets | 12980 | 12136 |
| &nbsp;&nbsp;Add: Acquisition-related expenses | 1424 | 5041 |
| &nbsp;&nbsp;Add: Expenses related to a cooperation agreement | 2627 |  |
| &nbsp;&nbsp;Add: Expenses related to a U.S. Department of Justice antitrust interlock inquiry | 350 |  |
| &nbsp;&nbsp;Add: Transaction costs related to the Merger | 7500 |  |
| Non-GAAP net loss | $(35511) | $(50295) |

---

***Free Cash Flow***

We define free cash flow as cash used in operating activities less purchases of property and equipment and 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. The following table sets forth our free cash flow for the periods indicated.

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | *(dollars in thousands)* | *(dollars in thousands)* |
| Cash used in operating activities | $(27358) | $(30491) |
| &nbsp;&nbsp;Less: Purchases of property and equipment | (386) | (2258) |
| &nbsp;&nbsp;Less: Capitalized internal-use software costs | (1630) | (182) |
| Free cash flow | $(29374) | $(32931) |
| Cash provided by (used in) investing activities | $6271 | $(323265) |
| Cash provided by financing activities | $18695 | $30210 |

---

**Liquidity and Capital Resources** 

Since inception, we have financed our operations primarily through subscription revenue from customers accessing our cloud-native platform and the net proceeds of issuances of equity securities. We have incurred losses and generated negative cash flows from operations, as reflected in our accumulated deficit of $646.0 million as of January 31, 2023. As of January 31, 2023, we had $76.5 million in cash and cash equivalents and $266.9 million in marketable securities.

We believe our existing cash and cash equivalents, marketable securities, and cash provided by sales of access to our platform will be sufficient to meet our projected operating requirements for at least the next 12 months, despite the ongoing COVID-19 pandemic, continued supply chain disruptions, and uncertainty in the changing market and macroeconomic conditions, including inflation and rising interest rates, which may have an impact on our available cash due to customer requests for extended payment terms or better pricing. As a result of our revenue growth plans, we expect that losses and negative cash flows from operations may continue in the near term. Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewals, billing timing and frequency, pricing changes, the timing and extent of spending to support development

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efforts, the expansion of sales and marketing activities, the introduction of new and enhanced platform features and functionality, the continued market adoption of our platform, the impact of the COVID-19 pandemic, and the impact of the current macroeconomic conditions on our business and results of operations, and the business of our customers. We may in the future pursue acquisitions of businesses, technologies, assets, and talent.

In February 2021, we entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank, or the SVB Agreement, which provides for a revolving line of credit. The SVB Agreement amends and restates the Loan and Security Agreement dated as of January 31, 2016. Under the SVB Agreement, we can borrow up to $50 million. Interest on any drawdown accrues at the prime rate minus a spread rate ranging from 0.25% to 0.75%, as determined by our adjusted quick ratio, subject to either a 3.00% or 2.50% floor depending on the adjusted quick ratio. The SVB Agreement is secured by substantially all of our assets and includes restrictive covenants, in each case subject to certain exceptions, that limit our ability to, among other things: incur debt, grant liens, make acquisitions, undergo a change in control, make investments, make certain dividends or distributions, repurchase or redeem stock, dispose of or transfer assets, and enter into transactions with affiliates. Pursuant to the SVB Agreement, we are also required to maintain a minimum adjusted quick ratio of 1.25 to 1.00. The SVB Agreement also contains customary events of default, upon which Silicon Valley Bank may declare all or a portion of our outstanding obligations payable to be immediately due and payable. As of January 31, 2023, we did not have any debt outstanding.

We typically invoice our subscription customers annually in advance, and in certain cases, we invoice upfront for multi-year contracts. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as deferred revenue. Deferred revenue consists of billed fees for our subscriptions and to a lesser extent, premium support services, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of January 31, 2023, future estimated revenue related to performance obligations from non-cancelable contracts that were unsatisfied or partially unsatisfied was $351.5 million, of which we expect to recognize approximately 96% as revenue over the next 24 months, with the remaining balance recognized thereafter. As of January 31, 2023, we had deferred revenue of $152.1 million, of which $150.5 million was recorded as a current liability and is expected to be recognized as revenue within the next 12 months, subject to applicable revenue recognition criteria.

**Merger Agreement**

On February 9, 2023, we entered into the Merger Agreement. We have agreed to various representations, warranties, covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. If the Merger Agreement is terminated in certain circumstances, including by us in order to enter into a superior proposal or by Parent because the Board withdraws its recommendation in favor of the Merger, we would be required to pay Parent a termination fee of $52.0 million. In addition, without the consent of Parent, we may not take, authorize, agree or commit to do certain actions outside of the ordinary course of business, including incurring material capital expenditures above specified thresholds, or issuing additional debt, subject to certain exceptions set forth in the Merger Agreement. We do not believe that the restrictions in the Merger Agreement will prevent us from meeting our debt obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.

**Cash Flows** 

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

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| | | |
|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** |
|  | &nbsp;&nbsp;**(***in thousands***)** | &nbsp;&nbsp;**(***in thousands***)** |
| Net cash provided by (used in): |  |  |
| &nbsp;&nbsp;&nbsp;Operating activities | $(27358) | $(30491) |
| &nbsp;&nbsp;&nbsp;Investing activities | 6271 | (323265) |
| &nbsp;&nbsp;&nbsp;Financing activities | 18695 | 30210 |

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***Operating Activities***

Our largest source of operating cash is cash collections from sales of subscriptions to our customers. Our primary uses of cash from operating activities are for personnel and related expenses, marketing expenses, and third-party cloud infrastructure and software costs. In the last several years, we have generated negative cash flows from operating activities and have supplemented working capital requirements through net proceeds from equity financings up to fiscal 2021.

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Cash used in operating activities for fiscal 2023 of $27.4 million consisted of our net loss of $124.8 million, adjusted for non-cash charges of $103.4 million and net cash outflows of $6.0 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $63.5 million, amortization of deferred sales commissions of $20.2 million, depreciation and amortization of $15.6 million, and non-cash operating lease costs of $4.0 million. Net cash outflows from changes in our operating assets and liabilities were primarily the result of a $20.8 million increase in deferred sales commissions due to commissions paid on new bookings, a $9.0 million increase in accounts receivable due to new billings being greater than collections during the period, and a $4.4 million decrease in lease liabilities due to monthly rental payments for our operating leases. Net cash outflows were partially offset by a $14.9 million increase in deferred revenue resulting from increased billings for subscriptions, a $11.8 million increase in accounts payable and accrued expenses due to timing of payments to vendors, a $1.0 million increase in other noncurrent liabilities for deferred taxes, and a $0.6 million decrease in prepaid expenses and other assets related to the timing of payments to vendors and amortization of prior amounts paid.

Cash used in operating activities for fiscal 2022 of $30.5 million consisted of our net loss of $123.4 million, adjusted for non-cash charges of $91.9 million and net cash inflows of $1.0 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $54.1 million, amortization of deferred sales commissions of $15.8 million, and depreciation and amortization of $14.2 million. Net cash inflows from changes in our operating assets and liabilities were primarily the result of a $29.5 million increase in deferred revenue resulting from increased billings for subscriptions, and a $4.4 million increase in accounts payable and accrued expenses due to timing of payments to vendors. Net cash inflows were partially offset by cash outflows resulting from a $25.0 million increase in deferred sales commissions due to commissions paid on new bookings, a $4.5 million decrease in lease liabilities due to monthly rental payments for our operating leases, and a $4.2 million increase in accounts receivable due to new billings being greater than collections during the period.

***Investing Activities***

Cash provided by investing activities for fiscal 2023 of $6.3 million consisted of $273.6 million of maturities and sales of marketable securities partially offset by $265.3 million of purchases of marketable securities and $2.0 million in purchases of property and equipment primarily related to purchases of computer hardware as well as an increase of capitalized internal-use software development costs.

Cash used in investing activities for fiscal 2022 of $323.3 million consisted of purchases of marketable securities of $424.7 million, cash paid for acquisitions, net of cash and restricted cash acquired of $40.3 million, and $2.3 million in purchases of property and equipment primarily related to leasehold improvements and purchases of furniture for our expanded office space and computers for new employees, partially offset by $144.2 million of maturities and sales of marketable securities.

***Financing Activities***

Cash provided by financing activities for fiscal 2023 of $18.7 million primarily consisted of proceeds from common stock option exercises of $14.6 million and proceeds from employee stock purchase plan of $4.6 million, partially offset by $0.5 million of cash paid for holdback consideration in connection with acquisitions.

Cash provided by financing activities for fiscal 2022 of $30.2 million primarily consisted of proceeds from common stock option exercises of $22.3 million and proceeds from employee stock purchase plan of $8.0 million.

**Contractual Obligations and Commitments**

The Company enters into contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum, or variable price provisions, and the approximate timing of the actions under the contracts. The Company's material contractual obligations include the following:

The Company has committed to spend $70.0 million for hosting services in fiscal year 2024 based on an amended hosting agreement executed in July 2020.

The Company has lease arrangements associated with its corporate facilities. Refer to Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.

As of January 31, 2023, our unrecognized tax benefits were $7.9 million, of which $1.1 million are classified as other liabilities and $6.8 million are netted against deferred tax assets. At this time, we are unable to make a reasonably reliable estimate of the timing of payments, if any, in individual years due to uncertainties in the timing or outcomes of either actual or anticipated tax audits. Refer to Note 12 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.

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**Critical Accounting Policies and Estimates** 

We prepared our consolidated financial statements and the related notes thereto, included elsewhere in this Annual Report on Form 10-K, in accordance with GAAP. In preparation of these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements and may involve subjective or significant judgment by management; therefore, actual results could differ from the estimates made by management. We refer to accounting estimates of this type as critical accounting policies and estimates, which are disclosed below.

***Revenue Recognition***

We recognize revenue from contracts with customers using the five-step method described in Note 2 in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We generate revenue through the sale of subscriptions and support services to customers that enable them to access our cloud-native platform. Our subscription arrangements with customers do not provide the customer with the right to take possession of our cloud-native platform at any time and as a result are accounted for as service arrangements. Revenue is recognized when control of these services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Subscription terms are generally one to two years, but can be three years or longer, and the substantial majority of our contracts are non-cancelable. Revenue is recognized ratably over the subscription generally beginning on the date that our platform is made available to a customer. We typically bill for subscriptions annually in advance for subscriptions with terms of one year or more.

We allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on a range of actual prices charged to customers. In general, we satisfy the majority of our performance obligations over time as we transfer the promised services to our customers. We review the contract terms and conditions to evaluate the timing and amount of revenue recognition, the related contract balances, and our remaining performance obligations. These evaluations require judgment that could affect the timing and amount of revenue recognized.

***Deferred Sales Commissions***

Deferred contract costs include sales commissions which are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit, determined to be five years. The period of benefit is estimated by considering factors such as the expected life of our subscription contracts, historical customer attrition rates, technological life of our platform, the impact of competition in our industry, as well as other factors. Amounts anticipated to be recognized within 12 months of the balance sheet date are recorded as deferred sales commissions, current, with the remaining portion recorded as deferred sales commissions, noncurrent, on the consolidated balance sheets. Amortization of deferred contract costs is recorded as sales and marketing expense in the consolidated statements of operations included elsewhere in this Annual Report on Form 10-K.

***Stock-Based Compensation***

We measure and recognize compensation expense for all stock-based payment awards granted to employees, directors, and non-employees based on the estimated fair values on the date of the grant.

The fair value of options granted and purchase rights granted under the Employee Stock Purchase Plan, or ESPP, is estimated on the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units, or RSUs, is estimated on the date of grant based on the fair value of our underlying common stock. Prior to our IPO, the fair value of our common stock for financial reporting purposes was determined considering objective and subjective factors, including valuations from third-party valuation experts, and required judgment to determine the fair value of common stock for financial reporting purposes as of the date of each equity grant or modification.

These assumptions are estimated as follows:

*Fair Value.* Prior to our IPO, the fair value of common stock underlying the stock options had historically been determined by our Board of Directors, with input from our management. Our Board of Directors previously determined the fair value of the common stock at the time of grant by considering a number of objective and subjective factors. Subsequent to our IPO, the fair value of the underlying common stock is determined by the closing price, on the date of grant, of our common stock, as reported by the Nasdaq Global Select Market.

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*Expected Term*. The expected term represents the period that our stock-based awards are expected to be outstanding. The expected term assumptions were based on the vesting terms, exercise terms, and contractual lives of these awards. For non-employee awards, the expected term would equal the contractual term.

*Volatility.* Since we do not have a trading history of our common stock, the expected volatility is based on a calculation using the historical stock information of companies deemed comparable to us, over a period equal to the expected term. We intend to apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be used in the calculation.

*Risk-Free Rate.* The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant corresponding to the expected life of the award.

*Dividend Yield.* We have not and do not expect to pay cash dividends on our common stock.

We recognize stock-based compensation expense for service-based stock-based awards and our ESPP purchase rights on a straight-line basis over the service period, net of actual forfeitures. We also have certain options and RSUs that have performance-based vesting conditions; stock-based compensation expense for such awards is recognized using an accelerated attribution method from the time the vesting condition is probable through the time the vesting condition has been achieved.

Prior to our IPO, we recognized stock-based compensation expense for RSUs on an accelerated attribution method as the RSUs were subject to service-based and performance-based vesting conditions, which included a liquidity event condition, and in certain cases, the achievement of certain other performance metrics. None of the RSUs would vest unless the liquidity event condition was satisfied. Upon the completion of the IPO, the liquidity event condition was considered probable and we recognized cumulative stock-based compensation expense using the accelerated attribution method related to RSUs that had vested as of the IPO. The remaining unrecognized stock-based compensation expense related to the RSUs will be recognized over the remaining requisite service period. All service-based RSUs granted after the IPO, under our 2020 Equity Incentive Plan, will not be subject to a liquidity event condition and will be recognized on a straight-line basis over the service period.

We adopted ASU No. 2018-07 effective February 1, 2020, which aligns the accounting for employee and non-employee awards except for inputs to the option pricing model and the attribution of cost. Assumptions used in valuing non-employee stock options are generally consistent with those used for employee stock options with the exception that the expected term is over the contractual life, or 10 years for non-employee stock options. The adoption of this standard did not have a material impact on our consolidated financial statements. As of February 1, 2020, the awards issued to non-employees are no longer subject to periodic adjustments as such awards vest at the end of each reporting period.

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to our estimates, which could materially impact our future stock-based compensation expense.

***Business Combinations***

We allocate the fair value of purchase consideration to the tangible and intangible assets acquired, and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, reproduction costs, expected long-term market growth, future expected operating expenses, cost build-up to support obligations, and appropriate discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which may be up to one year from the acquisition date, if new information is obtained about facts and circumstances that existed as of the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations.

**Recent Accounting Pronouncements** 

See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for more information about the impact of certain recent accounting pronouncements on our consolidated financial statements.

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**Item 7A. Quantitative and Qualitative Disclosures About Market Risk**

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.

***Interest Rate Risk***

As of January 31, 2023, we had $62.6 million of cash equivalents invested in money market funds and $0.3 million was restricted cash primarily related to outstanding letters of credit established in connection with lease agreements for our facilities. In addition, we had $266.9 million in marketable securities, which consisted of U.S. treasury securities, corporate debt securities, commercial paper, foreign government obligations, supranational securities, certificates of deposits, and U.S. government agency securities. Our cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes.

A hypothetical 10% relative change in interest rates during any of the periods presented would not have had a material impact on our results of operations.

***Foreign Currency Exchange Risk***

Our reporting currency is the U.S. dollar, and the functional currency of our foreign subsidiaries is the respective local currency. The assets and liabilities of each of our foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the consolidated statements of comprehensive loss. Equity transactions are translated using historical exchange rates. Expenses are translated using the average exchange rate during the year. Gains or losses due to transactions in foreign currencies are included in interest and other income (expense), net in our consolidated statements of operations.

The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in foreign exchange gains and losses related to changes in foreign currency exchange rates. In the event our foreign currency denominated assets, liabilities, revenue, or expenses increase, our results of operations may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future.

A hypothetical 10% change in the relative value of the U.S. dollar to other currencies during any of the periods presented would not have had a material effect on our results of operations.

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**Item 8. Financial Statements and Supplementary Data**

**Sumo Logic, Inc.** 

**Index to Consolidated Financial Statements**

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| | |
|:---|:---|
| | **<u>Page</u>** |
| <u>[Report of Independent Registered Public Accounting Firm](#ie4a4a1dccd92486a88fcb9a732da7f70_103)</u> (PCAOB ID 238) | [61](#ie4a4a1dccd92486a88fcb9a732da7f70_103) |
| <u>[Consolidated Balance Sheets](#ie4a4a1dccd92486a88fcb9a732da7f70_106)</u> | [63](#ie4a4a1dccd92486a88fcb9a732da7f70_106) |
| <u>[Consolidated Statements of Operations](#ie4a4a1dccd92486a88fcb9a732da7f70_109)</u> | [64](#ie4a4a1dccd92486a88fcb9a732da7f70_109) |
| <u>[Consolidated Statements of Comprehensive Loss](#ie4a4a1dccd92486a88fcb9a732da7f70_112)</u> | [65](#ie4a4a1dccd92486a88fcb9a732da7f70_112) |
| <u>[Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)](#ie4a4a1dccd92486a88fcb9a732da7f70_115)</u> | [66](#ie4a4a1dccd92486a88fcb9a732da7f70_115) |
| <u>[Consolidated Statements of Cash Flows](#ie4a4a1dccd92486a88fcb9a732da7f70_118)</u> | [67](#ie4a4a1dccd92486a88fcb9a732da7f70_118) |
| <u>[Notes to Consolidated Financial Statements](#ie4a4a1dccd92486a88fcb9a732da7f70_121)</u> | [68](#ie4a4a1dccd92486a88fcb9a732da7f70_121) |

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**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Stockholders of Sumo Logic, Inc.

***Opinions on the Financial Statements and Internal Control over Financial Reporting***

We have audited the accompanying consolidated balance sheets of Sumo Logic, Inc. and its subsidiaries (the "Company") as of January 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders' equity (deficit) and of cash flows for each of the three years in the period ended January 31, 2023, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2023 and 2022**,** and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

***Basis for Opinions***

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

***Definition and Limitations of Internal Control over Financial Reporting***

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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***Critical Audit Matters***

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Revenue Recognition*

As described in Note 2 to the consolidated financial statements, the Company generates revenue from subscriptions to customers that enable them to access the Company's cloud-based platform. Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Subscription arrangements with customers do not provide the customer with the right to take possession of the Company's software at any time. Instead, customers are granted continuous access to the platform over the contractual period. A time-elapsed method is used to measure progress as control is transferred evenly over the contractual period. Accordingly, the fixed consideration related to subscription fees is generally recognized on a straight-line basis over the contract term, commencing on the date the service is made available to the customer and all other revenue recognition criteria have been met. The Company recorded total revenue of $301 million for the year ended January 31, 2023.

The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter are the high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company's revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others, evaluating the recognition of revenue on a test basis by obtaining and inspecting customer contracts, testing whether access to the Company's platform had been provided to the customer, recalculating revenue recognized, and where applicable, vouching to cash receipts from customers.

/s/ PricewaterhouseCoopers LLP

San Francisco, California

March 16, 2023

We have served as the Company's auditor since 2015.

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**Sumo Logic, Inc.** 

**Consolidated Balance Sheets** 

*(in thousands, except for per share data)* 

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| **Assets** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $76496 | $79986 |
| &nbsp;&nbsp;Marketable securities, current | 225643 | 210645 |
| &nbsp;&nbsp;Accounts receivable, net | 58366 | 49451 |
| &nbsp;&nbsp;Prepaid expenses | 9063 | 9792 |
| &nbsp;&nbsp;Deferred sales commissions, current | 19699 | 17110 |
| &nbsp;&nbsp;Other current assets | 2545 | 2865 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 391812 | 369849 |
| Marketable securities, noncurrent | 41213 | 65866 |
| Property and equipment, net | 4852 | 4960 |
| Operating lease right-of-use assets | 1381 | 6110 |
| Goodwill | 94213 | 94967 |
| Acquired intangible assets, net | 12709 | 26221 |
| Deferred sales commissions, noncurrent | 30670 | 32689 |
| Other assets | 2248 | 1469 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $579098 | $602131 |
| **Liabilities and stockholders' equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable | $17279 | $7755 |
| &nbsp;&nbsp;Accrued expenses and other current liabilities | 26793 | 25425 |
| &nbsp;&nbsp;Operating lease liabilities, current | 1641 | 4619 |
| &nbsp;&nbsp;Deferred revenue, current | 150484 | 131329 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 196197 | 169128 |
| Operating lease liabilities, noncurrent | 22 | 2346 |
| Deferred revenue, noncurrent | 1658 | 5944 |
| Other liabilities | 6111 | 5744 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 203988 | 183162 |
| Commitments and contingencies (Note 8) |  |  |
| Stockholders' equity: |  |  |
|  Common stock $0.0001 par value— 1,000,000 shares authorized as of January 31, 2023 and 2022; 122,388 and 113,813 shares issued and outstanding as of January 31, 2023 and 2022, respectively | 12 | 11 |
| &nbsp;&nbsp;Additional paid-in-capital | 1027627 | 944447 |
| &nbsp;&nbsp;Accumulated other comprehensive loss | (6558) | (4333) |
| &nbsp;&nbsp;Accumulated deficit | (645971) | (521156) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 375110 | 418969 |
| **Total liabilities and stockholders' equity** | $579098 | $602131 |

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See Notes to Consolidated Financial Statements

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**Sumo Logic, Inc.**

**Consolidated Statements of Operations** 

*(in thousands, except for per share data)*

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Revenue | $300668 | $242125 | $202637 |
| Cost of revenue | 97551 | 78308 | 56492 |
| Gross profit | 203117 | 163817 | 146145 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 104949 | 94652 | 70206 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 153383 | 131311 | 109190 |
| &nbsp;&nbsp;&nbsp;General and administrative | 71649 | 59129 | 44408 |
| Total operating expenses | 329981 | 285092 | 223804 |
| Loss from operations | (126864) | (121275) | (77659) |
| &nbsp;&nbsp;&nbsp;Interest and other income (expense), net | 5031 | 10 | (419) |
| &nbsp;&nbsp;&nbsp;Interest expense | (173) | (174) | (703) |
| Loss before provision for income taxes | (122006) | (121439) | (78781) |
| &nbsp;&nbsp;&nbsp;Provision (benefit) for income taxes | 2809 | 1926 | 1516 |
| Net loss | $(124815) | $(123365) | $(80297) |
| Net loss per share, basic and diluted | $(1.06) | $(1.13) | $(1.65) |
| Weighted-average shares used to compute net loss per share, basic and diluted | 117836 | 108695 | 48805 |

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See Notes to Consolidated Financial Statements

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**Sumo Logic, Inc.** 

**Consolidated Statements of Comprehensive Loss** 

*(in thousands)*

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Net loss | $(124815) | $(123365) | $(80297) |
| Other comprehensive (loss) income: |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | (1917) | (3402) | 168 |
| &nbsp;&nbsp;&nbsp;Unrealized loss on available-for-sale marketable securities | (308) | (886) |  |
| Total comprehensive loss | $(127040) | $(127653) | $(80129) |

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See Notes to Consolidated Financial Statements

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**Sumo Logic, Inc.** 

**Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)** 

*(in thousands)* 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Redeemable Convertible Preferred Stock** | **Redeemable Convertible Preferred Stock** | **Common Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive (Loss) Income** | **Accumulated Deficit** | **Total Stockholders' Equity (Deficit)** |
| | **Shares** | **Amount** | **Shares** | **Amount** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive (Loss) Income** | **Accumulated Deficit** | **Total Stockholders' Equity (Deficit)** |
| **Balance at January 31, 2020** | 63762 | $340167 | 18984 | $2 | $97131 | $(213) | $(317494) | $(220574) |
| Issuance of common stock upon initial public offering, net of underwriting discounts and issuance costs |  |  | 17020 | 2 | 342683 |  |  | 342685 |
| Conversion of convertible redeemable preferred stock to common stock upon initial public offering | (63762) | (340167) | 63762 | 6 | 340161 |  |  | 340167 |
| Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital upon initial public offering |  |  |  |  | 512 |  |  | 512 |
| Issuance of common stock upon exercise of stock options |  |  | 2462 |  | 7282 |  |  | 7282 |
| Vesting of early exercised stock options |  |  |  |  | 197 |  |  | 197 |
| Common stock issued in connection with acquisitions |  |  | 256 |  |  |  |  |  |
| Stock-based compensation |  |  |  |  | 41272 |  |  | 41272 |
| Foreign currency translation adjustments |  |  |  |  |  | 168 |  | 168 |
| Net loss |  |  |  |  |  |  | (80297) | (80297) |
| **Balance at January 31, 2021** |  | $— | 102484 | $10 | $829238 | $(45) | $(397791) | $431412 |
| Issuance of common stock upon exercise of stock options |  |  | 7088 | 1 | 22325 |  |  | 22326 |
| Exercise of common stock warrants |  |  | 18 |  |  |  |  |  |
| Vesting of restricted stock units |  |  | 2008 |  |  |  |  |  |
| Vesting of early exercised stock options |  |  |  |  | 197 |  |  | 197 |
| Issuance of common stock in connection with employee stock purchase plan |  |  | 541 |  | 7977 |  |  | 7977 |
| Common stock issued in connection with acquisitions |  |  | 1674 |  | 30499 |  |  | 30499 |
| Stock-based compensation |  |  |  |  | 54211 |  |  | 54211 |
| Other comprehensive loss |  |  |  |  |  | (4288) |  | (4288) |
| Net loss |  |  |  |  |  |  | (123365) | (123365) |
| **Balance at January 31, 2022** |  | $— | 113813 | $11 | $944447 | $(4333) | $(521156) | $418969 |
| Issuance of common stock upon exercise of stock options |  |  | 4316 | 1 | 14562 |  |  | 14563 |
| Vesting of restricted stock units |  |  | 3551 |  |  |  |  |  |
| Vesting of early exercised stock options |  |  |  |  | 33 |  |  | 33 |
| Issuance of common stock in connection with employee stock purchase plan |  |  | 736 |  | 4588 |  |  | 4588 |
| Cancellation of common stock held |  |  | (28) |  |  |  |  |  |
| Stock-based compensation |  |  |  |  | 63997 |  |  | 63997 |
| Other comprehensive loss |  |  |  |  |  | (2225) |  | (2225) |
| Net loss |  |  |  |  |  |  | (124815) | (124815) |
| **Balance at January 31, 2023** |  | $— | 122388 | $12 | $1027627 | $(6558) | $(645971) | $375110 |

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**Sumo Logic, Inc.** 

**Consolidated Statements of Cash Flows** 

*(in thousands)*

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| **Cash flows from operating activities** |  |  |  |
| Net loss | $(124815) | $(123365) | $(80297) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |
| &nbsp;&nbsp;Depreciation and amortization | 15564 | 14181 | 8298 |
| &nbsp;&nbsp;Amortization of deferred sales commissions | 20194 | 15847 | 11476 |
| &nbsp;&nbsp;Amortization (accretion) of marketable securities purchased at a premium (discount) | 740 | 3070 |  |
| &nbsp;&nbsp;Stock-based compensation, net of amounts capitalized | 63493 | 54146 | 40951 |
| &nbsp;&nbsp;Non-cash operating lease cost | 3953 | 4178 |  |
| &nbsp;&nbsp;Other | (502) | 474 | 635 |
| &nbsp;&nbsp;Changes in operating assets and liabilities, net of impact of acquisitions: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (8975) | (4194) | (17809) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 721 | 714 | (4199) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | (169) | 850 | (2574) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred sales commissions | (20764) | (24999) | (25771) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 9549 | 2825 | (1345) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 2233 | 1589 | 4121 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 14869 | 29458 | 18016 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (4410) | (4513) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 961 | (752) | 1319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (27358) | (30491) | (47179) |
| **Cash flows from investing activities** |  |  |  |
| Purchases of marketable securities | (265269) | (424724) |  |
| Maturities of marketable securities | 245701 | 102508 |  |
| Sales of marketable securities | 27855 | 41731 |  |
| Purchases of property and equipment | (386) | (2258) | (1138) |
| Capitalized internal-use software costs | (1630) | (182) | (1205) |
| Cash paid for acquisitions, net of cash and restricted cash acquired |  | (40340) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities | 6271 | (323265) | (2343) |
| **Cash flows from financing activities** |  |  |  |
| Proceeds from initial public offering, net of underwriting discounts |  |  | 349166 |
| Proceeds from borrowings |  |  | 24250 |
| Repayment of borrowings |  |  | (24250) |
| Payments of deferred offering costs |  | (93) | (4362) |
| Proceeds from employee stock purchase plan | 4588 | 7977 |  |
| Proceeds from exercise of common stock options | 14563 | 22326 | 7282 |
| Cash paid for holdback consideration in connection with acquisitions | (456) |  | (100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 18695 | 30210 | 351986 |
| Effect of exchange rate changes on cash and cash equivalents | (1098) | (608) | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in cash and cash equivalents and restricted cash | (3490) | (324154) | 302627 |
| Cash and cash equivalents and restricted cash: |  |  |  |
| Beginning of period | 80286 | 404440 | 101813 |
| End of period | $76796 | $80286 | $404440 |
| **Supplemental disclosures of cash flow information** |  |  |  |
| Cash paid for income taxes | $2431 | $933 | $1194 |
| Cash paid for interest | 87 | 84 | 733 |
| **Supplemental non-cash investing and financing information** |  |  |  |
| Conversion of redeemable convertible preferred stock to common stock | $— | $— | $340161 |
| Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital |  |  | 512 |
| Vesting of early exercised options | 33 | 197 | 197 |
| Common stock and assumed awards issued as consideration for acquisitions |  | 30499 |  |
| Unpaid cash consideration for acquisitions |  | 456 |  |
| Stock-based compensation capitalized as internal-use software costs | 504 | 65 | 321 |
| Deferred offering costs accrued but not yet paid |  |  | 99 |
| Property and equipment accrued but not yet paid |  | 4 | 15 |
| **Reconciliation of cash, cash equivalents, and restricted cash to consolidated balance sheets** |  |  |  |
| Cash and cash equivalents | $76496 | $79986 | $404140 |
| Restricted cash included in other current assets | 300 | 300 | 300 |
| Total cash, cash equivalents, and restricted cash | $76796 | $80286 | $404440 |

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**Sumo Logic, Inc.** 

**Notes to Consolidated Financial Statements**

**1. Description of Business and Basis of Presentation**

***Organization and Nature of Operations***

Sumo Logic, Inc. (the "Company") was incorporated in Delaware in March 2010. The Company provides, on a cloud-native software-as-a-service ("SaaS") delivery model, a software analytics platform for reliable and secure cloud-native applications to address the challenges and opportunities presented by digital transformation, modern applications, and cloud computing. The platform helps customers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructure.

***Basis of Presentation and Principles of Consolidation***

The Company's consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's consolidated financial statements and accompanying notes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

***Fiscal Year***

The Company's fiscal year ends on January 31. Unless otherwise stated, references to year in these consolidated financial statements relate to the above described fiscal year rather than calendar year.

***Initial Public Offering***

On September 21, 2020, the Company completed its initial public offering ("IPO"), in which it sold 14,800,000 shares of common stock at a public offering price $22.00 per share. On October 9, 2020, the Company sold an additional 2,220,000 shares of common stock at a public offering price of $22.00 per share pursuant to the exercise of the underwriters' option to purchase additional shares. The Company received net proceeds of $342.7 million, after deducting underwriters' discounts and commissions and offering costs of $31.8 million. Immediately prior to the IPO, all shares of outstanding redeemable convertible preferred stock were converted into 63,761,950 shares of common stock on a one-to-one basis. Redeemable convertible preferred stock warrants also converted into 32,276 warrants to purchase common stock on a one-to-one basis.

Prior to the IPO, all deferred offering costs were capitalized in other assets on the consolidated balance sheets. Deferred offering costs of $6.5 million, primarily consisting of accounting, legal, and other fees related to the Company's IPO, were offset against the IPO proceeds upon the closing of the Company's IPO in September of 2020.

**2. Summary of Significant Accounting Policies**

***Segment Information***

The Company operates as one operating and reportable segment. The Company's chief operating decision maker is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

***Use of Estimates and Judgments***

The preparation of the Company's consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements and may involve subjective or significant judgment by the Company; therefore, actual results could differ from the Company's estimates. The Company's accounting policies that involve judgment include revenue recognition, period of benefit for deferred sales commissions, useful lives of acquired intangible assets and property and equipment, stock-based compensation expense including the assumptions used for estimating the fair value of common stock (prior to the closing of the IPO), capitalization of internal-use software costs, fair value of assets acquired and liabilities assumed from business combinations, incremental borrowing rate for operating leases, estimate of credit losses for accounts receivable and marketable securities, and valuation allowances associated with income taxes.

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*Macroeconomic Conditions and COVID-19*

The uncertain macroeconomic environment and the ongoing COVID-19 pandemic have had and may continue to have an adverse effect on the Company's corporate spending, operating margins, expenses, and cashflows. The Company has experienced and may continue to experience customer requests for concessions such as extended payment terms or better pricing and customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. These conditions may continue to impact the Company's financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company's assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company's financial statements.

Since March 2020, the Company has continued to support many of their employees and contractors in working remotely and have reduced business travel. The Company has exited and may continue to exit office leases. During the second quarter of fiscal 2023, the Company exercised the option to early terminate one of its office leases, resulting in the related right-of-use asset balance being written off with no corresponding lease liability remaining on the consolidated balance sheet as of January 31, 2023. The action resulted in a $0.1 million gain recognized in interest and other income (loss), net for the year ended January 31, 2023.

In May 2020, as part of the Company's efforts to respond to the COVID-19 pandemic and ensure longer-term financial stability, the Company initiated cost reduction measures, including a headcount reduction. The headcount reduction resulted in $1.2 million of severance and benefits expense and $0.1 million in stock-based compensation expense for the year ended January 31, 2021.

***Revenue Recognition***

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company determines revenue recognition through the following steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*1. Identification of the contract, or contracts, with the customer* 

The Company considers the terms and conditions of the contract and its customary business practices in identifying contracts under ASC 606. The Company determines it has a contract with a customer when the contract is fully approved by both parties, it can identify each party's rights regarding the services to be transferred, it can identify the payment terms for the services, and it has determined the customer has the ability and intent to pay and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer's ability and intent to pay, which is based on a variety of factors, including the customer's historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2. Identification of the performance obligations in the contract* 

Performance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or the Company, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. The Company's performance obligations consist of subscription and support services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*3. Determination of the transaction price* 

The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in the Company's judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company's policy is to exclude sales and other indirect taxes when measuring the transaction price. None of the Company's contracts contain a significant financing component.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*4. Allocation of the transaction price to the performance obligation in the contract* 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance

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obligation based on a relative standalone selling price ("SSP"). The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers, its discounting practices, and the Company's overall pricing objectives, while maximizing observable inputs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*5. Recognition of the revenue when, or as, the Company satisfies a performance obligation* 

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company generates all its revenue from contracts with customers.

The Company generates revenue from subscriptions and support services to customers that enable them to access the Company's cloud-based platform. Subscription arrangements with customers do not provide the customer with the right to take possession of the Company's software at any time. Instead, customers are granted continuous access to the platform over the contractual period. A time-elapsed method is used to measure progress as control is transferred evenly over the contractual period. Accordingly, the fixed consideration related to subscription fees is generally recognized on a straight-line basis over the contract term, commencing on the date the service is made available to the customer and all other revenue recognition criteria have been met.

The typical subscription term is one to three years. Most of the contracts are non-cancelable over the contractual term. Customers typically have the right to terminate their contracts for cause if the Company fails to perform in accordance with the contractual terms. Some arrangements contain options to purchase additional subscription services at a stated price and are evaluated on a case-by-case basis but generally do not provide a material right as they are priced at or above the Company's SSP and would not result in a separate performance obligation.

The Company allocates revenue to each performance obligation based on its relative standalone selling price and generally determines standalone selling prices based on a range of actual prices charged to customers.

***Accounts Receivable, Net and Contract Assets***

Accounts receivable are recorded at the invoiced amount, net of allowance for credit losses. The allowance is based upon historical loss patterns, the age of each past due invoice, and expectations of forward-looking loss estimates to determine whether the allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. The Company performs ongoing credit evaluations of its customers. There was $0.4 million and $0.3 million recorded as an allowance for doubtful accounts for the Company's accounts receivables as of January 31, 2023 and January 31, 2022, respectively.

As of January 31, 2023 and 2022, no customer accounted for 10% or more of total accounts receivable.

Unbilled receivables are recorded when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is unconditional when only passage of time is required before payment of that consideration is due. Unbilled receivables totaled $3.1 million and $1.9 million as of January 31, 2023 and 2022, respectively, and were recorded within accounts receivable, net on the consolidated balance sheets.

Contract assets are recorded when revenue recognized on a contract exceeds the billings to date for that contract and the right to consideration is conditional. There were no contract assets on the consolidated balance sheet as of January 31, 2023 and 2022, respectively.

***Deferred Revenue***

Deferred revenue consists of non-cancelable customer billings, or payments received in advance of revenue recognition. The Company generally invoices its customers in monthly, quarterly, or annual installments. Accordingly, the deferred revenue balance generally does not represent the total contract value of annual or multi-year, non-cancelable subscription arrangements. Deferred revenue that will be recognized within the next twelve months is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent.

***Deferred Sales Commissions***

The Company capitalizes certain sales commissions, including related payroll taxes, earned by the Company's sales force, which are considered to be incremental costs that would not be incurred absent the contract, and recoverable costs of acquiring a contract with a customer.

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Commissions earned on the initial acquisition of a contract are amortized over a period of benefit of five years on a straight-line basis. The period of benefit is estimated by considering factors such as the expected life of the Company's subscription contracts, historical customer attrition rates, technological life of the Company's platform, the impact of competition in its industry, as well as other factors. Commissions for renewals are considered not commensurate with the commission paid for the acquisition of the initial contract and are therefore amortized over the contractual term of the contract, consistent with the pattern of revenue recognition for each performance obligation. The Company capitalized $20.8 million and $25.0 million in sales commissions for the years ended January 31, 2023 and 2022, respectively. Amortized costs are included in sales and marketing expense in the accompanying consolidated statements of operations and were $20.2 million, $15.8 million, and $11.5 million for the years ended January 31, 2023, 2022, and 2021, respectively. There was no impairment loss in relation to deferred sales commissions for the years ended January 31, 2023, 2022, or 2021. Sales commissions that will be amortized within the next twelve months are included in deferred sales commissions, current, on the consolidated balance sheets. Any sales commissions that will be amortized in any period subsequent to the next twelve months are included in deferred sales commissions, noncurrent, on the consolidated balance sheets.

***Concentrations of Risk***

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. Although the Company deposits its cash with high-quality credit rated financial institutions, the deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Cash equivalents consist of money market funds and highly liquid investments that mature in three months or less at the date of purchase which are invested through financial institutions in the United States. Management believes that the institutions are financially stable and, accordingly, minimal credit risk exists.

***Foreign Currency Transactions***

The functional currency of the Company's foreign subsidiaries is the respective local currency. All asset and liability accounts of the Company's foreign subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are recorded as a separate component on the consolidated statements of comprehensive loss. Equity transactions are translated using historical exchange rates. Expenses are translated using the average exchange rate during the year. Foreign currency transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of the recording entity are included in interest and other income (expense), net in the Company's consolidated statements of operations. The Company incurred $0.2 million, $(0.4) million, and $(0.4) million in foreign currency transaction gains (losses) for the years ended January 31, 2023, 2022, and 2021, respectively.

***Cash and Cash Equivalents***

The Company's cash and cash equivalents consist primarily of cash deposits, money market funds, and highly liquid investments that mature in three months or less at the date of purchase.

***Marketable Securities***

Marketable securities consist of U.S. treasury securities, corporate debt securities, commercial paper, foreign government obligations, supranational securities, certificates of deposits, and U.S. government agency securities. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. Interest receivable on these securities is presented in other current assets on the consolidated balance sheets. All marketable securities are recorded at their estimated fair values. When the fair value of a marketable security declines below its amortized cost basis, the carrying value of the security will be reduced to its fair value if it is more likely than not that management is required to sell the impaired security before recovery of its amortized basis, or management has the intention to sell the security. If neither of these conditions are met, the Company determines whether any portion of the decline is due to credit losses. Any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in the Company's consolidated statement of operations. When the fair value of the security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in accumulated other comprehensive (loss) income and are recognized in the Company's consolidated statement of operations only if the Company sells or intends to sell the security before recovery of its cost basis. Realized gains and losses are determined based on the specific identification method and are reported in interest and other income (expense), net in the Company's consolidated statements of operations.

***Property and Equipment, Net***

Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Management evaluates the useful lives of these assets on an annual basis and

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tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Land is not depreciated. Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization are removed from the Company's consolidated balance sheet and the resulting gain or loss is reflected in the Company's consolidated statement of operations.

The following table presents the estimated useful lives of the Company's property and equipment:

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| | |
|:---|:---|
| | &nbsp;&nbsp;&nbsp;**Useful Life** |
| Computer and hardware equipment | 3 years |
| Furniture and fixtures | 5 years |
| Leasehold improvements | Shorter of lease term or estimated useful life |
| Capitalized internal-use software | 3 years |
| Building | 10 - 22 years |

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***Leases***

The Company enters into operating lease arrangements for real estate assets related to office space. The Company determines if an arrangement is or contains a lease at commencement by evaluating various factors, including whether a vendor's right to substitute an identified asset is substantive. Lease classification is determined at the lease commencement date, which is the date the leased assets are made available for use. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current, and operating lease liabilities, noncurrent in the consolidated balance sheets. The Company did not have any financing leases in any of the periods presented.

Operating lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement allowances. The Company elected the practical expedient which allows the Company to not allocate consideration between lease and non-lease components. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of right-to-use assets and lease liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs. The interest rate implicit in its operating leases is not readily determinable, and therefore an incremental borrowing rate ("IBR") is estimated to determine the present value of future payments. The estimated IBR factors in a hypothetical interest rate on a collateralized basis with similar terms, payments, and economic environments. Lease expenses are recognized on a straight-line basis over the lease term.

The Company generally uses the non-cancelable lease term when recognizing the right-of-use assets and lease liabilities, unless it is reasonably certain that a renewal or termination option will be exercised. The Company accounts for lease components and non-lease components as a single lease component.

Leases with a term of 12 months or less are not recognized on the consolidated balance sheets but are recognized as expense on a straight-line basis over the term of the lease.

***Capitalized Internal-Use Software Costs***

The Company capitalizes certain costs related to its enterprise cloud computing services and certain projects for internal use incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life.

The Company capitalized $2.1 million and $0.2 million of internal-use software costs during the years ended January 31, 2023 and 2022, respectively. Amortization of internal-use software costs included in cost of revenue in the consolidated statements of operations was $0.6 million, $0.7 million, and $0.7 million for the years ended January 31, 2023, 2022, and 2021, respectively. As of January 31, 2023 and 2022, the Company included capitalized internal-use software costs of $2.8 million and $1.2 million within property and equipment, net, respectively.

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to capitalized internal-use software costs during the years ended January 31, 2023, 2022, or 2021.

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***Goodwill and Other Acquired Intangible Assets***

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in connection with business combinations accounted for using the acquisition method of accounting. The Company has one reporting unit and performs such testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. These triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows. The Company's test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. If the Company determines, based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, then a quantitative goodwill impairment test is required. There was no impairment of goodwill recorded for the years ended January 31, 2023, 2022, or 2021.

Intangible assets consist of identifiable intangible assets, primarily developed technology and customer relationships, resulting from the Company's acquisitions. Acquired intangible assets are recorded at cost, net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization costs are included in cost of revenue within the consolidated statements of operations. Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. There was no impairment of intangible assets recorded for the years ended January 31, 2023, 2022, or 2021.

***Business Combinations***

The Company accounts for its acquisitions using the acquisition method of accounting. The Company allocates the fair value of purchase consideration to the tangible and intangible assets acquired, and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain identifiable assets include, but are not limited to, reproduction costs, expected long-term market growth, future expected operating expenses, cost build-up to support obligations, and appropriate discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition costs, such as legal and consulting fees, are expensed as incurred. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations. See Note 5 for additional information regarding the Company's acquisitions.

***Cost of Revenue***

Cost of revenue includes all direct costs to deliver and support the Company's platform, including personnel and related costs, third-party cloud infrastructure costs for hosting the Company's cloud platform, amortization of internal-use software and acquired developed technology, as well as allocated facilities and IT costs. These costs are expensed as incurred.

***Research and Development Expense***

The Company's costs related to research, design, maintenance, and minor enhancements of the Company's platform are expensed as incurred. These costs consist primarily of personnel and related expenses, including allocated overhead costs, contractor and consulting fees related to the design, development, testing, and enhancements of the Company's platform, and software, hardware, and cloud infrastructure fees for staging and development related to research and development activities necessary to support growth in the Company's employee base and in the adoption of its platform.

***Advertising and Promotion Costs***

Costs related to advertising and promotions of the Company's service offerings are charged to sales and marketing expense as incurred. The Company incurred $8.9 million, $6.5 million, and $7.2 million in advertising and promotion expenses for the years ended January 31, 2023, 2022, and 2021, respectively.

***Stock-Based Compensation***

The Company measures and recognizes compensation expense for all stock-based payment awards granted to employees, directors, and non-employees based on the estimated fair values on the date of the grant. The fair value of options granted and purchase rights granted under the Employee Stock Purchase Plan ("ESPP") is estimated on the grant date using the Black-Scholes

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option pricing model. The fair value of Restricted Stock Units ("RSUs") is estimated on the date of grant based on the fair value of the Company's underlying common stock. Prior to the Company's IPO, the fair value of the Company's common stock for financial reporting purposes was determined considering objective and subjective factors, including valuations from third-party valuation experts, and required judgment to determine the fair value of common stock for financial reporting purposes as of the date of each equity grant or modification.

The Company recognizes stock-based compensation expense for service-based awards and its ESPP purchase rights on a straight-line basis over the service period, net of actual forfeitures. The Company also has certain options and RSUs that have performance-based vesting conditions; stock-based compensation expense for such awards is recognized using an accelerated attribution method from the time the vesting condition is probable through the time the vesting condition has been achieved.

Prior to the Company's IPO, the Company recognized stock-based compensation expense for RSUs on an accelerated attribution method as the RSUs were subject to service-based and performance-based vesting conditions, which included a liquidity event condition, and in certain cases, the achievement of certain other performance metrics. None of the RSUs would vest unless the liquidity event condition was satisfied. Upon the completion of the IPO, the liquidity event condition was considered probable and the Company recognized cumulative stock-based compensation expense using the accelerated attribution method related to RSUs that had vested as of the IPO. The remaining unrecognized stock-based compensation expense related to the RSUs will be recognized over the remaining requisite service period. All RSUs granted after the IPO, under the 2020 Equity Incentive Plan (the "2020 Plan") will not be subject to a liquidity event condition and will generally be recognized on a straight-line basis over the service period.

***Income Taxes***

The Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or income tax returns.

The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision (benefit) for income taxes.

The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. The Company provides for tax contingencies whenever it is deemed more likely than not that a tax asset has been impaired, or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, applicable tax law, and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) a determination is made as to whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.

***Other Comprehensive Loss (Income)***

Other comprehensive (loss) income includes amounts recorded in equity that are not the result of transactions with stockholders. The changes in other comprehensive (loss) income are a result of translation gains and losses for the Company's foreign subsidiaries assets, liabilities, revenue, and expenses and unrealized gains (losses) on available-for-sale marketable securities. The Company recorded other comprehensive (loss) income of $(2.2) million, $(4.3) million, and $0.2 million for the years ended January 31, 2023, 2022, and 2021, respectively.

***Net Loss per Share***

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, less any shares subject to repurchase. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock. The Company also considers the shares issued upon the early

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exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. In addition, shares that are contingently issuable are excluded from the computation of basic earnings per share. Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

***Related Party Transactions***

Certain members of the Company's board of directors serve as directors of, or are executive officers of, and in some cases are investors in, companies that are customers or vendors of the Company. The Company received cash payments of $1.5 million from a related party for the year ended January 31, 2021. Related party transactions were not material for the years ended January 31, 2023 or 2022.

***Recently Adopted Accounting Pronouncements***

The Company assesses the adoption impacts of recently issued accounting pronouncements by the Financial Accounting Standards Board ("FASB") on its consolidated financial statements. The sections below describe impacts from newly adopted pronouncements.

In October 2021, the FASB issued ASU 2021-08, *Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers*, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if it had originated the contracts. The adoption of the standard will impact future business combinations. The Company has elected to early adopt this guidance as of February 1, 2022. The adoption of this guidance did not have an impact on the Company's consolidated financial statements for the year ended January 31, 2023 as no business combination activities occurred during this period.

**3. Fair Value Measurements** 

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument's classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:

Level 1&nbsp;&nbsp;&nbsp;&nbsp;Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2&nbsp;&nbsp;&nbsp;&nbsp;Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3&nbsp;&nbsp;&nbsp;&nbsp;Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The carrying amounts of the Company's financial instruments, which include cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity of those instruments.

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The following tables present the fair value of the Company's financial assets measured at fair value on a recurring basis, based on the three-tier fair value hierarchy (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;Money market funds | $62570 | $— | $— | $62570 |
| Marketable securities: |  |  |  |  |
| &nbsp;&nbsp;U.S. treasury securities |  | 49023 |  | 49023 |
| &nbsp;&nbsp;Corporate debt securities |  | 134771 |  | 134771 |
| &nbsp;&nbsp;Commercial paper |  | 48246 |  | 48246 |
| &nbsp;&nbsp;Foreign government obligations |  | 1394 |  | 1394 |
| &nbsp;&nbsp;Certificates of deposit |  | 7901 |  | 7901 |
| &nbsp;&nbsp;U.S. government agency securities |  | 25521 |  | 25521 |
| Total financial assets | $62570 | $266856 | $— | $329426 |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;Money market funds | $70742 | $— | $— | $70742 |
| Marketable securities: |  |  |  |  |
| &nbsp;&nbsp;U.S. treasury securities |  | 67476 |  | 67476 |
| &nbsp;&nbsp;Corporate debt securities |  | 167160 |  | 167160 |
| &nbsp;&nbsp;Commercial paper |  | 19033 |  | 19033 |
| &nbsp;&nbsp;Foreign government obligations |  | 7607 |  | 7607 |
| &nbsp;&nbsp;Supranational securities |  | 12922 |  | 12922 |
| &nbsp;&nbsp;Certificates of deposit |  | 2313 |  | 2313 |
| Total financial assets | $70742 | $276511 | $— | $347253 |

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The Company had $0.3 million of restricted cash invested in money market funds that is not included in the tables above as of January 31, 2023 and 2022, respectively.

In connection with the Loan and Security agreement, discussed in Note 7, the Company issued 32,276 warrants to purchase shares of the Company's redeemable convertible preferred stock. The Company used a Black-Scholes option valuation model to value its redeemable convertible preferred stock warrant liability at inception and on subsequent valuation dates. Changes in the fair values of the redeemable convertible preferred stock warrant liability were recorded as interest and other income (expense), net in the Company's consolidated statements of operations. All 32,276 warrants to purchase shares of redeemable convertible preferred stock converted into warrants to purchase common stock upon the closing of the Company's IPO and the related liability was reclassified to additional paid-in capital in the Company's consolidated balance sheet. During the year ended January 31, 2023, no warrants were exercised. During the year ended January 31, 2022, 21,746 warrants were exercised. There were no transfers between levels of the fair value hierarchy during the years ended January 31, 2023 and 2022, respectively.

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The following is a summary of available-for sale marketable securities, excluding those securities classified within cash and cash equivalents on the consolidated balance sheet as of January 31, 2023 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** |
| | **Amortized Cost** | **Unrealized Gain** | **Unrealized Loss** | **Fair Value** |
| U.S. treasury securities | $49378 | $2 | $(357) | $49023 |
| Corporate debt securities | 135552 | 40 | (821) | 134771 |
| Commercial paper | 48277 | 9 | (40) | 48246 |
| Foreign government obligations | 1408 |  | (14) | 1394 |
| Certificates of deposit | 7924 | 2 | (25) | 7901 |
| U.S. government agency securities | 25512 | 11 | (2) | 25521 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total marketable securities | $268051 | $64 | $(1259) | $266856 |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** |
| | **Amortized Cost** | **Unrealized Gain** | **Unrealized Loss** | **Fair Value** |
| U.S. treasury securities | $67770 | $— | $(294) | $67476 |
| Corporate debt securities | 167693 | 3 | (536) | 167160 |
| Commercial paper | 19052 |  | (19) | 19033 |
| Foreign government obligations | 7640 |  | (33) | 7607 |
| Supranational securities | 12923 |  | (1) | 12922 |
| Certificates of deposit | 2319 |  | (6) | 2313 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total marketable securities | $277397 | $3 | $(889) | $276511 |

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The Company does not believe that any unrealized losses are attributable to credit-related factors based on its evaluation of available evidence. To determine whether a decline in value is related to credit loss, the Company evaluates, among other factors: the extent to which the fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, and any adverse conditions specifically related to an issuer of a security or its industry. No impairment loss has been recorded on the securities included in the table above, as the Company believes that the decrease in fair value of these securities is temporary.

The following table presents the contractual maturities of the Company's marketable securities (in thousands):

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| | |
|:---|:---|
| | **January 31,<br>2023** |
| Due in one year or less | $225643 |
| Due after one year and within five years | 41213 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total marketable securities | $266856 |

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**4. Balance Sheet Components** 

***Property and Equipment, Net***

Property and equipment, net, consisted of the following (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| Computer and hardware equipment | $3556 | $3406 |
| Furniture and fixtures | 2047 | 2016 |
| Leasehold improvements | 2891 | 3004 |
| Capitalized internal-use software | 4111 | 3633 |
| Building | 301 | 311 |
| Land | 85 | 87 |
| &nbsp;&nbsp;&nbsp;Gross property and equipment<sup>(a)</sup> | 12991 | 12457 |
| Accumulated depreciation and amortization | (8139) | (7497) |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | $4852 | $4960 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Gross property and equipment includes construction-in-progress of $0.1 million that had not yet been placed in service as of January 31, 2022. The costs associated with construction-in-progress are not amortized until placed in service.

Depreciation and amortization expense of property and equipment was $2.6 million, $2.0 million, and $1.5 million for the years ended January 31, 2023, 2022, and 2021, respectively.

The following table presents the Company's long-lived assets by geographic region for the periods indicated (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| United States | $4237 | $4133 |
| International | 615 | 827 |
| &nbsp;&nbsp;&nbsp;Total long-lived assets | $4852 | $4960 |

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***Accrued Expenses and Other Current Liabilities***

Accrued expenses and other current liabilities consisted of the following (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| Accrued compensation | $8079 | $10771 |
| Accrued sales commissions | 3645 | 5624 |
| Accrued taxes | 1044 | 2022 |
| Accrued professional services | 8428 | 851 |
| Accrued other expenses | 5597 | 6157 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | $26793 | $25425 |

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**5. Acquisitions, Intangible Assets, and Goodwill**

***Fiscal 2022 Acquisitions***

*Sensu, Inc.*

On June 10, 2021, the Company completed the acquisition of Sensu, Inc. ("Sensu") a privately-held software company that is a leader in open source monitoring. The addition of Sensu is expected to accelerate the Company's observability strategy by providing customers with an affordable and scalable end-to-end solution for infrastructure and application monitoring.

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The aggregate amount recorded as purchase consideration was $32.7 million, of which $8.6 million was paid or to be paid in cash, and $24.1 million was comprised of 1,123,697 shares of the Company's common stock. The value of consideration assigned to such shares of common stock was based on the closing price of the Company's common stock on the date of acquisition, or $21.49 per share.

Additionally, 71,644 shares of common stock were issued with a fair value of $21.49 per share at the time of grant and will be recorded as stock-based compensation expense. These shares are subject to risk of forfeiture which lapse in full 1.5 years after the acquisition date. The Company recorded stock-based compensation expense related to the vesting of the restricted common stock of $0.3 million and $0.7 million during the year ended January 31, 2023 and 2022, respectively. As of January 31, 2023, stock-based compensation on these awards has been fully recognized.

A portion of the consideration otherwise payable was held back by the Company as partial security for certain indemnification obligations to be released 12 months after the acquisition date, subject to reduction for any indemnification claims. The $0.5 million of consideration held back was released during the second quarter of fiscal 2023.

Certain stock options held by Sensu employees were assumed by the Company with a total fair value of $0.6 million and will be recognized as stock-based compensation expense over the remaining service period. See Note 10 for more details on the Sensu options assumed.

The acquisition was accounted for as a business combination and the total purchase consideration was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill.

The following table presents the purchase consideration allocation recorded in the Company's consolidated balance sheet as of the acquisition date (in thousands):

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| | |
|:---|:---|
| | **Amount** |
| Cash and cash equivalents | $2270 |
| Accounts receivable | 409 |
| Other current assets | 50 |
| Acquired intangible assets | 11800 |
| Goodwill | 19889 |
| Accounts payable | (49) |
| Deferred revenue, current | (658) |
| Accrued expenses and other current liabilities | (143) |
| Deferred revenue, noncurrent | (99) |
| Other liabilities | (747) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total acquisition consideration | $32722 |

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The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):

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| | | |
|:---|:---|:---|
| | **Total** | **Useful Life<br>(in years)** |
| Developed technology | $8800 | 3 |
| Customer relationships | 3000 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | $11800 |  |

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Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce and synergies expected to be achieved from the integration of Sensu. In addition, goodwill represents the future benefits as a result of the acquisition that management expects to enhance the Company's product available to both new and existing customers and increase the Company's market position. Goodwill is not deductible for tax purposes.

The results of operations of Sensu from the date of acquisition have been included in the Company's consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of Sensu are not material to the Company's consolidated financial statements in any period presented.

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*DF Labs S.p.A.*

On May 24, 2021, the Company completed the acquisition of DF Labs S.p.A. ("DFLabs"), a privately-held Italian corporation and a leader in security orchestration, automation and response ("SOAR") technology. The combination of the Company's Cloud SIEM and DFLabs' solution will provide customers with comprehensive cloud-native security intelligence solutions.

The aggregate amount recorded as purchase consideration was $41.7 million, of which $35.3 million was paid in cash, and $6.4 million was comprised of 334,815 shares of the Company's common stock. The value of consideration assigned to such shares of common stock was based on the closing price of the Company's common stock on the date of acquisition, or $18.97 per share.

Additionally, 143,492 shares of common stock were issued with a fair value of $18.97 per share at the time of grant and will be recorded as stock-based compensation. These shares are subject to risk of forfeiture, which lapse in full 2.0 years after the acquisition date. The Company recorded stock-based compensation expense related to the vesting of the restricted common stock of $1.4 million and $0.9 million during the year ended January 31, 2023 and 2022, respectively. As of January 31, 2023, the remaining unrecognized stock-based compensation expense was $0.4 million and will be recognized over the remaining vesting period.

A portion of the consideration otherwise payable was placed into escrow as partial security for certain indemnification obligations to be released 12 months after the acquisition date, subject to reduction for any indemnification claims. The consideration placed in escrow was released during the third quarter of fiscal 2023.

The acquisition was accounted for as a business combination and the total purchase consideration was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill.

The following table presents the purchase consideration allocation recorded in the Company's consolidated balance sheet as of the acquisition date (in thousands):

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| | |
|:---|:---|
| | **Amount** |
| Cash and cash equivalents | $782 |
| Accounts receivable | 430 |
| Other current assets | 111 |
| Property and equipment | 435 |
| Acquired intangible assets | 17200 |
| Goodwill | 26623 |
| Other assets | 178 |
| Accounts payable | (262) |
| Deferred revenue, current | (340) |
| Accrued expenses and other current liabilities | (788) |
| Deferred revenue, noncurrent | (38) |
| Other liabilities | (2654) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total acquisition consideration | $41677 |

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Acquired intangible assets consist of developed technology with an estimated useful life of 3 years.

Goodwill represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce of DFLabs and synergies expected to be achieved from the integration of DFLabs. In addition, goodwill represents the future benefits as a result of the acquisition that management expects to enhance the Company's product available to both new and existing customers and increase the Company's market position. Goodwill is not deductible for tax purposes.

The results of operations of DFLabs from the date of acquisition have been included in the Company's consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of DFLabs are not material to the Company's consolidated financial statements in any period presented.

***Acquisition-Related Expenses***

The Company incurred acquisition-related expenses primarily for professional services of $3.8 million during the year ended January 31, 2022, which were recorded as general and administrative expenses in the consolidated statement of operations.

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***Acquired Intangible Assets***

Acquired intangible assets, net consisted of the following (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** |
| | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** | **Weighted Average Remaining Useful Life <br>(in years)** |
| Developed technology | $43163 | $(32471) | $10692 | 1.4 |
| Customer relationships | 3000 | (983) | 2017 | 3.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $46163 | $(33454) | $12709 |  |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** | **January 31, 2022** |
| | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** | **Weighted Average Remaining Useful Life <br>(in years)** |
| Developed technology | $43650 | $(20046) | $23604 | 2.1 |
| Customer relationships | $3000 | $(383) | $2617 | 4.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $46650 | $(20429) | $26221 |  |

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The Company recorded $13.0 million, $12.1 million, and $6.8 million of amortization expense during the years ended January 31, 2023, 2022, and 2021, respectively. There was no impairment of intangible assets recorded for the years ended January 31, 2023, 2022, and 2021, respectively. Fully amortized intangible assets were written off in the amount of $1.0 million during the year ended January 31, 2022.

As of January 31, 2023, future amortization expense related to acquired intangible assets was as follows (in thousands):

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| | |
|:---|:---|
| | **Amortization Expense** |
| 2024 | $8626 |
| 2025 | 3266 |
| 2026 | 600 |
| 2027 | 217 |
| &nbsp;&nbsp;&nbsp;Total amortization expense | $12709 |

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As of January 31, 2022, future amortization expense related to acquired intangible assets was as follows (in thousands):

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| | |
|:---|:---|
| | **Amortization Expense** |
| 2023 | $13298 |
| 2024 | 8789 |
| 2025 | 3317 |
| 2026 | 600 |
| 2027 | 217 |
| &nbsp;&nbsp;&nbsp;Total amortization expense | $26221 |

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***Goodwill***

Changes in the carrying amount of goodwill for the year ended January 31, 2023 was as follows (in thousands):

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| | |
|:---|:---|
| | **Amounts** |
| Balance as of January 31, 2022 | $94967 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation | (754) |
| Balance as of January 31, 2023 | $94213 |

---

There was no impairment of goodwill recorded for the years ended January 31, 2023, 2022, or 2021.

**6. Leases**

The Company leases office space globally under non-cancelable operating lease agreements that expire at various dates through fiscal 2025. The leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases include (i) renewal options at the election of the Company to renew or extend the lease for an additional 5 years, and/or (ii) options to terminate the lease early, subject to certain termination penalties and fees. These optional renewal and terminations periods have not been considered in the determination of the right-of-use assets and lease liabilities associated with these leases, as the Company did not consider it reasonably certain it would exercise the options. During the second quarter of fiscal 2023, the Company exercised the option to early terminate one of its office leases, resulting in the related right-of-use asset balance being written off with no corresponding lease liability remaining on the Company's balance sheet. This action resulted in a $0.1 million gain recognized in interest and other income (expense), net in the Company's consolidated statements of operations during the year ended January 31, 2023.

In January 2023, the Company entered into a Sublease Agreement ("Sublease") with respect to the Company's new corporate headquarters office space located in Redwood City, California. The term of the sublease is February 2023 through May 2027 and is for approximately 24,000 square feet. Under the Sublease, the Company is obligated to pay fixed monthly rent over the term totaling approximately $10.6 million. The Sublease will be recorded as an operating lease liability in the Company's consolidated balance sheet in the first quarter of fiscal 2024.

The Company evaluated its contracts and determined each of its identified leases are classified as operating leases. The Company has no lease agreements that are classified as finance leases as of January 31, 2023.

The following table presents the components of operating lease expense (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| Operating lease expense | $4093 | $4467 |
| Variable lease expense | 480 | 496 |
| Short-term lease expense | 397 | 81 |
| Sublease income | (263) | (217) |

---

As of January 31, 2023, the weighted average remaining lease term was 0.6 years and the weighted average discount rate used to determine the net present value of the lease liability was 3.0%.

Rent expense under the previous lease accounting standard (ASC 840) was $3.3 million for the year ended January 31, 2021.

Supplemental cash flow information and non-cash activity related to the Company's operating leases were as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| Cash paid for amounts included in the measurement of lease liabilities | $4534 | $4785 |

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As of January 31, 2023, remaining maturities of lease liabilities are as follows (in thousands):

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| | |
|:---|:---|
| | **Amount** |
| 2024 | $1658 |
| 2025 | 22 |
| Total lease payments | $1680 |
| Less: imputed interest | (17) |
| Present value of lease liabilities | $1663 |

---

**7. Debt** 

In February 2021, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank ("SVB Agreement") which provides for a revolving line of credit facility. The SVB Agreement amends and restates the Loan and Security Agreement dated January 31, 2016. Under the SVB Agreement, the Company can borrow up to $50 million. Interest on any drawdown accrues at the prime rate minus a spread rate ranging from 0.25% to 0.75%, as determined by the Company's adjusted quick ratio, subject to either a 3.00% or 2.50% floor depending on the adjusted quick ratio. The SVB Agreement is secured by substantially all of the Company's assets and includes restrictive covenants, in each case subject to certain exceptions, that limit the Company's ability to, among other things: incur debt, grant liens, make acquisitions, undergo a change in control, make investments, make certain dividends or distributions, repurchase or redeem stock, dispose of or transfer assets, and enter into transactions with affiliates. Pursuant to the SVB Agreement, the Company is required to maintain a minimum adjusted quick ratio of 1.25 to 1.00. The SVB Agreement also contains customary events of default, upon which Silicon Valley Bank may declare all or a portion of the Company's outstanding obligations payable to be immediately due and payable.

During the year ended January 31, 2021, the Company borrowed $24.3 million under its revolving line of credit facility with Silicon Valley Bank and repaid the outstanding balance under this facility during the third quarter of its fiscal 2021. The Company did not have any debt outstanding under this facility as of January 31, 2023 and 2022, respectively. The Company was in compliance with the financial covenants associated with the SVB Agreement as of January 31, 2023.

**8. Commitments and Contingencies** 

***Non-Cancellable Purchase Commitments***

As of January 31, 2023, the Company had future minimum commitments for hosting and other non-cancelable obligations as follows (in thousands):

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| | |
|:---|:---|
| | **Minimum<br>Annual<br>Commitments** |
| Fiscal 2024 | $71370 |
| Fiscal 2025 | 1370 |
| &nbsp;&nbsp;&nbsp;Total future minimum commitments | $72740 |

---

***Other Obligations***

*Indemnifications* 

In the ordinary course of business, the Company includes standard indemnification provisions in most of its SaaS revenue arrangements with its customers. Pursuant to these provisions, the Company indemnifies these parties for losses suffered or incurred in connection with its service, breach of representations or covenants, intellectual property infringement, or other claims made against certain parties. These provisions may limit the time within which an indemnification claim can be made but are generally perpetual any time after execution of the agreement. The maximum amount of potential future indemnification is generally unlimited. It is not possible to estimate the maximum potential amount under these indemnification agreements due to limited history of prior indemnification claims and the unique facts and circumstances involved in each agreement, and the Company does not believe a loss contingency is probable. The Company has not incurred significant expense defending its licensees against third-party claims, nor has it ever incurred significant expense under its standard service warranties. Accordingly, the Company has no liabilities recorded for potential claims under these agreements as of January 31, 2023 or 2022.

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The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person's service as a director or officer, including any action by the Company, arising out of that person's services as the Company's director or officer or that person's services provided to any other company or enterprise at the Company's request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. No liabilities have been recorded associated with these indemnification provisions as of January 31, 2023 or 2022.

*Litigation and Other Matters* 

From time to time, the Company may be a party to various legal matters, threatened claims, or proceedings in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable.

Attorneys representing a purported class of current and former employees in various sales roles alleged potential claims of employee misclassification and related federal and state law claims, which the Company disputed. In response, the Company mediated the dispute, and in August 2020, the Company entered into a settlement agreement with the purported class counsel to resolve the dispute, which was handled in arbitration and resulted in the Company paying $4.5 million to resolve the class-wide claims during the year ended January 31, 2022.

The Company is not always able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued. In management's opinion, resolution of all current matters, including employment matters, is not expected to have a material adverse impact on the Company's business, financial position, results of operations, or cash flows as of January 31, 2023.

**9. Revenue** 

***Disaggregation of Revenue***

The following table presents the Company's revenue by geographic region, based on the billing address of the customer, for the periods indicated (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| United States | $234791 | $197834 | $171142 |
| International | 65877 | 44291 | 31495 |
| &nbsp;&nbsp;&nbsp;Total revenue | $300668 | $242125 | $202637 |

---

No individual foreign country contributed 10% or more of revenue for the years ended January 31, 2023, 2022, or 2021.

No customer individually accounted for 10% or more of the Company's revenues for the years ended January 31, 2023, 2022, and 2021.

***Deferred Revenue and Remaining Performance Obligations***

The Company recognized revenue of $137.2 million and $104.7 million during the years ended January 31, 2023 and 2022, respectively, that was included in the deferred revenue balance at the beginning of the respective periods.

As of January 31, 2023, future estimated revenue related to performance obligations from non-cancelable contracts that were unsatisfied or partially unsatisfied was $351.5 million and the Company expects to recognize approximately 96% as revenue for these remaining performance obligations over the next twenty-four months, with the remaining balance recognized thereafter.

**10. Stockholders' Equity and Equity Incentive Plans**

***Redeemable Convertible Preferred Stock***

Upon the closing of the Company's IPO, all 63,761,950 shares of redeemable convertible preferred stock were automatically converted into shares of common stock on a one-to-one basis, and the carrying value of $340.2 million was reclassified into common

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stock and additional paid-in-capital. As of January 31, 2023, there were no shares of redeemable convertible preferred stock issued and outstanding.

***Common Stock***

The Company's Amended and Restated Certificate of Incorporation authorized the Company to issue 1.0 billion shares of common stock at a par value of $0.0001 as of January 31, 2023 and 2022, respectively. As of January 31, 2023 and January 31, 2022, approximately 122.4 million and 113.8 million shares of common stock were issued and outstanding, respectively.

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. As of January 31, 2023 and 2022, no dividends had been declared.

The Company has reserved shares of its common stock as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **January 31,<br>2023** | **January 31,<br>2022** |
| Warrants | 11 | 11 |
| Stock options outstanding | 10556 | 15928 |
| RSUs outstanding | 15699 | 9502 |
| Future issuance under equity incentive plans | 9154 | 12131 |
| Future issuance in connection with assumed options for acquisitions | 45 | 94 |
| Shares available subject to the 2020 ESPP Plan | 2885 | 2484 |
| &nbsp;&nbsp;&nbsp;Total reserved shares | 38350 | 40150 |

---

***Stock Plans***

The Company has two equity incentive plans: the 2010 Stock Plan (the "2010 Plan") and the 2020 Equity Incentive Plan (the "2020 Plan"). The number of shares of common stock available for issuance under the 2020 Plan will be increased by any shares of common stock subject to awards outstanding under the 2010 Plan that expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest.

The Company has issued stock options and RSUs to employees, directors, consultants, and advisors pursuant to both the 2010 Plan and 2020 Plan.

Employee stock options are granted with an exercise price no less than the fair value of the underlying common stock on the grant date, in general vest based on continuous service over four years, and expire 10 years from the date of grant. The value of RSUs is measured based on the grant date fair value of the awards and in general vest based on satisfying a service-based condition based on continuous service over four years.

As of January 31, 2023, there were 9.2 million shares available for grant under the 2020 Plan. The 2020 Plan provides that the number of shares reserved will automatically increase on the first day of each fiscal year, beginning on February 1, 2021, by an amount equal to the least of (i) 12,500,000 shares, (ii) 5% of the outstanding shares of the Company's common stock on the last day of the immediately preceding fiscal year, or (iii) such other amount as the administrator of the 2020 Plan may determine.

***Stock Options***

The Company records stock-based compensation expense for stock options based on the estimated fair value of the options on the date of the grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The expected term represents the period that the Company's stock-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms, and contractual lives of the options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated option life. The expected stock price volatility is based upon comparable public company data. The Company does not currently pay dividends.

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The fair value of each stock option was estimated on the date of grant using the following assumptions during the period:

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| | |
|:---|:---|
| | **Year Ended January 31, 2021** |
| Expected term (in years) | 5.7 - 6.1 |
| Risk-free interest rate | 0.4% - 0.9% |
| Expected volatility | 52.5% - 55.2% |
| Expected dividend yield |  |

---

Assumptions used in valuing non-employee stock options are generally consistent with those used for employee stock options with the exception that the expected term is over the contractual life, or 10 years.

The following table is a summary of option activity during the year ended January 31, 2023:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Number of Shares** | **Weighted Average Exercise Price** | **Weighted Average Remaining <br>Contractual Term** | **Aggregate Intrinsic Value** |
|  | *(in thousands)* |  | *(years)* | *(in thousands)* |
| Balance at January 31, 2022 | 15928 | $4.20 | 5.9 | $123382 |
| &nbsp;&nbsp;Options granted |  | $— |  |  |
| &nbsp;&nbsp;Options exercised | (4291) | $3.36 |  |  |
| &nbsp;&nbsp;Options cancelled | (1081) | $9.24 |  |  |
| Balance at January 31, 2023 | 10556 | $4.03 | 4.7 | $82744 |
| Options exercisable at January 31, 2023 | 10079 | $3.77 | 4.6 | $81210 |

---

No stock options were granted during the years ended January 31, 2023 and 2022. Stock options granted during the year ended January 31, 2021 had a weighted-average grant-date fair value of $6.31 per share. The aggregate intrinsic value of options exercised during the years ended January 31, 2023, 2022, and 2021 was $24.5 million, $112.0 million, and $31.1 million, respectively.

No income tax benefits have been recognized for stock-based compensation arrangements. As of January 31, 2023 and 2022, there was $2.6 million and $12.4 million, respectively, of total unrecognized compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 0.8 years and 1.5 years, respectively.

***Early Exercise of Employee Options***

At the discretion of the Company's board of directors, certain stock options may be exercisable immediately at the date of grant, but are subject to a repurchase right under which the Company may buy back any unvested shares at their original exercise price in the event of an employee's termination prior to full vesting. The consideration received for an exercise of an unvested option is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. The liabilities are reclassified into equity as the awards vest.

All early exercised options were fully vested in the first quarter of fiscal 2023. As of January 31, 2022, the Company had a liability of less than $0.1 million, for 10,750 shares of common stock that were unvested and early exercised by employees.

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***Restricted Stock Units***

The following table is a summary of RSU activity for the year ended January 31, 2023:

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| | | |
|:---|:---|:---|
| | **Number of<br>Shares** | **Weighted Average Grant Date Fair Value per Share** |
|  | *(in thousands)* |  |
| Balance at January 31, 2022  | 9502 | $17.20 |
| &nbsp;&nbsp;Granted<sup>(a)</sup>  | 12962 | $8.75 |
| &nbsp;&nbsp;Released | (3551) | $15.26 |
| &nbsp;&nbsp;Forfeited | (3214) | $14.79 |
| Balance at January 31, 2023 | 15699 | $11.16 |
| RSUs expected to vest at January 31, 2023 | 15699 | $11.16 |

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______________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Includes 1,023,797 awards subject to both service-based and performance-based vesting conditions based on a 100% attainment rate.

As of January 31, 2023, there was $145.6 million of total unrecognized compensation expense related to unvested RSUs. As of January 31, 2022, there was $141.1 million of total unrecognized compensation expense related to unvested RSUs, of which $1.9 million was for the RSUs subject to certain other performance metrics. As of January 31, 2023 and 2022, total unrecognized compensation expense related to unvested RSUs is expected to be recognized over a weighted-average period of 2.7 years and 3.4 years, respectively.

***Sensu Plans***

In connection with the acquisition of Sensu, the Company assumed 33,267 options to purchase shares of common stock, granted under the Sensu, Inc. Amended and Restated 2017 Equity Incentive Plan, at a weighted-average exercise price of $4.88 per share and weighted-average fair value of $17.19 per share, of which 11,724 and 29,771 options remained outstanding as of January 31, 2023 and 2022, respectively. As of January 31, 2023 and 2022, 8,589 and 11,166 options were vested and exercisable with a weighted-average exercise price of $4.77 and $4.79, and the total unrecognized compensation expense related to these awards was less than $0.1 million and $0.3 million, respectively. During the year ended January 31, 2023 17,283 options were exercised.

***Jask Labs Inc. Plans***

In connection with the acquisition of Jask Labs Inc. ("Jask Labs"), the Company assumed 265,075 options to purchase shares of common stock, granted under the Jask Labs 2015 Stock Option and Grant Plan and the Jask Labs 2018 Equity Incentive Plan, at a weighted-average exercise price of $9.86 per share and weighted-average fair value of $6.39 per share, of which 33,497 and 64,622 options remained outstanding as of January 31, 2023 and 2022, respectively. As of January 31, 2023 and 2022, 32,063 and 52,193 options were vested and exercisable with a weighted-average exercise price of $9.08 and $9.73, and the total unrecognized compensation expense related to these awards was less than $0.1 million and $0.1 million, respectively. During the year ended January 31, 2023 8,104 options were exercised.

***Employee Stock Purchase Plan***

In September 2020, the board of directors adopted and the stockholders of the Company approved the 2020 Employee Stock Purchase Plan ("ESPP"), which became effective on September 17, 2020. The ESPP was amended in September 2021. The ESPP initially reserved and authorized the issuance of up to a total of 2,000,000 shares of common stock to participating employees. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2021, in an amount equal to the least of (i) 2,500,000 shares, (ii) 1% of the outstanding shares of the Company's common stock on the last day of the immediately preceding fiscal year, or (iii) such other amount as the administrator of the ESPP may determine. The ESPP generally provides for 24-month offering periods beginning June 15 and December 15 of each year, with each offering period consisting of four six-month purchase periods. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company's common stock as of the beginning of the offering period or (2) the fair market value of the Company's common stock on the purchase date, as defined in the ESPP. Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering would automatically be enrolled in the new offering, resulting in a modification charge to be recognized over the new offering period.

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The Company recognized stock-based compensation expense related to the ESPP of $2.7 million and $5.0 million during the year ended January 31, 2023 and 2022, respectively. As of January 31, 2023 and 2022, $1.0 million and $1.3 million has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions, respectively. As of January 31, 2023 and 2022, there was $5.8 million and $8.0 million, respectively, of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized over an average vesting period of 0.8 years.

During the year ended January 31, 2023 and 2022, 736,316 and 540,993 shares of common stock were issued under the ESPP, respectively.

The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine the fair value of the ESPP purchase rights:

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Expected term (in years) | 0.5 - 2.0 | 0.5 - 2.0 | 0.7 - 2.2 |
| Risk-free interest rate | 2.31% - 4.64% | 0.05% - 0.69% | 0.11% - 0.14% |
| Expected volatility | 58.8% - 75.5% | 46.0% - 59.4% | 55.4% - 65.5% |
| Expected dividend yield |  |  |  |

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Pursuant to the terms of the ESPP, the next scheduled purchase under the ESPP will occur on June 15, 2023. Pursuant to the terms of the Merger Agreement, as defined in Note 14, no further offering periods or purchase periods will commence under the ESPP on or after February 9, 2023 (the date of the Merger Agreement). If the effective time of the Merger occurs prior to June 15, 2023, any offering periods or purchase periods under the ESPP that would otherwise be outstanding as of such time will be shortened and any outstanding purchase rights will be exercised no later than one business day prior to the effective time of the Merger. The ESPP will terminate immediately prior to, and contingent upon, the effective time of the Merger. See Note 14 for further discussion around the Merger.

***Stock-Based Compensation Expense***

The following table presents total stock-based compensation expense included in the consolidated statements of operations (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Cost of revenue | $1440 | $816 | $510 |
| Research and development<sup>(a)</sup> | 28329 | 23781 | 13728 |
| Sales and marketing | 17902 | 15941 | 11532 |
| General and administrative | 15822 | 13608 | 15181 |
| &nbsp;&nbsp;&nbsp;Total stock-based compensation expense | $63493 | $54146 | $40951 |

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________________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)During the years ended January 31, 2023, 2022, and 2021, the Company capitalized stock-based compensation of $0.5 million, $0.1 million, and $0.3 million, respectively, related to internal-use software development costs. The research and development stock-based compensation amounts are presented net of the capitalized costs.

In connection with the acquisition of Jask Labs, the Company granted 130,180 shares of restricted common stock, with a fair value of $12.11683 per share at the time of grant, that vest over a period of two years. During the years ended January 31, 2022 and 2021, the Company recorded $0.6 million and $0.8 million, respectively, in stock-based compensation expense related to the vesting of the restricted common stock. The awards were fully vested as of October 31, 2021.

During the years ended January 31, 2023, 2022, and 2021, the Company granted 1,023,797, 105,419, and 220,000 awards, respectively, to certain executives that were subject to both service-based vesting conditions and performance-based vesting conditions. For awards granted during the year ended January 31, 2023, the total number of shares earned will be based on the Company's performance against a specific metric for fiscal year 2023, unless such period is otherwise truncated per the terms of the award agreement. The number of shares earned and eligible for service-based vesting can range between 0% to 167% of target for our chief executive officer and between 0% and 125% for our other executives. For awards granted during the year ended January 31, 2023 and 2022, no stock-based compensation expense was recognized as the performance-based vesting conditions were not met. Of

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the awards granted in fiscal 2021, $0.3 million and $2.4 million of stock-based compensation expense was recognized during the years ended January 31, 2022 and 2021, respectively as the performance-based vesting conditions were met.

***Common Stock Transfers***

During the years ended January 31, 2021 certain of the Company's existing investors acquired outstanding common stock from former employees of the Company for a purchase price greater than the fair value of the common stock at the time of the transaction. In connection with these stock transfers, the Company waived its right of first refusal and other transfer restrictions applicable to such shares. As a result, the Company recorded $0.3 million as stock-based compensation for the years ended January 31, 2021 in general and administrative expenses in the consolidated statements of operations. The amount recorded as stock-based compensation represents the difference between the price paid and the estimated fair value at the date of the transaction.

**11. 401(k) Plan** 

In November 2011, the Company adopted a 401(k) Plan that qualifies as a deferred salary arrangement under Section 401 of the Internal Revenue Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings not to exceed the maximum amount allowable. The Company has not made any matching contributions as of January 31, 2023 or 2022.

**12. Income Taxes** 

The Company's loss before income taxes consisted of the following (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31** | **Year Ended January 31** | **Year Ended January 31** |
| | **2023** | **2022** | **2021** |
| United States | $(128495) | $(130257) | $(82850) |
| International | 6489 | 8818 | 4069 |
| &nbsp;&nbsp;&nbsp;Total | $(122006) | $(121439) | $(78781) |

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The components of the provision (benefit) for income taxes are as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| **Current:** |  |  |  |
| Federal | $— | $— | $— |
| State | 45 | (4) | 201 |
| Foreign | 2825 | 1573 | 1081 |
| &nbsp;&nbsp;&nbsp;Total current tax expense (benefit) | $2870 | $1569 | $1282 |
| **Deferred:** |  |  |  |
| Federal | $— | $(540) | $— |
| State |  | (116) |  |
| Foreign | (61) | 1013 | 234 |
| Total deferred tax expense (benefit) | $(61) | $357 | $234 |
| &nbsp;&nbsp;&nbsp;Total tax expense (benefit) | $2809 | $1926 | $1516 |

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A reconciliation of the Company's effective income tax rate to the expected income tax rate, computed by applying the federal statutory income tax rate of 21.0% for each of the years ended January 31, 2023, 2022, and 2021, to the Company's loss before provision (benefit) for income taxes, is as follows:

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31** | **Year Ended January 31** | **Year Ended January 31** |
| | **2023** | **2022** | **2021** |
| Federal tax statutory rate | 21.0% | 21.0% | 21.0% |
| State tax, net of federal tax effect | 4.8 | 4.3 | 2.1 |
| Change in valuation allowance | (31.2) | (32.1) | (22.9) |
| Nondeductible expenses | (0.5) | 3.0 | (5.0) |
| Effect of foreign operations | (1.2) | (0.6) | (0.6) |
| Tax credits | 5.1 | 2.7 | 4.5 |
| Other | (0.3) | 0.1 | (1.0) |
| &nbsp;&nbsp;&nbsp;Total | (2.3)% | (1.6)% | (1.9)% |

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The Company's significant components of its deferred tax assets and liabilities were as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **As of January 31,** | **As of January 31,** |
| | **2023** | **2022** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Accruals and reserves | $4655 | $3158 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 1495 | 1073 |
| &nbsp;&nbsp;&nbsp;Net operating loss carryforwards | 132314 | 126332 |
| &nbsp;&nbsp;&nbsp;Tax credit carryforwards | 23843 | 17754 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 5697 | 6010 |
| &nbsp;&nbsp;&nbsp;Capitalized research expenditures | 21128 |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 345 | 1575 |
| Gross deferred tax assets | $189477 | $155902 |
| &nbsp;&nbsp;&nbsp;Less: valuation allowance | (189403) | (150963) |
| Total deferred tax assets | $74 | $4939 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment | $(1257) | $(5769) |
| &nbsp;&nbsp;&nbsp;Deferred sales commissions | (2946) | (2436) |
| &nbsp;&nbsp;&nbsp;Right-of-use assets | (319) | (1449) |
| Total deferred tax liabilities | $(4522) | $(9654) |
| Net deferred tax liabilities | $(4448) | $(4715) |

---

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Management believes that, based on a number of factors, it is more likely than not that the U.S. federal and state net deferred tax assets will not be fully realized, such that a full valuation allowance has been recorded. A valuation allowance of $189.4 million, $151.0 million, and $110.2 million has been established by the Company as of January 31, 2023, 2022, and 2021, respectively. The gross change in the valuation allowance during the years ended January 31, 2023, 2022, and 2021 was an increase of $38.4 million, $40.7 million, and $18.0 million, respectively, primarily due to current year losses.

Effective for tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act of 2017 eliminates the right to deduct research and development expenditures for tax purposes in the period the expenses were incurred and instead requires all U.S. and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively. As a result, the Company recognized a deferred tax asset for the future tax benefit of the amortization deductions of the capitalized research and development expenditures that was fully offset by a change in valuation allowance.

As of January 31, 2023, the Company had net operating loss ("NOL") carryforwards of $522.1 million for U.S. federal and $362.2 million for U.S. state income tax purposes available to offset future taxable income. The net operating losses generated during the year ended January 31, 2019 and thereafter can be carried forward indefinitely for federal purposes. The federal net operating

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losses generated before the year ended January 31, 2019 carry forward for a 20-year period and if unutilized will begin to expire in 2032. The California net operating loss carryforwards begin to expire in 2030. The Company also had research tax credit carryforwards of $19.6 million for U.S. federal and $13.1 million for U.S. state income tax return purposes. The federal research tax credits expire beginning in 2030, and the U.S. state tax credits can be carried forward indefinitely.

Internal Revenue Code Section 382 places a limitation (the "Section 382 Limitation") on the amount of taxable income that can be offset by net operating loss carryforwards after a change in control (generally greater than a 50% change in ownership) of a loss corporation. Generally, after a control change, a loss corporation cannot deduct operating loss carryforwards in excess of the Section 382 Limitation. Due to these "change in ownership" provisions, utilization of the net operating loss and income tax credit carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company may have previously experienced, and may experience in the future, one or more Section 382 "changes in ownership", however, the Company does not expect any resulting limitations on its ability to utilize its net operating loss or research tax carryovers.

The Company files income tax returns in the United States federal jurisdiction, various U.S. state jurisdictions, and foreign jurisdictions. For jurisdictions in which tax filings are made, the Company is generally subject to income tax examination for all fiscal years since inception. Due to the Company's net operating loss carryforwards, all tax years since inception remain subject to adjustment for U.S. federal and California tax returns. There are tax years which remain subject to examination in other U.S. state jurisdictions that are not material to the Company's consolidated financial statements. In the Company's major foreign jurisdictions – India, Italy and Poland – the tax years subsequent to 2018 remain open to examination for India, the tax years subsequent to 2016 remain open to examination for Italy and the tax years subsequent to 2016 remain open to examination for Poland.

The following shows the changes in the gross amount of unrecognized tax benefits (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Unrecognized tax benefits, beginning of year | $5610 | $4213 | $3252 |
| Increase related to prior year tax positions | 736 |  | 66 |
| Decreases related to prior year tax positions |  |  |  |
| Increases related to current year tax positions | 1602 | 1397 | 895 |
| &nbsp;&nbsp;&nbsp;Unrecognized tax benefits, end of year | $7948 | $5610 | $4213 |

---

As of January 31, 2023, the Company had $7.9 million of unrecognized tax benefits. As of January 31, 2023, $1.1 million of the Company's unrecognized tax benefits, if recognized, would affect the effective tax rate. Due to the Company's full valuation allowance against all U.S. federal and state net deferred tax assets, the Company's remaining unrecognized tax benefits, if recognized, would not affect the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued interest of an insignificant amount during the year ended January 31, 2023, and no penalties or interest during the years ended January 31, 2022, and 2021.

The Company regularly assesses the likelihood of adverse outcomes resulting from examinations to determine the adequacy of its provision (benefit) for income taxes, and monitors the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision (benefit) for income taxes in the period such resolution occurs. Although the timing of the resolution or closure of audits is not certain, the Company does not believe that it is reasonably possible that its unrecognized tax benefits could change within the next 12 months.

The Company's accumulated undistributed foreign earnings as of January 31, 2023 have been subject to either the deemed one-time mandatory repatriation under the Tax Act or the current year income inclusion under the Global Intangible Low-Taxed Income ("GILTI") regime for U.S. tax purposes. If the Company were to make actual distributions of some or all of these earnings, including earnings accumulated after December 31, 2017, the Company would generally incur no additional U.S. income tax but could incur U.S. state income tax and foreign withholding taxes. The Company has not accrued for these potential U.S. state income tax and foreign withholding taxes because the Company intends to permanently reinvest its foreign earnings in its international operations.

**13. Net Loss per Share** 

Basic net loss per share attributable to the Company's common stockholders is computed by dividing the net loss attributable to the Company's common stockholders by the weighted-average number of shares of common stock outstanding during the period.

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Diluted net loss per share is the same as basic net loss per share for all years presented because the effects of potentially dilutive items were anti-dilutive given the Company's net loss position in each period presented.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Net loss | $(124815) | $(123365) | $(80297) |
| Weighted-average shares outstanding, basic and diluted | 117836 | 108695 | 48805 |
| Net loss per share, basic and diluted | $(1.06) | $(1.13) | $(1.65) |

---

The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended January 31,** | **Year Ended January 31,** | **Year Ended January 31,** |
| | **2023** | **2022** | **2021** |
| Stock options | 10556 | 15928 | 24768 |
| RSUs | 16097 | 9502 | 3757 |
| ESPP | 102 | 130 | 133 |
| Warrants | 11 | 11 | 32 |
| Shares subject to repurchase | 36 | 226 | 140 |
| Assumed options for acquisitions | 45 | 94 | 140 |
| Issuable shares for acquisitions |  | 194 |  |
| &nbsp;&nbsp;&nbsp;Total anti-dilutive securities | 26847 | 26085 | 28970 |

---

**14. Subsequent Events**

On February 9, 2023, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Serrano Parent, LLC ("Parent") and Serrano Merger Sub, Inc ("Merger Sub"). Parent and Merger Sub are affiliates of Francisco Partners Management, L.P. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving corporation of the Merger and a wholly owned subsidiary of Parent. Per the Merger Agreement, at the time of the effective date of the Merger, each share of the Company's common stock outstanding immediately prior to such effective time (except for certain shares specified in the Merger Agreement) will be automatically converted into the right to receive $12.05 in cash without interest thereon, subject to applicable withholding taxes.

Completion of the Merger is subject to customary closing conditions set forth in the Merger Agreement, including, among other things, the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of the Company's common stock, the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other specified regulatory approvals, and the absence of an order or law preventing, materially restraining, or materially impairing the consummation of the Merger.

The Company is subject to customary restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, subject to customary exceptions.

If the Merger Agreement is terminated in certain circumstances, including by the Company in order to enter into a superior proposal or by Parent because the Company's board of directors withdraws its recommendation in favor of the Merger, the Company would be required to pay Parent a termination fee of $52.0 million.

The Merger is expected to close in the second calendar quarter of 2023. Upon consummation of the Merger, the Company will cease to be a publicly traded company and its common stock will be delisted from the Nasdaq Global Select Market.

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

Not applicable.

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**Item 9A. Controls and Procedures**

***Evaluation of Disclosure Controls and Procedures***

Our management, with the participation and supervision of our chief executive officer and our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on the Company's evaluation, our chief executive officer and chief financial officer concluded that, as of January 31, 2023, our disclosure controls and procedures were effective at the reasonableness assurance level.

***Management's Report on Internal Control Over Financial Reporting***

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2023 based on the criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of January 31, 2023. The effectiveness of our internal control over financial reporting as of January 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Form 10-K.

***Changes in Internal Control Over Financial Reporting***

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended January 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

***Inherent Limitations on the Effectiveness of Controls***

Our management, including our chief executive officer and chief financial officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed and operated to be effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

**Item 9B. Other Information**

Not applicable.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

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**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance** 

The information required by this item is incorporated by reference to the definitive proxy statement to be filed with the SEC no later than 120 days after January 31, 2023 in connection with our 2023 annual meeting of stockholders (the "Proxy Statement").

**Item 11. Executive Compensation**

The information required by this Item is incorporated herein by reference to our Proxy Statement.

**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

The information required by this Item is incorporated herein by reference to our Proxy Statement.

**Item 13. Certain Relationships and Related Transactions, and Director Independence** 

The information required by this Item is incorporated herein by reference to our Proxy Statement.

**Item 14. Principal Accounting Fees and Services**

The information required by this Item is incorporated herein by reference to our Proxy Statement.

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**PART IV**

**Item 15. Exhibits and Financial Statement Schedules**

Documents filed as part of this report are as follows:

(1) Consolidated Financial Statements: Our consolidated financial statements are listed in the "Index to Consolidated Financial Statements" under Part II, Item 8 of this report.

(2) Financial Statement Schedules: Financial statement schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

(3) Exhibits: The documents listed below are incorporated by reference or are filed with this report, in each case as indicated therein.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
|<br>**Exhibit Number** |<br>**Description** | **Form** | **File No.** | **Exhibit** | **Filing Date** |
| 2.1# | <u>[Agreement and Plan of Merger, dated February 9, 2023, among Serrano Parent, LLC, Serrano Merger Sub, Inc. and the registrant.](https://www.sec.gov/Archives/edgar/data/1643269/000119312523030373/d443031dex21.htm)</u> | 8-K | 001-39502 | 2.1 | February 9, 2023 |
| 3.1 | <u>[Amended and Restated Certificate of Incorporation of the registrant.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex32.htm)</u> | S-1 | 333-248251 | 3.2 | August 24, 2020 |
| 3.2 | <u>[Bylaws of the registrant, as amended.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex34.htm)</u> | S-1 | 333-248251 | 3.4 | August 24, 2020 |
| 4.1 | <u>[Form of common stock certificate of the registrant.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex41.htm)</u> | S-1 | 333-248251 | 4.1 | August 24, 2020 |
| 4.2 | <u>[Amended and Restated Investors' Rights Agreement among the registrant and certain holders of its capital stock, dated as of May 1, 2019.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex42.htm)</u> | S-1 | 333-248251 | 4.2 | August 24, 2020 |
| 4.3 | <u>[Warrant to Purchase Stock between the registrant and Silicon Valley Bank, dated as of July 30, 2019.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520236213/d821436dex45.htm)</u> | S-1/A | 333-248251 | 4.5 | August 31, 2020 |
| 4.4 | <u>[Description of registrant's securities.](https://www.sec.gov/Archives/edgar/data/0001643269/000164326921000006/ex46-descriptionofsecuriti.htm)</u> | 10-K | 001-39502 | 4.6 | March 12, 2021 |
| 10.1+ | <u>[Form of Indemnification Agreement between the registrant and each of its directors and executive officers.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex101.htm)</u> | S-1 | 333-248251 | 10.1 | August 24, 2020 |
| 10.2+ | <u>[Sumo Logic, Inc. 2020 Equity Incentive Plan and related form agreements.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex102.htm)</u> | S-1 | 333-248251 | 10.2 | August 24, 2020 |
| 10.3+ | <u>[Sumo Logic, Inc. 2020 Employee Stock Purchase Plan, as amended, and related form agreements.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex103.htm)</u> | 10-Q | 001-39502 | 10.1 | December 8, 2021 |
| 10.4+ | <u>[Sumo Logic, Inc. 2010 Stock Plan and related form agreements.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex104.htm)</u> | S-1 | 333-248251 | 10.4 | August 24, 2020 |
| 10.5+ | <u>[Sumo Logic, Inc. Executive Incentive Compensation Plan.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex105.htm)</u> | S-1 | 333-248251 | 10.5 | August 24, 2020 |
| 10.6+ | <u>[Form of Change in Control and Severance Agreement between the registrant and each of its executive officers.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex106.htm)</u> | S-1 | 333-248251 | 10.6 | August 24, 2020 |
| 10.7+ | <u>[Confirmatory Employment Letter between the registrant and Ramin Sayar, dated as of July 9, 2020.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex107.htm)</u> | S-1 | 333-248251 | 10.7 | August 24, 2020 |
| 10.8+ | <u>[Confirmatory Employment Letter between the registrant and Katherine Haar, dated as of July 10, 2020.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex1010.htm)</u> | S-1 | 333-248251 | 10.10 | August 24, 2020 |
| 10.9+ | <u>[Confirmatory Employment Letter between the registrant and Suku Krishnaraj Chettiar, dated as of July 10, 2020.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex1011.htm)</u> | S-1 | 333-248251 | 10.11 | August 24, 2020 |
| 10.10+ | <u>[Employment Letter between the registrant and Lynne Doherty, dated as of September 9, 2021.](https://www.sec.gov/Archives/edgar/data/0001643269/000164326921000037/a101-employmentletterlynne.htm)</u> | 8-K | 001-39502 | 10.1 | November 1, 2021 |
| 10.11+ | <u>[Employment Letter between the registrant and Stewart Grierson, dated November 6, 2021.](https://www.sec.gov/Archives/edgar/data/1643269/000164326921000039/ex101-employmentletterbetw.htm)</u> | 8-K | 001-39502 | 10.1 | December 6, 2021 |
| 10.12+ | <u>[Sumo Logic, Inc. Outside Director Compensation Policy.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex1012.htm)</u> | S-1 | 333-248251 | 10.12 | August 24, 2020 |
| 10.13 | <u>[Building Lease Agreement between the registrant and Landlord Brugger Corp., dated as of January 22, 2013, as amended July 10, 2017.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex1013.htm)</u> | S-1 | 333-248251 | 10.13 | August 24, 2020 |
| 10.14\* | <u>[Sublease Agreement between the registrant and Delphix Corp., dated as of January 24, 2023.](sumo-exhibit1014.htm)</u> |  |  |  |  |
| 10.15 | <u>[Amended and Restated Loan and Security Agreement between the registrant and Silicon Valley Bank, dated as of February 8, 2021.](https://www.sec.gov/Archives/edgar/data/1643269/000164326921000002/amendedsvbagreement.htm)</u> | 8-K | 001-39502 | 10.1 | February 12, 2021 |
| 10.16 | <u>[Agreement, dated as of May 3, 2022, by and between the registrant and Scalar Gauge Fund LP.](https://www.sec.gov/Archives/edgar/data/1643269/000164326922000016/exhibit101.htm)</u> | 8-K | 001-39502 | 10.1 | May 5, 2022 |
| 10.17# | <u>[Form of Voting Agreement, dated February 9, 2023, among Serrano Parent, LLC and certain stockholders of the registrant.](https://www.sec.gov/Archives/edgar/data/1643269/000119312523030373/d443031dex101.htm)</u> | 8-K | 001-39502 | 10.1 | February 9, 2023 |
| 21.1 | <u>[List of subsidiaries of the registrant.](https://www.sec.gov/Archives/edgar/data/1643269/000119312520227201/d821436dex211.htm)</u> | S-1 | 333-248251 | 21.1 | August 24, 2020 |
| 23.1\* | <u>[Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.](ex231consentpwcq423.htm)</u> |  |  |  |  |
| 24.1\* | Power of Attorney (included on signature page hereto). |  |  |  |  |

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| | | |
|:---|:---|:---|
| | | **Incorporated by Reference** |
| 31.1\* | <u>[Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex-311q42310xk.htm)</u> |  |
| 31.2\* | <u>[Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex-312q42310xk.htm)</u> |  |
| 32.1† | <u>[Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex-321q42310xk.htm)</u> |  |
| 101 | The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit), (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements |  |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |  |

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__________________

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| | |
|:---|:---|
| \* | Filed herewith. |
| + | Indicates management contract or compensatory plan. |
| † | The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Sumo Logic, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. |
| # | Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. Sumo Logic, Inc. will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. Sumo Logic, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished. |

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**Item 16. Form 10-K Summary**

Not applicable.

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**SIGNATURES** 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | | |
|:---|:---|:---|
| | **SUMO LOGIC, INC.** | **SUMO LOGIC, INC.** |
| Date: March 16, 2023 | By: | /s/ Ramin Sayar |
|  |  | Ramin Sayar<br>President and Chief Executive Officer |

---

**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ramin Sayar, Stewart Grierson, and Katherine Haar, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such individual in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or the individual's substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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| | | |
|:---|:---|:---|
| **<u>Signature</u>** | **<u>Title</u>** | **<u>Date</u>** |
| /s/ Ramin Sayar | &nbsp;&nbsp;President, Chief Executive Officer, and Director<br>(*Principal Executive Officer)* | March 16, 2023 |
| Ramin Sayar | &nbsp;&nbsp;President, Chief Executive Officer, and Director<br>(*Principal Executive Officer)* |  |
| /s/ Stewart Grierson | &nbsp;&nbsp;Chief Financial Officer<br>(*Principal Financial Officer)* | March 16, 2023 |
| Stewart Grierson | &nbsp;&nbsp;Chief Financial Officer<br>(*Principal Financial Officer)* |  |
| /s/ Jennifer McCord | &nbsp;&nbsp;Chief Accounting Officer<br>(*Principal Accounting Officer)* | March 16, 2023 |
| Jennifer McCord | &nbsp;&nbsp;Chief Accounting Officer<br>(*Principal Accounting Officer)* |  |
| /s/ Joseph Ansanelli | &nbsp;&nbsp;Director | March 16, 2023 |
| Joseph Ansanelli |  |  |
| /s/ Christian Beedgen | &nbsp;&nbsp;Director | March 16, 2023 |
| Christian Beedgen |  |  |
| /s/ Sandra E. Bergeron | &nbsp;&nbsp;Director | March 16, 2023 |
| Sandra E. Bergeron |  |  |
| /s/ Margaret Francis | &nbsp;&nbsp;Director | March 16, 2023 |
| Margaret Francis |  |  |
| /s/ Randy S. Gottfried | &nbsp;&nbsp;Director | March 16, 2023 |
| Randy S. Gottfried |  |  |
| /s/ John D. Harkey, Jr. | &nbsp;&nbsp;Director | March 16, 2023 |
| John D. Harkey, Jr. |  |  |
| /s/ Tracey Newell | &nbsp;&nbsp;Director | March 16, 2023 |
| Tracey Newell |  |  |
| /s/ Timothy Youngblood | &nbsp;&nbsp;Director | March 16, 2023 |
| Timothy Youngblood |  |  |

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## Exhibit 10.14

![](sumo-exhibit1014001.jpg)

855 Main Street, 1st and 4th Floor Redwood City, CA SUBLEASE AGREEMENT This Sublease Agreement ("Sublease") is made effective as of the 24th day of January, 2023, (the "Effective Date") by and between DELPHIX CORP., a Delaware corporation ("Sublandlord") and SUMO LOGIC, INC., a Delaware corporation ("Subtenant") with reference to the following facts: A. 855 MAIN STREET RWC, LLC, a California limited liability company ("Master Landlord") and Sublandlord entered into that certain Lease Agreement, dated August 12, 2021 ("Original Lease") as amended by that certain First Amendment to Lease Agreement dated May 3, 2022 ("First Amendment", collectively with the Original Lease, the "Master Lease"), whereby Master Landlord leased to Sublandlord and Sublandlord leased from Master Landlord those certain premises consisting of approximately 11,756 rentable square feet on the first (1st) floor and approximately 12,581 rentable square feet on the fourth (4th) floor (totaling approximately 24,337 rentable square feet) located at 855 Main Street, Redwood City, California as further set forth in the Master Lease (the "Premises"). B. Sublandlord agrees to sublease to Subtenant, and Subtenant agrees to sublease from Sublandlord, the entire Premises upon the terms and conditions set forth in this Sublease. AGREEMENT 1. Sublease of Premises. Subject to the terms and conditions of this Sublease, Sublandlord 1 hereby subleases to Subtenant and Subtenant hereby subleases from Sublandlord the Premises. 2. Master Lease and Other Agreements. 2.1 Subordinate to Master Lease. This Sublease is subject and subordinate to all of the terms and conditions of the Master Lease. Except as specifically set forth herein, Subtenant hereby assumes and agrees to perform the obligations of "Tenant" under the Master Lease to the extent incorporated herein pursuant to this Section 2. Unless otherwise defined, all capitalized terms used herein shall have the same meanings as given them in the Master Lease. A copy of the Master Lease is attached hereto as Exhibit A and incorporated herein by this reference. Subtenant shall not commit or permit to be committed any act or omission which would violate any term or condition of the Master Lease. Neither Sublandlord nor Subtenant shall neither do nor permit anything to be done which would cause the Master Lease to be terminated or forfeited by reason of any right of termination or forfeiture reserved or vested in Master Landlord under the Master Lease; provided however, nothing herein shall prohibit Sublandlord from exercising right to terminate the Master Lease as set forth in the Master Lease or available to Sublandlord under law or equity. Subtenant shall indemnify and hold Sublandlord harmless from and against all claims, liabilities, judgments, costs, demands, penalties, expenses, and damages of any kind whatsoever, including, without limitation, reasonable attorneys' fees, consultants' fees and costs and court costs, ("Claims") by reason of any failure on the part of Subtenant to perform any of the obligations of "Tenant" under the Master Lease which Subtenant has become obligated hereunder to perform, and such indemnity and hold harmless shall survive the expiration or sooner termination of this Sublease. In the event of the termination of the Master Lease for any reason, then this Sublease shall terminate automatically upon such termination without any liability owed to Subtenant by Master Landlord, or by Sublandlord unless the termination is due to Sublandlord's breach of the Master Lease and not due to Subtenant's breach of the Sublease, or if such termination is in breach of Sublandlord's covenants in this Sublease. Sublandlord shall not voluntarily terminate the Master Lease without Subtenant's prior consent, which may be withheld in its sole discretion (excepting terminations pursuant to the terms of the Master Lease or as a result of rights and remedies available to Sublandlord under law or equity). In addition, Sublandlord shall not amend or modify the Master Lease in any manner that will result in a material increase in Subtenant's obligations or reduction of Subtenant's rights set forth in this Sublease. Exhibit 10.14 Sumo Logic, Inc.

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![](sumo-exhibit1014002.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA Subtenant represents and warrants to Sublandlord that it has read and is familiar with the Master Lease as attached hereto as Exhibit A. Notwithstanding anything herein to the contrary, Subtenant shall have no 2 obligation to perform any of the obligations of Sublandlord as "Tenant" under the Master Lease that Sublandlord was obligated under the Master Lease to perform prior to the Commencement Date but that have not been performed by Sublandlord, including without limitation, the obligation to repair any damage to the Premises existing as of the Commencement Date, to insure or to remove any alterations, additions or improvements performed by or at the direction of Sublandlord prior to the Commencement Date, to correct any violation of law, ordinance or regulation caused by Sublandlord, its agents, contractors, employees or invitees or which existed as of the Commencement Date, or to indemnify, defend or hold harmless Master Landlord with respect to matters occurring prior to the Commencement Date. 2.2 Applicable Provisions. All of the terms and conditions contained in the Master Lease as they may apply to the Premises are incorporated herein and shall be terms and conditions of this Sublease, except those directly contradicted by, inapplicable to, or modified by the terms and conditions contained in this Sublease. Each reference therein to "Landlord", "Tenant", "Leased Premises" and "Lease" to be deemed to refer to Sublandlord, Subtenant, Premises and Sublease, respectively, as appropriate. 2.3 Modifications. For the purposes of incorporation herein, the terms of the Master Lease are subject to the following additional modifications: (a) In all provisions of the Master Lease (under the terms thereof and without regard to modifications thereof for purposes of incorporation into this Sublease) requiring the approval or consent of Master Landlord, Subtenant shall be required to obtain the approval or consent of both Sublandlord and Master Landlord, under the same standards of consent as set forth in the Master Lease and the approval of Sublandlord may be withheld if Master Landlord's consent is not obtained. (b) In all provisions of the Master Lease requiring "Tenant" to submit, exhibit to, supply or provide Master Landlord with evidence, certificates, or any other matter or thing, Subtenant shall be required to submit, exhibit to, supply or provide, as the case may be, the same to both Master Landlord and Sublandlord. (c) Sublandlord shall have no obligation to perform the obligations of "Landlord" under the Master Lease to restore or rebuild any portion of the Premises after any destruction or taking by eminent domain or to maintain, repair, restore or control any portion of the Building or Property. (d) Sublandlord shall not be obligated to perform those obligations of Master Landlord which Sublandlord cannot immediately and unilaterally perform as "Landlord", nor shall Sublandlord be deemed to have adopted as its own any representations made by Master Landlord in the Master Lease. (e) Sublandlord shall not be obligated to maintain any building systems (unless such maintenance is the obligation of "Tenant" under the Master Lease and not the obligation of Subtenant herein), any Common Areas or any other repair or maintenance obligations which are Master Landlord's obligations under the Master Lease. (f) Sublandlord shall have no obligation to perform those obligations of Master Landlord to construct or pay for any improvements. (g) In all provisions of the Master Lease requiring "Tenant" to designate Master Landlord as an additional or named insured on its insurance policy, Subtenant shall be required to so designate Master Landlord, Sublandlord and any individual, party or entity as required by Master Landlord or Sublandlord on its insurance policy.

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![](sumo-exhibit1014003.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA (h) If and to the extent that Sublandlord's rental obligation is abated or reduced pursuant to the Master Lease due to a casualty, condemnation, or other interference with the use of the Premises, the Rent hereunder shall be abated or reduced in the same proportion and period as the abatement or reduction under the Master Lease. Subtenant shall not be entitled to any further abatement or reduction in Rent. (i) Whenever in the Master Lease a time is specified for the giving of any notice or the making of any demand by the "Tenant" thereunder, such time is hereby changed, for the purpose of this Sublease only, by adding two (2) business days thereto and whenever in the Master Lease a time is specified for the giving of any notice or the making of any demand by the "Landlord", such time is hereby changed, for the purpose of this Sublease only, by subtracting two (2) business days therefrom. It is the purpose and intent of the foregoing provisions to provide Sublandlord with time within which to transmit to Master Landlord any notices or demands received from Subtenant and to transmit to Subtenant any notices or demands received from Master Landlord; provided, however, if such reduction would result in Subtenant not having at least three (3) business days to review and respond to any notice or demand, then such time period shall be equal to the lesser of (3) business days or the time period set forth in the Master Lease. (j) In the following provisions that are incorporated herein, the reference to Landlord shall mean Master Landlord only: Section 1.12 of the Original Lease; the portion of "Landlord shall replace such capital improvements or equipment" of the last sentence of Section 6.1 of the Original Lease; Section 4.1A(3) of the Original Lease; Sections 4.2(B) (provided that the Delivery Date and the Commencement Date in this Section 4.2(B) of the Original Lease shall have the meaning of the Delivery Date and the Commencement Date in the Master Lease), Sections 4.5, 4.6, 4.8, 4.8(A), 4.9, 5.4, 6.2 (except the second and third sentences), 6.4, 7.1 (except the last sentence), 7.3, 8.1, 9.2, 11.1 (provided that the Commencement Date in this Section 11.1 of the Original Lease shall have the meaning of the Commencement Date in the Master Lease), 11.2, 12.1, 12.2, 12.3, and 12.4 of the Original Lease. (k) In the following provisions that are incorporated herein, the reference to Landlord shall mean both Master Landlord and Sublandlord: Sections 4.1 (except the last sentence), 4.1(A), 4.1(A)(1), 4.1(A)(2) and 4.3 of the Original Lease; the second and third sentences of Section 6.2 of the Original Lease; the fourth sentence of Section 7.1 of the Original Lease; Sections 9.1(F), 10.1, 16.1 and 16.16 of the Original Lease. 2.4 Exclusions. Notwithstanding the terms of Section 2.2 above, Subtenant shall 3 have no rights under any of the following provisions of the Master Lease: (i) any rights or options to expand, extend, renew or terminate the Master Lease, this Sublease or the Premises, and (ii) any rights of first offer, rights of first negotiation, or similar rights, or any rights to any tenant improvement allowance (except for the tenant improvement allowance as expressly provided herein). In addition, the following provisions of the Master Lease are NOT incorporated herein: Portions of the Basic Lease Information Summary of the Original Lease with the following headings: Date, Landlord, Tenant, Commencement Date, Anticipated Delivery Date, Lease Term, Option to Extend, Base Monthly Rent, Estimated Monthly Operating Expenses And Taxes, Prepaid Rent, Security Deposit, Total Prepaid Rent and Security Deposit Due Upon Lease Execution, Landlord's Address For Notices, Tenant's Address For Notices, and Brokers; Sections 1.1, 1.2, 1.8, 1.10 and 1.11 of the Original Lease; the second sentence of Section 2.1 of the Original Lease; Sections 2.2, 2.3, 3.1 and 3.5 of the Original Lease; the last sentence of Section 3.6 of the Original Lease; the first sentence of Section 4.8 of the Original Lease; the third sentence of Section 4.8(A) of the Original Lease; Section 6.3; the last sentence of Section 8.2; Sections 11.3 and 13.3 of the Original Lease; the first two sentences of the first paragraph of Section 14.1(C) of the Original Lease; Sections 15.2 and 16.2(B) of the Original Lease; the second sentence of Section 16.9 of the Original Lease; the first sentence of Section 16.11 of the Original Lease; Section 16.14 of the Original Lease; Exhibits C and H; Addenda 1 and 2 of the Original Lease; and the entire First Amendment. All of the incorporated terms of the Master Lease as referenced and qualified above along with all of the following

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![](sumo-exhibit1014004.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA terms and conditions set forth in this document shall constitute the complete terms and conditions of this Sublease. 2.5 Obligations of Sublandlord. Notwithstanding anything herein contained, the only 4 services or rights to which Subtenant is entitled hereunder are those to which Sublandlord is entitled under the Master Lease, and for all such services and rights Subtenant shall look solely to the Master Landlord under the Master Lease, and the obligations of Sublandlord hereunder shall be limited to using its reasonable good faith efforts to obtain the performance by Master Landlord of its obligations, provided Subtenant shall reimburse Sublandlord for all reasonable, out-of-pocket costs incurred by Sublandlord in such efforts. Sublandlord shall have no liability to Subtenant or any other person for damage of any nature whatsoever as a result of the failure of Master Landlord to perform said obligations except for Master Landlord's termination of the Sublandlord's interest as "Tenant" under the Master Lease in the event of Sublandlord's breach of the Master Lease (without cause of Subtenant). 2.6 Sublandlord Representations. Sublandlord represents and warrants to Subtenant as follows: (i) to Sublandlord's actual knowledge, there are no other amendments or modifications to the Master Lease other than as attached hereto as Exhibit A which would materially and adversely affect Subtenant's rights or obligations as set forth in this Sublease; and (ii) to Sublandlord's actual knowledge, Sublandlord has not received a notice of default under the Master Lease from Master Landlord which remains uncured; and (iii) to Sublandlord's actual knowledge, Sublandlord has not sent a notice of default under the Master Lease to Master Landlord that remains uncured. 3. Term. 3.1 Initial Term. The term of this Sublease ("Term") shall commence the later of (i) the date the possession of the Premises is delivered to Subtenant (or the date possession of the Premises would have been delivered but for Sublandlord not receiving the prepaid Base Rent and Security Deposit), (ii) the date Sublandlord receives Master Landlord's consent of this Sublease, and (iii) February 1, 2023 ("Commencement Date") and shall expire on the expiration of the Master Lease which is anticipated to be May 31, 2027 ("Expiration Date"), unless sooner terminated pursuant to any provision of the Master Lease applicable to the Premises or the terms of this Sublease. Sublandlord shall have no obligation to Subtenant to exercise any of its options to extend under the Master Lease. 3.2 Option to Extend. Subtenant shall have no option to extend this Sublease. 3.3 Sublandlord's Inability to Deliver the Premises. In the event Sublandlord is unable to deliver possession of the Premises on or before the anticipated Commencement Date, Sublandlord shall not be liable for any damage caused thereby, nor shall this Sublease be void or voidable, and the term hereof shall not be extended by such delay. If Subtenant, with Sublandlord's and Master Landlord's consent, takes possession prior to commencement of the Term, Subtenant shall do so subject to all the covenants and conditions hereof and shall pay pro-rated Base Rent for each day at the same rate as that prescribed for the first month of the term. Notwithstanding anything to the contrary, Sublandlord shall have no obligation to deliver possession of the Premises to Subtenant unless and until Sublandlord receives the prepaid Base Rent and Security Deposit and any delay in delivery of the Premises as a result of not receiving the prepaid Base Rent and Security Deposit shall not affect the Commencement Date. Notwithstanding the foregoing, if Sublandlord has failed to deliver possession of the Premises to Subtenant on or before March 1, 2023, then at any time before delivery of possession, Subtenant may give written notice to Sublandlord of Subtenant's intention to terminate this Sublease, and if Sublandlord has failed to deliver possession of the Premises within ten (10) days following receipt of Subtenant's termination notice, this Sublease shall be terminated with neither party having any obligations to the other there party thereafter.

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![](sumo-exhibit1014005.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA 4. Rent. 5 4.1 Base Rent. Subtenant shall pay to Sublandlord each month during the Term of this Sublease, base rent, in advance, on or before the 1st of each month thereafter ("Base Rent") per month pursuant to the following schedule: Period During Term Monthly Installment of Base Rent Commencement Date – May 31, 2023 $189,828.60 June 1, 2023 – May 31, 2024 $195,523.46 June 1, 2024 – May 31, 2025 $201,389.16 June 1, 2025 – May 31, 2026 $207,430.84 June 1, 2026 – May 31, 2027 $213,653.76 4.2 Expenses and Taxes. Subtenant shall pay to Sublandlord all Operating Expenses and Real Property Taxes which Sublandlord is responsible to pay under the Master Lease during the Term. If Master Landlord charges Sublandlord an estimated amount such Operating Expenses and/or Real Property Taxes, Subtenant shall pay such estimated amount of the first day of each month. Sublandlord shall deliver to Subtenant any estimated statement of Operating Expenses and/or Real Property Taxes it receives from Master Landlord. Sublandlord promptly deliver to Subtenant any Annual Statement it receives from Master Landlord, and if Subtenant has underpaid any Operating Expenses and Real Property Taxes for such calendar year in which the Annual Statement applies, Subtenant shall pay such underpayment to Sublandlord within thirty (30) days following delivery of such Annual Statement to Subtenant. If Subtenant overpaid Operating Expenses and Real Property Taxes, Subtenant shall be entitled to a credit of such overpaid amount; provided however, if Master Landlord refunds such overpayment, Sublandlord shall deliver such refund to Subtenant within thirty (30) days following Subtenant's receipt of such refund from Master Landlord. Upon written request from Subtenant, Sublandlord, shall exercise the right to review and/or audit Master Landlord's books and records with respect to Operating Expenses pursuant to Section 3.2(c) of the Original Lease for Subtenant's benefit, provided that Subtenant is not in Default, Subtenant notifies Sublandlord of its request to review and/or audit Master Landlord's books and records at least thirty (30) days prior to the end of the ninety (90) day period set forth in Section 3.2(c) of the Original Lease, and Subtenant shall be responsible for the actual costs of such audit (except to the extent the cost of such audit is paid by Master Landlord pursuant to the Master Lease). 4.3 Utilities and Services. To the extent that Subtenant does not pay any utilities or services directly to the provider or as a part of Operating Expenses, Subtenant shall pay to Sublandlord all utilities and services supplied to the Premises during the Term and charged to Sublandlord pursuant to the Master Lease. 4.4 Additional Services. If Subtenant shall, at its request, procure any additional services from Master Landlord, including, but not limited to, after-hours HVAC, or if additional rent or other sums are incurred under the Master Lease as a result of Subtenant's use or occupancy of the Premises, Subtenant shall make such payment to Sublandlord or Master Landlord, as Sublandlord shall reasonably direct. Notwithstanding the foregoing, Subtenant shall not be responsible or liable for any additional rent or other sums incurred or arising from (i) the failure of Sublandlord to comply with the Master Lease unless such failure was caused by Subtenant, and (ii) any additional rent which accrued prior to the Commencement Date. 4.5 Rent. All amounts set forth in this Section 4 and any other rent or other sums payable by Subtenant under this Sublease shall constitute and be due as additional rent. Base Rent, and additional rent shall herein be referred to as "Rent". Rent for partial months at the commencement or

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![](sumo-exhibit1014006.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA termination of this Sublease shall be prorated. Rent shall be paid to the Sublandlord at its notice address noted herein, or at any other place Sublandlord may from time to time designate by written notice mailed or delivered to Subtenant. 4.6 Prepaid Base Rent. Notwithstanding anything to the contrary, Subtenant shall 6 pay to Sublandlord the first full month of Base Rent within two (2) business days following Master Landlord's consent to this Sublease. 5. Security Deposit. Within two (2) business days following Master Landlord's consent to this Sublease, Subtenant shall deposit with Sublandlord the sum of $1,035,682.33 ("Security Deposit") as and for a security deposit to secure Subtenant's full and timely performance of all of its obligations hereunder; provided however, if Sublandlord is entitled to a reduction in its security deposit pursuant to the Master Lease (or if Sublandlord would have been entitled to a reduction in its security deposit pursuant to the Master Lease but for a beach of the Master Lease by Sublandlord and not caused by Subtenant) and provided that Subtenant is not then in Default of this Sublease, upon Sublandlord's receipt of the reduced security deposit per the Master Lease (or the date the deposit would have been reduced but for the Sublandlord breach of the Master Lease not caused by Subtenant), Subtenant shall be entitled a reduction of the Security Deposit to $517,841.17. If Subtenant is in Default, Sublandlord may (but shall not be obligated to) use, apply, or retain all or any portion of the Security Deposit for payment of any sum for which Subtenant is obligated or which will compensate Sublandlord for any foreseeable or unforeseeable loss or damage which Sublandlord may suffer thereby including, without limitation, any damage that will result in the future through the Term, to repair damage to the Premises, to clean the Premises at the end of the Term or for any loss or damage caused by the act or omission of Subtenant or Subtenant's officers, agents, employees, independent contractors or invitees. Subtenant waives the provisions of California Civil Code Section 1950.7(c) and all other provisions of law now in force or that become in force after the date of execution of this Sublease that provide that Sublandlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Subtenant or to clean the Premises. Any such use, application, or retention shall not constitute a waiver by Sublandlord of its right to enforce its other remedies hereunder, at law, or in equity. If any portion of the Security Deposit is so used, applied, or retained, Subtenant shall, within ten (10) days after delivery of written demand from Sublandlord, restore the Security Deposit to its original amount. Subtenant's failure to do so shall constitute a material breach of this Sublease, and in such event Sublandlord may elect, among or in addition to other remedies, to terminate this Sublease. Sublandlord shall not be a trustee of such Security Deposit, and shall not be required to keep this Security Deposit separate from its accounts. Sublandlord alone shall be entitled to any interest or earnings thereon and Sublandlord shall have the free use of same. If Subtenant fully and faithfully performs all of its obligations hereunder, then so much of the Security Deposit as it remains shall be returned to Subtenant (without payment of interest or earnings thereon) within 60 days after the later of (i) expiration or sooner termination of the Term, or (ii) Subtenant's surrender of possession of the Premises to Sublandlord. 6. Premises. 6.1 Condition of the Premises. Subtenant acknowledges that as of the Commencement Date, Subtenant shall have inspected the Premises, and every part thereof, and by taking possession shall have acknowledged that the Premises is in good condition and without need of repair, and Subtenant accepts the Premises "as is", Subtenant having made all investigations and tests it has deemed necessary or desirable in order to establish to its own complete satisfaction the condition of the Premises. Subtenant accepts the Premises in their condition existing as of the Commencement Date, subject to all applicable zoning, municipal, county and state laws, ordinances, and regulations governing and regulating the use of the Premises and any covenants or restrictions of record. Subtenant acknowledges that neither Sublandlord nor Master Landlord have made any representations or warranties as to the condition of the Premises or its present or future suitability for Subtenant's purposes.

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![](sumo-exhibit1014007.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA 6.2 Maintenance and Surrender. Subtenant shall keep the Premises in good order 7 and repair and perform all maintenance, repair and replacement obligations of "Tenant" required under the Master Lease. Subtenant shall surrender the Premises in the same condition as on the Commencement Date, reasonable wear and tear and casualty excepted. Notwithstanding anything herein to the contrary, in no event shall Subtenant be required to remove or pay for the removal of any improvements or alterations existing as of the Commencement Date. Notwithstanding anything to the contrary, if Master Landlord requires the removal any Leasehold Improvements existing as of the Commencement Date upon the expiration of the Master Lease, Sublandlord shall have the right to enter the Premises during the last thirty (30) days of the Term to perform such work required under the Master Lease, provided if the work materially interferes with Subtenant's use and occupancy of the Premises, Rent shall abate during the period of interference in proportion to the portion of the Premises Subtenant is unable to use and occupy and does not use and occupy. Subject to the foregoing sentence, such entry by Sublandlord and the performance of such work shall not be deemed an interference with Subtenant's quiet enjoyment of the Premises and shall not subject Sublandlord to liability to Subtenant. 7. Insurance. 7.1 Subtenant's Insurance. With respect to the "Tenant's" insurance under the Master Lease, the same is to be provided by Subtenant as described in the Master Lease, and such policies of insurance shall include as additional insureds Master Landlord, Sublandlord, any individual, party or entity as required by Master Landlord or Sublandlord. 7.2 Waiver of Subrogation. With respect to the waiver of subrogation contained in the Master Lease, such waiver shall be deemed to be modified to constitute an agreement by and between Sublandlord and Subtenant. 8. Use and Alterations. 8.1 Use of Premises. Subtenant shall use the Premises only for those purposes permitted in the Master Lease. 8.2 Alterations. Subtenant shall not make any Leasehold Improvements (as defined in the Master Lease) to the Premises without the express prior written consent of Sublandlord and of Master Landlord (to the extent Master Landlord's consent is required under the Master Lease), which consent by Sublandlord shall not be unreasonably withheld, conditioned or delayed. Subtenant shall reimburse Sublandlord for all reasonable, out-of-pocket costs which Sublandlord may incur in connection with reviewing Subtenant's plans for such Leasehold Improvements, including, without limitation, reasonable attorneys' fees and costs and any fees or costs charged by Master Landlord with respect to such Leasehold Improvements pursuant to the Master Lease, provided Sublandlord shall not impose a separate supervision, administrative, review or similar fee. On termination of this Sublease, if required by Master Landlord pursuant to the Master Lease, Subtenant shall remove any or all of such Leasehold Improvements and restore the Premises (or any part thereof) to the same condition as of the date Sublandlord delivered possession of the Premises to Subtenant; provided, in no event shall Subtenant be required to remove or pay for the removal of any Leasehold Improvements existing as of the Commencement Date. Should Subtenant fail to remove such Leasehold Improvements and restore the Premises on termination of this Sublease unless as otherwise set forth above, Sublandlord shall have the right to do so, and charge Subtenant the costs incurred by Sublandlord in addition to any costs or expenses charged by Master Landlord under the Master Lease. 8.3 Parking. Subject to Section 4.8 of the Master Lease, Subtenant shall have the right to all parking spaces available to Sublandlord under the Master Lease. Subtenant shall be responsible for all costs incurred by Sublandlord for Subtenant's parking, including, without limitation, any parking fees or taxes, if applicable.

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![](sumo-exhibit1014008.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA 8.4 Signage. Subject to the terms of the Master Lease, Subtenant shall have the right 8 to signage as provided in the Master Lease. Unless such signage is provided at Master Landlord's cost pursuant to the Master Lease, all signs shall be at Subtenant's sole cost and shall comply with the terms of the Master Lease and with all local, federal and state rules, regulations, statutes, and ordinances at all times during the Term. Subtenant shall obtain the prior written consent of Sublandlord, which consent shall not be unreasonably withheld, conditioned or delayed, and the consent of Master Landlord, to the extent required under the Master Lease, for any such signage. Subtenant, at Subtenant's cost, shall remove all such signs and graphics prior to the termination of this Sublease and repair any damage caused by such removal. 9. Assignment and Subletting. 9.1 Consent Required. Subtenant shall not assign this Sublease or any interest therein nor shall Subtenant sublet, license, encumber or permit the Premises or any part thereof to be used or occupied by others (collectively "Transfer"), without Sublandlord's and Master Landlord's prior written consent. Sublandlord's consent shall not be unreasonably withheld, conditioned or delayed; provided, however, Sublandlord's withholding of consent shall in all events be deemed reasonable if for any reason Master Landlord's consent is not obtained. The consent by Sublandlord and Master Landlord to any Transfer shall not waive the need for Subtenant (and Subtenant's transferees) to obtain the consent of Sublandlord and Master Landlord to any different or further Transfer. All conditions and standards set forth in the Master Lease regarding Transfers shall apply. 9.2 Transfer Premium. To the extent there is any consideration (as defined in Section 14.1 of the Master Lease) with respect to the assignment of this Sublease or the sublease of all or part of the Premises as set forth in Section 14.1 of the Master Lease, the portion, if any, of such consideration to which Master Landlord is entitled to under the Master Lease shall first be paid by Subtenant to Master Landlord and the remaining consideration will be split between Subtenant and Sublandlord in the same manner as set forth in Section 14.1 of the Master Lease. 9.3 Form of Document. Every Transfer shall recite that it is and shall be subject and subordinate to the provisions of this Sublease, that in the event of an assignment, the transferee assumes Subtenant's obligation hereunder, that the termination of this Sublease shall at Sublandlord's sole election, constitute a termination of every such Transfer. 9.4 No Release of Subtenant. Regardless of Sublandlord's consent, no Transfer shall release Subtenant of Subtenant's obligation or alter the primary liability of Subtenant to pay the Rent and to perform all other obligations to be performed by Subtenant hereunder. The acceptance of Rent by Sublandlord from any other person shall not be deemed to be a waiver by Sublandlord of any provision hereof. In the event of Default by any transferee, in the performance of any of the terms hereof, Sublandlord may proceed directly against Subtenant without the necessity of exhausting remedies against such transferee. 9.5 Permitted Transfers. Notwithstanding any provision contained in the Section 9 to the contrary, Subtenant shall have the right, without the consent of Sublandlord, upon ten (10) days prior written notice to Sublandlord (unless prohibited by Law or any binding nondisclosure agreement, in which event Subtenant shall provide Sublandlord with written notice as soon as reasonably practicable thereafter but in any event within five (5) days after such prohibition is no longer applicable), to Transfer this Sublease to any of the following entities (each a "Permitted Transferee" , a Transfer to a Permitted Transferee being a "Permitted Transfer"): (i) a successor corporation related to Subtenant by merger, consolidation, or non-bankruptcy reorganization; (ii) a purchaser of at least ninety percent (90%) of Subtenant's assets as an ongoing concern; or (iii) an "Affiliate" of Subtenant; or (iv) any entity or person by sale or other transfer of a percentage of capital stock or equity of Tenant which results in a change of controlling; so long as the Permitted Transferee has a tangible net worth sufficient to fulfill the obligations of the original Subtenant under this Sublease being assumed by the Permitted Transferee and

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![](sumo-exhibit1014009.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA for mergers or acquisitions, the Permitted Transferee has no less than the tangible net worth of Subtenant immediately prior to such Transfer. Notwithstanding this Section 9.5, Subtenant shall still be required to obtain the consent of Master Landlord to any Permitted Transfer to the extent required under the Master Lease or any consent to this Sublease. 10. Default. 9 10.1 Default Described. The occurrence of any of the following shall constitute a "Default" by Subtenant: (i) failure to pay Rent or any other amount within three (3) business days after written notice that such payment is past due; (ii) all those items of default set forth in the Master Lease where the obligation is incorporated in this Sublease which remain uncured after the one-half (½) of the cure period provided in the Master Lease; or (iii) Subtenant's failure to perform timely and remain uncured after fifteen (15) days written notice of the default, any other provision of this Sublease; provided, however, that if a cure cannot reasonable be completed in such 15-day period, then Tenant shall not be in Default provided that Subtenant commences a cure within five (5) days and thereafter diligently prosecutes a cure to completion (not to exceed 60 days). 10.2 Sublandlord's Remedies. In the event of a Default, Sublandlord shall have the remedies set forth in the Master Lease as if Sublandlord is Master Landlord. These remedies are not exclusive; they are cumulative and in addition to any remedies now or later allowed by law. 10.3 Subtenant's Right to Possession Not Terminated. Sublandlord has the remedy described in California Civil Code Section 1951.4 (landlord may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations). Sublandlord may continue this Sublease in full force and effect, and Sublandlord shall have the right to collect rent and other sums when due. During the period Subtenant is in Default, Sublandlord may enter the Premises and relet them, or any part of them, to third parties for Subtenant's account and alter or install locks and other security devices at the Premises. Subtenant shall be liable immediately to Sublandlord for all costs Sublandlord incurs in reletting the Premises, including, without limitation, attorneys' fees, brokers' commissions, expenses of remodeling the Premises required by the reletting, and like costs. Reletting may be for a period equal to, shorter or longer than the remaining term of this Sublease and rent received by Sublandlord shall be applied to (i) first, any indebtedness from Subtenant to Sublandlord other than rent due from Subtenant; (ii) second, all costs incurred by Sublandlord in reletting, including, without limitation, brokers' fees or commissions and attorneys' fees, the cost of removing and storing the property of Subtenant or any other occupant, and the costs of repairing, altering, maintaining, remodeling or otherwise putting the Premises into condition acceptable to a new subtenant or subtenants; (iii) third, rent due and unpaid under this Sublease. After deducting the payments referred to in this Section Error! Reference source not found., any sum remaining from the rent Sublandlord receives from reletting shall be held by Sublandlord and applied in payment of future rent and other amounts as rent and such amounts become due under this Sublease. In no event shall Subtenant be entitled to any excess rent received by Sublandlord. 10.4 All Sums Due and Payable as Rent. Subtenant shall also pay without notice, or where notice is required under this Sublease, immediately upon demand, except as otherwise provided herein, without any abatement, deduction, or setoff, as additional rent all sums, impositions, costs, expenses, and other payments which Subtenant in any of the provisions of this Sublease assumes or agrees to pay, and, in case of any nonpayment thereof, Sublandlord shall have, in addition to all other rights and remedies, all the rights and remedies provided for in this Sublease or by law in the case of nonpayment of rent. 10.5 No Waiver. Sublandlord may accept Subtenant's payments without waiving any rights under the Sublease, including rights under a previously served notice of default. No payment by Subtenant or receipt by Sublandlord of a lesser amount than any installment of rent due or other sums shall be deemed as other than a payment on account of the amount due, nor shall any endorsement or

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![](sumo-exhibit1014010.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Sublandlord may accept such check or payment without prejudice of Sublandlord's right to recover the balance of such rent or other sum or pursue any other remedy provided in this Sublease, at law or in equity. If Sublandlord accepts payments after serving a notice of default, Sublandlord may nevertheless commence and pursue an action to enforce rights and remedies under the previously served notice of default without giving Subtenant any further notice or demand. Furthermore, Sublandlord's acceptance of rent from Subtenant when the Subtenant is holding over without express written consent does not convert Subtenant's tenancy from a tenancy at sufferance to a month-to-month tenancy. No waiver of any provision of this Sublease shall be implied by any failure of Sublandlord or Subtenant to enforce any remedy for the violation of that provision, even if that violation continues or is repeated. Any waiver by Sublandlord or Subtenant of any provision of this Sublease must be in writing. Such waiver shall affect only the provisions specified and only for the time and in the manner stated in the writing. No delay or omission in the exercise of any right or remedy by Sublandlord or Subtenant shall impair such right or remedy or be construed as a waiver thereof by such party. No act or conduct of Sublandlord, including, without limitation the acceptance of keys to the Premises shall constitute acceptance or the surrender of the Premises by Subtenant before the Expiration Date. Only written notice from Sublandlord to Subtenant of acceptance shall constitute such acceptance or surrender of the Premises. Sublandlord's consent to or approval of any act by Subtenant which requires Sublandlord's consent or approval shall not be deemed to waive or render unnecessary Sublandlord's consent to or approval of any subsequent act by Subtenant. Subtenant's consent to or approval of any act by Sublandlord which requires Subtenant's consent or approval shall not be deemed to waive or render unnecessary Subtenant's consent to or approval of any subsequent act by Sublandlord. 10.6 Sublandlord Default. For purposes of this Sublease, Sublandlord shall not be 10 deemed in default hereunder unless and until Subtenant shall first deliver to Sublandlord thirty (30) days' prior written notice, and Sublandlord shall fail to cure said default within said thirty (30) day period, or in the event Sublandlord shall reasonably require in excess of thirty (30) days to cure said default, shall fail to commence said cure with said thirty (30) day period, and thereafter diligently prosecute the same to completion. 10.7 Notice of Event of Default under Master Lease. Sublandlord shall notify Subtenant of any Default under the Master Lease, or of any other event of which Sublandlord has actual knowledge which will impair or affect Subtenant's ability to use the Premises or access thereto, as soon as reasonably practicable following Sublandlord's receipt of notice from Master Landlord of a Default or Sublandlord's actual knowledge of such impairment. Without limitation, in the event that Sublandlord delivers or receives a notice of default under the Master Lease, Sublandlord agrees to deliver to Subtenant a copy of any such notice of default. Furthermore, if at any time during the Term, Sublandlord receives any notice or demand from Master Landlord under the Master Lease with respect to the Premises, Sublandlord shall promptly deliver the same to Subtenant. 10.8 Self-Help. If Master Landlord fails to perform any of its obligations under the Master Lease and fails to cure such default within the time period prescribed in the Master Lease, then upon Subtenant's written request, Sublandlord shall exercise the remedies outlined in Section 13.3 of the Original Lease for Subtenant's benefit, provided that (a) Subtenant is not in Default, (b) Sublandlord reasonably agrees that Master Landlord has failed to perform its obligations under the Master Lease and failed to cure the same in the time period required, (c) Subtenant indemnifies defends and holds Sublandlord harmless from all Claims resulting from the exercise and performance of the rights under Section 13.3 of the Original Lease, and (d) Subtenant shall pay a deposit, bond, or other form of security reasonably requested by Sublandlord in an amount reasonably estimated to cover the costs to exercise the remedies under Section 13.3, which deposit, bond, or other form of security shall be returned to Subtenant (or released) upon completion of the exercise of the remedies outlined in Section 13.3 of the Original Lease (and all applicable lien rights waived).

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![](sumo-exhibit1014011.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA 11. Consent of Master Landlord. Subtenant acknowledges that the Master Lease requires 11 that Sublandlord obtain the consent of Master Landlord to any subletting by Sublandlord. This Sublease shall not be effective unless and until Master Landlord signs a consent to this subletting reasonably satisfactory to Sublandlord and Subtenant. Subtenant and Sublandlord will sign such commercially reasonable form of consent to Sublease if required by Master Landlord as reasonably presented by Master Landlord. This Sublease shall be contingent on Master Landlord's agreement that the terms of Section 9.4 of the Master Lease in relation to waivers of subrogation shall apply to Subtenant and Subtenant's transferees. If Master Landlord does not agree that the waiver of subrogation terms shall apply to Subtenant and Subtenant's transferees, then Subtenant shall have a one-time right to terminate this Sublease, provided Subtenant must exercise such right prior to the date possession of the Premises is delivered to Subtenant. Further, Sublandlord agrees to cooperate, at no additional cost to Sublandlord, with Subtenant's efforts in securing Master Landlord's consent to the following: (a) Subtenant may pay Rent due under this Sublease directly to Master Landlord; (b) so long as Subtenant is not in a Default, Master Landlord will not disturb Subtenant in its possession of the Premises or any right or privilege granted to Subtenant under this Sublease, and in the event of the termination of the Master Lease, Subtenant shall not be made a party to any removal or eviction action or proceeding, nor shall Subtenant be evicted, and this Sublease shall continue in full force and effect as a direct lease between Master Landlord and Subtenant for the remainder of the term of the Sublease, and (c) confirmation that the Master Lease and all amendments are attached to the Sublease, and constitute the entire agreement regarding the Premises between Sublandlord and Master Landlord. Sublandlord hereby agrees that, subject to Master Landlord's consent, Subtenant may pay Rent under this Sublease directly to Master Landlord, provided Subtenant shall be responsible for all late fees or other obligations incurred due to Subtenant's late payment of Rent under the Master Lease. If Master Landlord has not provided its consent to Sublease within sixty (60) days following the Effective Date, then either Sublandlord or Subtenant shall have the right to terminate this Sublease by written notice to the other party prior to the date such consent to Sublease is obtained whereupon this Sublease shall be deemed null and void and of no effect (except for those provisions expressly stated herein to survive a termination, and, upon such termination, Sublandlord shall return any prepaid rent and the security deposit to Subtenant upon such termination). Any legal fees, fees or other consideration charged by Landlord for its review of, and consent to, this Sublease shall be paid by Sublandlord pursuant to the Master Lease. 12. Notices and Payments. Any notice, demand, request, consent, approval, submittal or communication that either party desires or is required to give to the other party or any other person shall be in writing and either served personally or sent by prepaid, first-class certified mail, return receipt requested or commercial overnight delivery service. Such Notice shall be effective on the date of actual receipt or refusal, to the following addresses: To the Sublandlord: Delphix Corp. c/o Hopkins & Carley, ALC 70 S. 1st Street, San Jose, CA 95113 Attention: David W. Brown, Esq. With a copy sent via email to: To the Subtenant: At the Premises When this Sublease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notices required by Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a Attn: Legal Department [\*\*\*] [\*\*\*]

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![](sumo-exhibit1014012.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA particular manner, service of that notice (or a similar notice required by this Sublease) shall replace and satisfy the statutory service-of-notice procedures, including those required by Code of Civil Procedure Section 1162 or any similar or successor statute. 13. Holding Over. Subtenant shall have no right to holdover. If Subtenant does not 12 surrender and vacate the Premises at the expiration or earlier termination of this Sublease, Subtenant shall be a tenant at sufferance, or at the sole election of Sublandlord, a month to month tenancy, and the parties agree in either case that the reasonable rental value, if at sufferance, or the Rent if a month to month tenancy shall be Rent at the greater of (1) the monthly rate of one hundred fifty percent (150%) of the Base Rent set forth in Section 4, or (2) the rate of any and all Rent due to Master Landlord from Sublandlord under the holdover provisions of the Master Lease, including, but not limited to, Operating Expenses and Real Property Taxes due and payable during such holdover period of time. In connection with the foregoing, Sublandlord and Subtenant agree that the reasonable rental value of the Premises following the expiration or earlier termination of the Sublease shall be the amounts set forth above per month. Sublandlord and Subtenant acknowledge and agree that, under the circumstances existing as of the Effective Date, it is impracticable and/or extremely difficult to ascertain the reasonable rental value of the Premises on the Expiration Date and that the reasonable rental value established herein is a reasonable estimate of the damage that Sublandlord would suffer as the result of the failure of Subtenant to timely surrender possession of the Premises. The parties acknowledge that the liquidated damages established herein is not intended as a forfeiture or penalty within the meaning of California Civil Code sections 3275 or 3369, but is intended to constitute liquidated damages to Sublandlord pursuant to California Civil Code sections 1671, 1676, and 1677. Notwithstanding the foregoing, and in addition to all other rights and remedies on the part of Sublandlord if Subtenant fails to surrender the Premises upon the termination or expiration of this Sublease, in addition to any other liabilities to Sublandlord accruing therefrom, Subtenant shall indemnify, defend and hold Sublandlord harmless from all Claims resulting from such failure, including, without limitation, any Claims by any third parties based on such failure to surrender and any lost profits to Sublandlord resulting therefrom. 14. Certified Access Specialist Disclosure. For purposes of Section 1938 of the California Civil Code, Sublandlord hereby discloses to Subtenant, and Subtenant hereby acknowledges, that to Sublandlord's actual knowledge, the Premises have not undergone inspection by a CASp. California Civil Code Section 1938 states: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises." 15. Notwithstanding anything to the contrary in the Sublease, Sublandlord and Subtenant hereby agree that Subtenant shall be responsible for (i) the payment of the fee for any CASp inspection that Subtenant desires, and (ii) making, at Subtenant's sole cost, any repairs necessary to correct violations of construction-related accessibility standards within the Premises, whether such violations occurred before or occur after the Effective Date, if such CASp inspection at Subtenant's request reveals a violation, provided that such repairs shall be in accordance with the terms of the Sublease and the repairs are not the Master Landlord's responsibility under the terms of the Master Lease. Subtenant

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![](sumo-exhibit1014013.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA hereby agrees that: any CASp inspecting the Premises shall be selected by Sublandlord or Master Landlord; Subtenant shall promptly deliver to Sublandlord and Master Landlord any CASp report regarding the Premises obtained by Subtenant; and Subtenant shall keep information contained in any CASp report regarding the Premises confidential, except as required by law or as may be necessary for Subtenant or its agents to complete any repairs or correct violations with respect to the Premises that Subtenant agrees to undertake. Subtenant shall have no right to cancel or terminate the Sublease due to violations of construction-related accessibility standards within the Premises identified in a CASp report obtained during the Term. 16. Miscellaneous. 13 16.1 Conflict with Master Lease; Interpretation. In the event of any conflict between the provisions of the Master Lease and this Sublease, this Sublease shall govern and control as between Sublandlord and Subtenant; provided however, in no event shall this Sublease convey any greater right to Subtenant with respect to the Premises than provided under the Master Lease. No presumption shall apply in the interpretation or construction of this Sublease as a result of Sublandlord having drafted the whole or any part hereof. 16.2 Remedies Cumulative. The rights, privileges, elections, and remedies of Sublandlord in this Sublease, at law, and in equity are cumulative and not alternative. 16.3 Waiver of Redemption. Subtenant hereby expressly waives any and all rights of redemption to which it may be entitled by or under any present or future laws in the event Sublandlord shall obtain a judgment for possession of the Premises. 16.4 Damage and Destruction; Condemnation. In the event of any damage, destruction, casualty, or Condemnation affecting the Premises, Rent payable hereunder shall be abated but only to the extent that Rent is abated under the Master Lease with respect to the Premises. Subtenant shall have no right to terminate this Sublease in connection with any damage, destruction, casualty or Condemnation, provided however, if Sublandlord, as "Tenant", has the right to terminate the Master Lease pursuant to Sections 11 or 12 of the Original Lease, Subtenant shall have the right to terminate this Sublease; provided however, in the event of a casualty, Subtenant has provided written notice to Sublandlord of its election to terminate this Sublease not later than fifteen (15) days prior to the last day Sublandlord has the right to terminate the Master Lease pursuant to Section 11.3 of the Master Lease and in the event of a Condemnation, Subtenant has provided written notice to Sublandlord of its election to terminate this Sublease and Sublandlord continues to the right to terminate the Master Lease as a result of such Condemnation. 16.5 Effect of Conveyance. As used in this Sublease, the term "Sublandlord" means the holder of the "Tenant's" interest under the Master Lease. In the event of any assignment or transfer of the "Tenant's" interest under the Master Lease, which assignment or transfer may occur at any time during the Term hereof in Sublandlord's sole discretion, Sublandlord shall be and hereby is entirely relieved of the future performance of all covenants and obligations of Sublandlord hereunder if such future performance is assumed by the transferee in a writing and a copy thereof is delivered to Subtenant. Sublandlord may transfer and deliver any security of Subtenant to the transferee of the Tenant's interest under the Master Lease, and thereupon Sublandlord shall be discharged from any further liability with respect thereto if such transferee assumes in writing Sublandlord's obligations with regard to such security in a writing delivered to Subtenant. 16.6 Broker's Commission. Sublandlord and Subtenant each represents and warrants to the other that it has not dealt with any broker, agent, finder, or other such person with respect to this Sublease and each agrees to indemnify and hold the other harmless from any Claims asserted against the other by any broker, agent, finder, or other such person.

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![](sumo-exhibit1014014.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA 16.7 Offer. Preparation of this Sublease by either Sublandlord or Subtenant or either 14 party's agent and submission of same to Sublandlord or Subtenant shall not be deemed an offer to Sublease. This Sublease is not intended to be binding until executed and delivered by all Parties hereto. 16.8 Due Authority. If Subtenant signs as a corporation, Subtenant represents and warrants that each of the persons executing this Sublease on its behalf has the authority to bind Subtenant, Subtenant has been and is qualified to do business in the State of California, that the corporation has full right and authority to enter into this Sublease, and that all persons signing on behalf of the corporation were authorized to do so by appropriate corporate actions. If Subtenant signs as a partnership, trust or other legal entity, Subtenant represents and warrants that each of the persons executing this Sublease on its behalf has the authority to bind Subtenant, Subtenant has complied with all applicable laws, rules and governmental regulations relative to its right to do business in the State of California and that all persons signing on behalf of the Subtenant was authorized to do so by any and all appropriate partnership, trust or other actions. Subtenant agrees to furnish promptly upon request a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the authorization of Subtenant to enter into this Sublease. If Sublandlord signs as a corporation, Sublandlord represents and warrants that each of the persons executing this Sublease on its behalf has the authority to bind Sublandlord, Sublandlord has been and is qualified to do business in the State of California, that the corporation has full right and authority to enter into this Sublease, and that all persons signing on behalf of the corporation were authorized to do so by appropriate corporate actions. If Sublandlord signs as a partnership, trust or other legal entity, Sublandlord represents and warrants that each of the persons executing this Sublease on its behalf has the authority to bind Sublandlord, Sublandlord has complied with all applicable laws, rules and governmental regulations relative to its right to do business in the State of California and that all persons signing on behalf of the Sublandlord was authorized to do so by any and all appropriate partnership, trust or other actions. Sublandlord agrees to furnish promptly upon request a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the authorization of Sublandlord to enter into this Sublease. 16.9 Multiple Counterparts. This Sublease may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. This Sublease may be executed by a party's signature through DocuSign or transmitted by electronic mail in pdf format ("pdf"), and copies of this Sublease executed and delivered by means of DocuSign or pdf signatures shall have the same force and effect as copies hereof executed and delivered with original signatures. All parties hereto may rely upon DocuSign or pdf signatures as if such signatures were originals. Any party executing and delivering this Sublease by pdf shall promptly thereafter deliver a counterpart of this Sublease containing said party's original signature. All parties hereto agree that a DocuSign copy of this Sublease or pdf signature page may be introduced into evidence in any proceeding arising out of or related to this Sublease as if it were an original signature page. 16.10 Attorney Fees. In the event any action or proceeding at law or in equity or any arbitration proceeding be instituted by either party, relating to this Sublease or for an alleged breach of any obligation of a party under this Sublease, to recover rent or other sums due from either party, to terminate the tenancy of Subtenant at the Premises, or to enforce, protect, or establish any right or remedy of a party to this Sublease, the prevailing party (by judgment or settlement) in such action or proceeding shall be entitled to recover as part of such action or proceeding such reasonable attorneys' fees, expert witness fees, and court costs as may be fixed by the court or jury. 16.11 Subtenant's Requests. In any case where Subtenant requests permission from Sublandlord and/or Master Landlord to assign, sublet, make alterations, or receive any other consent or obtain any waiver from or modification to the terms of this Sublease, Subtenant shall reimburse Sublandlord for all costs and expense incurred by Sublandlord to review such consent, including, without limitation, reasonable attorney's fees and any amount charged by Master Landlord. Notwithstanding the foregoing, Sublandlord's attorney's fees for the preparation of any consent document to an assignment or

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![](sumo-exhibit1014015.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA sublease shall not exceed five thousand dollars ($5,000.00), provided such cap shall not apply to the cost 15 to negotiate the terms of the consent document. Sublandlord agrees to reasonably cooperate with Subtenant in obtaining the consent of the Master Landlord where any such consent is required by this Sublease or the Master Lease. If Subtenant shall submit to Sublandlord a request for Master Landlord's consent or approval with respect to any given matter required by this Sublease or the Master Lease, then Sublandlord shall promptly forward such request on to Master Landlord for its consent or approval. 16.12 Waiver of Damages. In no event shall Sublandlord be liable for, and Subtenant hereby waives any claim for, any indirect, consequential or punitive damages, including loss of profits or business opportunity, arising under or in connection with this Sublease. Subtenant shall not be liable for any indirect, consequential, or punitive damages, including loss of profits or business opportunity, arising under or in connection with this Sublease, provided however, nothing herein shall prohibit Sublandlord for exercising its remedies or shall reduce any claims or damages Sublandlord is entitled to pursuant to any indemnify provision set forth herein or incorporated from the Master Lease, those rights and remedies expressly set forth in this Sublease, including, without limitation those rights and remedies set forth in Sections 10 or 13 of this Sublease; or those for which Sublandlord is entitled pursuant to California Civil Code sections 1951.2, 1951.3 and 1951.4. 16.13 Quiet Enjoyment. Sublandlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as the Master Lease remains in full force and effect and so long as Subtenant is in compliance with the covenants and conditions set forth in this Sublease, Subtenant shall have the right to quiet use and enjoyment of the Premises without hindrance or interference from Sublandlord or those claiming through Sublandlord, subject to the covenants and conditions set forth in this Sublease and to the rights of Master Landlord. 16.14 Exhibits and Attachments. All exhibits and attachments to this Sublease are a part hereof. [Signatures appear on following page]

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![](sumo-exhibit1014016.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA IN WITNESS WHEREOF, Sublandlord and Subtenant have executed and delivered this Sublease on the date first set forth above. SUBLANDLORD SUBTENANT DELPHIX CORP., a Delaware corporation SUMO LOGIC, INC., a Delaware corporation 16 By: /s/ Steve Carbone Name: Steve Carbone Its: Chief Financial Officer By: /s/ Ramin Sayar Name: Ramin Sayar Its: President and CEO \*NOTE: If Subtenant is a corporation, then one of the following alternative requirements must be satisfied: (A) This Sublease must be signed by two (2) officers of such corporation: one being the chairman of the board, the president or a vice president, and the other being the secretary, an assistant secretary, the chief financial officer or an assistant treasurer. If one (1) individual is signing in two (2) of the foregoing capacities, that individual must sign twice; once as one officer and again as the other officer. (B) If the two (2) signatories do not satisfy the requirements of (A) above, then Subtenant shall deliver to Sublandlord a certified copy of a corporate resolution in a form reasonably acceptable to Sublandlord authorizing the signatory(ies) to execute this Sublease. By: /s/ Stewart Grierson Name: Stewart Grierson Its: CFO DocuSign Envelope ID: C7E98B4D-FB44-4BAD-93D8-618C1E2C32F6

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![](sumo-exhibit1014017.jpg)

855 Main Street, 1st and 4th Floor Sumo Logic, Inc. Redwood City, CA EXHIBIT A MASTER LEASE [Master Lease appears on following pages] A-1

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![](sumo-exhibit1014018.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LEASE AGREEMENT FOR 855 MAIN STREET, REDWOOD CITY, CALIFORNIA 94063 BETWEEN 855 MAIN STREET RWC, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY "LANDLORD" AND DELPHIX CORP. A DELAWARE CORPORATION "TENANT"

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![](sumo-exhibit1014019.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;i LEASE AGREEMENT ARTICLE 1 DEFINITIONS .........................................................................................................................4 1.1 Commencement Date ............................................................................................................4 1.2 Lease Term ............................................................................................................................4 1.3 Property .................................................................................................................................4 1.4 Leased Premises ....................................................................................................................4 1.5 Building .................................................................................................................................4 1.6 Permitted Use ........................................................................................................................4 1.7 Tenant's Minimum Liability Coverage .................................................................................4 1.8 Address for Notices ...............................................................................................................4 1.9 Additional Definitions ...........................................................................................................4 1.10 Prepaid Rent ..........................................................................................................................4 1.11 Security Deposit ....................................................................................................................4 1.12 Common Areas .....................................................................................................................4 ARTICLE 2 DEMISE AND POSSESSION .................................................................................................5 2.1 Lease of Premises ..................................................................................................................5 2.2 Construction of Improvements ..............................................................................................5 2.3 Delivery of Possession; Substantial Completion; Penalties ..................................................5 ARTICLE 3 RENT .......................................................................................................................................6 3.1 Base Monthly Rent ................................................................................................................6 3.2 Additional Rent .....................................................................................................................6 3.3 Payment of Rent ....................................................................................................................6 3.4 Late Charge and Interest Upon Default ................................................................................6 3.5 Security Deposit ....................................................................................................................7 3.6 Prepayment of Rent ...............................................................................................................7 ARTICLE 4 USE OF LEASED PREMISES ................................................................................................7 4.1 Limitation on Use ..................................................................................................................7 4.2 Compliance with Laws ..........................................................................................................9 4.3 Insurance Requirements ........................................................................................................9 4.4 Outside Areas ......................................................................................................................10 4.5 Signs ....................................................................................................................................10 4.6 Rules and Regulations .........................................................................................................10 4.7 Auctions ..............................................................................................................................10 4.8 Parking ................................................................................................................................10 4.9 Transportation Demand Management Programs ................................................................12 ARTICLE 5 TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS ............................................12 5.1 Trade Fixtures .....................................................................................................................12 5.2 Leasehold Improvements ....................................................................................................12 5.3 Compliance with Laws ........................................................................................................14 5.4 Landlord's Improvements ...................................................................................................14 5.5 Liens ....................................................................................................................................14 ARTICLE 6 REPAIR AND MAINTENANCE ..........................................................................................14

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![](sumo-exhibit1014020.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;ii 6.1 Tenant's Obligation to Maintain .........................................................................................14 6.2 Landlord's Obligation to Maintain .....................................................................................14 6.3 Tenant's Obligation to Reimburse ......................................................................................15 6.4 Operating Expenses Defined ...............................................................................................16 6.5 Main Street Lobby ..............................................................................................................20 ARTICLE 7 WASTE DISPOSAL AND UTILITIES ................................................................................20 7.1 Waste Disposal ....................................................................................................................20 7.2 Utilities ................................................................................................................................20 7.3 Window Washing ................................................................................................................21 ARTICLE 8 PAYMENT OF TAXES ........................................................................................................21 8.1 Real Property Taxes Defined ..............................................................................................21 8.2 Tenant's Obligation to Reimburse ......................................................................................22 8.3 Taxes on Tenant's Property ................................................................................................22 ARTICLE 9 INSURANCE .........................................................................................................................22 9.1 Tenant's Insurance ..............................................................................................................22 9.2 Landlord's Insurance ...........................................................................................................23 9.3 Tenant's Obligation to Reimburse ......................................................................................24 9.4 Release and Waiver of Subrogation ....................................................................................24 ARTICLE 10 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY ...............................24 10.1 Limitation on Landlord's Liability .....................................................................................24 10.2 Indemnification of Landlord ...............................................................................................24 10.3 Indemnification of Tenant ...................................................................................................24 10.4 Indemnities Generally .........................................................................................................25 10.5 Waiver of Consequential Damages .....................................................................................25 ARTICLE 11 DAMAGE TO LEASED PREMISES .................................................................................25 11.1 Landlord's Duty to Restore .................................................................................................25 11.2 Landlord's Right to Terminate ............................................................................................25 11.3 Tenant's Right to Terminate ...............................................................................................26 11.4 Abatement of Rent ..............................................................................................................27 ARTICLE 12 CONDEMNATION .............................................................................................................27 12.1 Permanent Taking of Leased Premises ...............................................................................27 12.2 Restoration Following the Taking .......................................................................................27 12.3 Temporary Taking ...............................................................................................................27 12.4 Division of Condemnation Award ......................................................................................28 ARTICLE 13 DEFAULTS AND REMEDIES ...........................................................................................28 13.1 Events of Tenant's Default .................................................................................................28 13.2 Landlord's Remedies ..........................................................................................................29 13.3 Landlord's Default and Tenant's Remedies ........................................................................30 13.4 Waiver .................................................................................................................................31 ARTICLE 14 ASSIGNMENT AND SUBLETTING .................................................................................32 14.1 By Tenant ............................................................................................................................32

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&nbsp;&nbsp;&nbsp;&nbsp;iii 14.2 By Landlord ........................................................................................................................35 ARTICLE 15 TERMINATION ..................................................................................................................35 15.1 Surrender of the Leased Premises .......................................................................................35 15.2 Holding Over .......................................................................................................................35 ARTICLE 16 GENERAL PROVISIONS ...................................................................................................36 16.1 Landlord's Right to Enter ...................................................................................................36 16.2 Subordination ......................................................................................................................36 16.3 [Intentionally Omitted] .......................................................................................................37 16.4 Mortgagee Protection ..........................................................................................................37 16.5 Estoppel Certificates and Financial Statements ..................................................................37 16.6 Notices ................................................................................................................................37 16.7 Attorneys' Fees ...................................................................................................................38 16.8 Entity Authority ..................................................................................................................38 16.9 Additional Definitions .........................................................................................................38 16.10 Miscellaneous ......................................................................................................................39 16.11 Limitation on Tenant's Recourse ........................................................................................39 16.12 Entire Agreement ................................................................................................................39 16.13 Waiver of Jury Trial ............................................................................................................40 16.14 Brokers ................................................................................................................................40 16.15 California Disability Compliance .......................................................................................40 16.16 Rooftop and Riser Rights ....................................................................................................40 16.17 Force Majeure .....................................................................................................................41 16.18 Confidentiality ....................................................................................................................41 16.19 Recording ............................................................................................................................41

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![](sumo-exhibit1014022.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;1 Basic Lease Information Summary Date: August 12, 2021 Landlord: 855 Main Street RWC, LLC, a California limited liability company Tenant: DELPHIX CORP., a Delaware corporation Commencement Date: The Delivery Date (as such term is defined in Section 4 of Exhibit C attached hereto), and subject to extension as set forth herein. Anticipated Delivery Date: February 1, 2022. Lease Term: Sixty (60) months from and after the Commencement Date, provided, however, that if the Commencement Date shall fall on a day of the month other than the first day of the month, the number of days in such partial month shall be added to the twelfth (12th) month of the Lease Term, such that the first (1st) year of the Lease Term ends on the last day of the twelfth (12th) full calendar month following the Commencement Date, and such that the Lease Term expires on the last calendar day of the last month of the Lease Term (the "Expiration Date"). At the request of either party following the Commencement Date, Landlord and Tenant shall execute and deliver to other party a completed Commencement Date Certificate substantially in the form attached hereto as Addendum 1. Option to Extend: Tenant shall have one (1) option to extend the Lease Term for an additional five (5) years pursuant to the terms and conditions set forth in Addendum 2 attached hereto. Property Description: The Property consists of the real property, together with the Building and other improvements to be constructed thereon, commonly known as 855 Main Street, Redwood City, California 94063 which Property is depicted on Exhibit A and which shall include two (2) levels of underground parking (the "Parking Area"), a mix of retail space and office space comprising ground level floor one (1) of the Building, and office space comprising the second (2nd) through fourth (4th) floors of the Building. Approximate Property Gross Leasable Area: 99,506 rentable square feet comprised of 93,506 rentable square feet of Office Space ("Office Space") and 5,726 rentable square feet of Retail Space ("Retail Space"). Leased Premises Description: The Leased Premises consists of approximately 11,756 rentable square feet of Office Space on the first (1st) floor of the Building and approximately 12,581 rentable square feet of Office Space on the fourth (4th) floor of the Building, and is generally depicted on Exhibit B.

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![](sumo-exhibit1014023.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;2 Approximate Leased Premises Gross Leasable Area: 24,337 rentable square feet Tenant's Allocated Share: 26.03% for the areas dedicated to the Office Space ("Allocated Office Share") and 24.53% for the areas dedicated to both the Office Space and the Retail Space ("Allocated Building Share"). Tenant's Permitted Use: General office, research and development, engineering, and sales and distrbution, but only to the extent permitted by the City in which the Leased Premises are located and all agencies and governmental authorities having jurisdiction of the Leased Premises. Tenant's Minimum Liability Insurance Coverage: $2,000,000.00 each occurrence/ $2,000,000.00 aggregate Base Monthly Rent: Estimated Monthly Operating Expenses And Taxes: Period Base Monthly Rent Months 1 - 12 $189,828.60 (NNN) Months 13 - 24 $195,523.46 (NNN) Months 25 - 36 $201,389.16 (NNN) Months 37 - 48 $207,430.84 (NNN) Months 49 - 60 $213,653.76 (NNN) $45,266.82 Prepaid Rent: $235,095.42 [Base Monthly Rent, Operating Expenses, and Taxes] Security Deposit: $1,035,682.33 (provided, however, so long as Tenant is not then in default under this Lease beyond applicable notice and cure periods, then, upon the thirty-sixth (36th) monthly anniversary of the Commencement Date, Landlord shall reduce the Security Deposit to $517,841.17 and Landlord shall promptly return the $517,841.16 delta to Tenant) Total Prepaid Rent and Security Deposit Due Upon Lease Execution: $1,270,777.75 Landlord's Address For Notices: 855 Main Street RWC, LLC 125 Willow Road Menlo Park, California 94025 Attention: Mark Johnson Email: [\*\*\*] Tenant's Address For Notices: Prior to the Commencement Date: DELPHIX CORP. 1400A Seaport Blvd. Ste 200

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![](sumo-exhibit1014024.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;3 Redwood City, California 94063 Attention: Stewart Grierson Email: [\*\*\*] After the Commencement Date: DELPHIX CORP. 855 Main Street, Suite 401 Redwood City, California 94063 Attention: Stewart Grierson Email: [\*\*\*] Brokers: Avis Young, representing the Tenant, and Cushman & Wakefield, representing the Landlord. This Basic Lease Information Summary is part of that certain Lease Agreement between the parties for the Leased Premises, referenced above, and the terms of this document are incorporated into the Lease Agreement and the terms of the Lease Agreement are incorporated into this Basic Lease Information Summary. In the event of a conflict between this Basic Lease Information Summary and the terms of the Lease Agreement, the terms of the Lease Agreement shall control.

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![](sumo-exhibit1014025.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;4 LEASE AGREEMENT This Lease Agreement ("Lease Agreement" or "Lease") is dated as of the date set forth in the Basic Lease Information Summary, for reference purposes only, by and between Landlord and Tenant who agree as follows. ARTICLE 1 DEFINITIONS 1.1 Commencement Date: The term "Commencement Date" shall mean the date set forth in the Basic Lease Information Summary, as may be extended pursuant to Section 2.3 . 1.2 Lease Term: The term "Lease Term" shall mean the term of this Lease set forth in the Basic Lease Information Summary, commencing on the Commencement Date and ending on the Expiration Date, as extended for any Extended Terms (as applicable). 1.3 Property: The term "Property" shall mean that real property with all improvements now or hereafter located thereon set forth in the Basic Lease Information Summary and depicted on Exhibit A, containing approximately the gross leasable area set forth in the Basic Lease Information Summary (the "Property Gross Leasable Area"). 1.4 Leased Premises: The term "Leased Premises" shall mean that portion of the Property set forth in the Basic Lease Information Summary and depicted on Exhibit B, containing approximately the gross leasable area set forth in the Basic Lease Information Summary. 1.5 Building: The term "Building" shall mean the structure on the Property or the structure under construction by Landlord on the Property, as applicable. 1.6 Permitted Use: The term "Permitted Use" shall mean only the use set forth in the Basic Lease Information Summary. 1.7 Tenant's Minimum Liability Coverage: The term "Tenant's Minimum Liability Insurance Coverage" shall mean the amount set forth in the Basic Lease Information Summary. 1.8 Address for Notices: The term "Address for Notices" shall mean the addresses set forth in the Basic Lease Information Summary. 1.9 Additional Definitions: Additional definitions are set forth in Paragraph 16.9, below. 1.10 Prepaid Rent: The term "Prepaid Rent" shall mean the sum set forth in the Basic Lease Information Summary. 1.11 Security Deposit: The term "Security Deposit" shall mean the sum set forth in the Basic Lease Information Summary. 1.12 Common Areas: The term "Common Areas" are all areas and facilities within the exterior boundary line of the Property which are reasonably necessary for ingress or egress to the Premises or which are otherwise designated by the Landlord from time to time for the general non-exclusive use of Landlord in its capacity to manage and operate the Building, Tenant, and other tenants of the Property and their respective employees, suppliers, shippers, tenants, contractors, and invitees. Subject to the terms of this Lease, Landlord has the right at any time to expand, reduce, remove, demolish, renovate or construct any

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![](sumo-exhibit1014026.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;5 existing or new improvements at the Property (other than the Leased Premises) or in the Common Areas, including without limitation the right to change the shape, size, location, number, design or extent of such improvements, provided that such expansion, reduction, removal, demolition, renovation, construction or change shall not materially adversely impact Tenant's use of or access to the Leased Premises or Parking Area, and, in the event of any expansion or reduction of the Common Areas, Tenant's Allocated Share shall be adjusted accordingly using the same method of measurement as used by Landlord in establishing the initial square footages of the Building and the Leased Premises as set forth in that certain Stevenson Systems Final Report dated November 26, 2019; provided, however, in no event shall Tenant's Allocated Share increase. The Common Areas shall at all times be subject to the exclusive control and management of Landlord, and, subject to the terms of this Lease, Landlord may, at any time, temporarily close all or any part of the Common Areas to make repairs or changes, to prevent the acquisition of public rights in the Common Areas, and to perform such other acts in or to the Common Areas to improve the benefit thereof to Tenant and other occupants of the Property as Landlord in its sole discretion shall deem appropriate; provided, however, that Landlord shall administer such closures in a manner to ensure Tenant's unfettered access to the Leased Premises and minimize interference with the use and enjoyment of the Leased Premises and the Common Areas by Tenant, and in all cases (subject to force majeure events and Landlord's compliance with applicable Laws)Tenant shall have access to the Leased Premises and the parking serving the Leased Premises twenty-four (24) hours per day, seven (7) days per week. ARTICLE 2 DEMISE AND POSSESSION 2.1 Lease of Premises: Landlord hereby leases to Tenant and Tenant leases from Landlord, upon the terms and conditions of this Lease, the Leased Premises, together with (i) the non-exclusive right to use the parking spaces within the Office Parking Area (defined below) 24 hours per day, 7 days per week for its use and the use of its employees and invitees (subject to the terms and limitations set forth in Section 4.8 below), (ii) the non-exclusive right to use the surface of the Common Area for ingress to and egress from the Leased Premises, and (iii) the non-exclusive right to use the Common Area of the Property consistent with the intended use of such Common Area by all tenants (however, Tenant shall not have the right to use any parking in the Retail Parking Area). Landlord further represents and warrants to Tenant, as of the Effective Date, that (a) Landlord has not entered into any contract with any person or entity (except pursuant to this Lease) to lease, occupy, or possess the Leased Premises or any portion thereof; (b) Landlord has not entered into any contract with any person or entity to purchase the Property or any portion thereof from Landlord; (c) excepting only the Parking Covenant, there are no covenants, conditions, restrictions, easements, other agreements or instruments affecting the use of the Property, and (d) the only party having a deed of trust affecting the Property or any portion thereof is BANK OZK. The parties stipulate that the Property Gross Leasable Area and the renatable square footage of the Leased Premises are correct and shall not be adjusted as a result of remeasurement of the Premises or Property. 2.2 Construction of Improvements: Landlord shall perform certain improvement work in connection with the Property and Leased Premises as set forth in, and subject to, the work agreement attached hereto as Exhibit C (Tenant Improvements). 2.3 Delivery of Possession; Substantial Completion; Penalties: A. The date that Landlord delivers the Leased Premises to Tenant in the Delivery Condition (as defined in Exhibit C) shall be the "Delivery Date". Landlord shall use commercially reasonable efforts to cause the Delivery Date to occur on the Anticipated Delivery Date. If, despite such efforts, Landlord is unable to deliver the Leased Premises to Tenant in the Delivery Condition by May 1, 2022 (as may have been extended pursuant to Exhibit C), the Commencement Date will be delayed two

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![](sumo-exhibit1014027.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;6 days for every day between May 1, 2022 (as may be extended pursuant to Exhibit C) and the Delivery Date. If Landlord fails to deliver the Leased Premises to Tenant in the Delivery Condition by September 30, 2022 (which, for the purposes of this sentence shall be extended only as a result to Tenant Delay as set forth in Section 5 of Exhibit C and shall not be extended for Force Majeure Events as set forth in Section 5(b) of Exhibit C), Tenant shall have the right to terminate this Lease by delivering written notice to Landlord. B. Notwithstanding anything herein to the contrary, Landlord agrees that Tenant shall have the benefit of any and all warranties or service contracts on systems in the Leased Premises that Tenant is obligated to maintain pursuant to the terms of this Lease. Landlord shall reasonably cooperate with Tenant in enforcing any such warranties against the parties or parties that issued the same. ARTICLE 3 RENT 3.1 Base Monthly Rent: Subject to the terms of this Lease, commencing on the Commencement Date and continuing throughout the Lease Term, Tenant shall pay to Landlord Base Monthly Rent as set forth in the Basic Lease Information Summary. 3.2 Additional Rent: Commencing on the Commencement Date and continuing throughout the Lease Term, Tenant shall pay, as additional rent Tenant's Allocated Share of Operating Expenses as provided in Article 6, and subject to the terms of this Lease, commencing on the Commencement Date and continuing throughout the Lease Term, Tenant shall pay to Landlord all other Additional Rent. As used any this Lease, "Additional Rent" shall mean, collectively, (a) any late charges due Landlord pursuant to paragraph 3.4, (b) Tenant's Allocated Share of Operating Expenses as provided in Article 6, (c) Tenant's Allocated Share of Real Property Taxes as provided in paragraph 8.2, (d) Landlord's share of any consideration received by Tenant from Transfers as provided in paragraph 14.1, and (e) any other charges due Landlord pursuant to this Lease. Landlord, in its reasonable discretion, shall create cost pools, or otherwise reasonably allocate expenses to certain tenants of the Property, in order to equitably allocate expenses among the tenants of the Property. 3.3 Payment of Rent: The Base Monthly Rent shall be paid in advance on or before the first day of each calendar month during the Lease Term. Any Additional Rent shall be due and payable as set forth in this Lease or, if not specifically set forth, within thirty (30) days of a written invoice from Landlord for the same. All Rent shall be paid in lawful money of the United States, without any abatement, deduction or offset whatsoever, except as expressly provided in this Lease, and without any prior demand therefor except as expressly provided in this Lease, to Landlord at its address set forth above or at such other place as Landlord may designate in writing from time to time. Tenant's obligation to pay rent shall be prorated at the commencement and expiration of the Lease Term. Base Monthly Rent and Additional Rent are collectively referred to as "Rent." All monetary obligations of Tenant to Landlord under the terms of this Lease are deemed to be Rent. 3.4 Late Charge and Interest Upon Default: If any Rent is not received by Landlord within five (5) days after it becomes due, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of such delinquent Rent. In no event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within which to pay any Rent or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant's failure to pay any Rent due under this Lease in a timely fashion, or for any other default. If any monetary obligation becomes delinquent and remains delinquent for a period in excess of ten (10) days, then, in addition to any late charge, Tenant shall pay to Landlord interest on such monetary obligation at the Agreed Interest Rate. Regardless of the foregoing, Tenant shall

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![](sumo-exhibit1014028.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;7 be entitled to one (1) written five (5) day notice to cure during each calendar year prior to a late charge becoming due, and prior to interest accruing, and such late charge shall not be due, nor shall interest accrue, if Tenant so cures within such five (5) day period. 3.5 Security Deposit: Tenant has deposited with Landlord, concurrently with its execution of this Lease, the Security Deposit as security for the performance by Tenant of the terms of this Lease to be performed by Tenant, and not as prepayment of rent. Landlord may apply such portion or portions of the Security Deposit as are reasonably necessary for the following purposes: (a) to remedy any default by Tenant in the payment of rent, beyond any applicable notice and cure period; (b) to repair damage to the Leased Premises caused by Tenant; (c) to clean the Leased Premises upon termination of the Lease, and (d) to remedy any other default of Tenant, beyond any applicable notice and cure period, as permitted by law. Tenant shall be provided a security deposit statement and refund, if applicable, pursuant to the time period prescribed by law. Tenant hereby waives the benefit of any restriction on the uses to which the Security Deposit may be put contained in California Civil Code Section 1950.7(c) or any similar or successor law. In the event the Security Deposit or any portion thereof is so used, Tenant shall pay to Landlord promptly within ten (10) days of demand an amount in cash sufficient to restore the Security Deposit to the full original sum. Landlord shall not be deemed a trustee of the Security Deposit. Landlord may use the Security Deposit in Landlord's ordinary business and shall not be required to segregate it from its general accounts. Tenant shall not be entitled to any interest on the Security Deposit. 3.6 Prepayment of Rent: Tenant shall pay to Landlord the Prepaid Rent concurrently with its execution of this Lease, as prepayment of Rent for credit against the first month's installment of Rent due hereunder. In the event the Commencement Date occurs on a date that is other than the first (1st) of the month, and in the event the prepayment of Rent required by Tenant hereunder does not consist of one full month's payment of Rent plus the first (1st) partial month's payment of Rent, then Tenant, on the first (1st) day of the first (1st) full calendar month following the Commencement Date for which Rent is payable under this Lease, shall pay the balance of such first (1st) full month's payment of Rent. In the event that Tenant terminates the Lease in accordance with Section 2.3, Landlord shall reimburse the Prepaid Rent to Tenant promptly upon Tenant's written demand therefor. ARTICLE 4 USE OF LEASED PREMISES 4.1 Limitation on Use: Tenant shall use the Leased Premises throughout the Lease Term solely for the Permitted Use (as described in Article 1) and for no other use. Tenant shall not do anything in or about the Leased Premises which Tenant reasonably knows will (a) cause structural injury to the Leased Premises, or (b) cause damage to any part of the Leased Premises, except to the extent reasonably necessary for the performance of the Tenant Improvements or Alterations or the installation of Tenant's equipment and Trade Fixtures, and then only in a manner which has been first reasonably approved by Landlord to the extent required under Article 5 below. Tenant shall not operate any non-office use equipment within the Leased Premises which shall injure or abnormally vibrate or shake the Leased Premises, which will overload existing electrical systems or other mechanical equipment servicing the Leased Premises, or which shall impair the efficient operation of the sprinkler system (if any) or the heating, ventilating or air conditioning ("HVAC") equipment servicing the Leased Premises. Any dust, fumes, or waste products generated by Tenant's use of the Leased Premises shall be contained and disposed consistent with commercial standards for tenant improvements. Except as provided herein, Tenant shall not change the exterior of the Building or install any equipment or antennas on the exterior of the Building except as otherwise expressly permitted under this Lease, and Tenant shall keep the Leased Premises in a clean condition. Landlord represents that Tenant's Permitted Use is permitted under applicable Laws and agrees

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![](sumo-exhibit1014029.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;8 that this Lease is expressly conditioned upon Tenant being allowed to conduct the Permitted Use at the Leased Premises pursuant to applicable Laws. Landlord agrees that it shall not request or consent to any change in the zoning, land use or other Laws pertaining to the use of the Leased Premises that would restrict or materially adversely affect Tenant's use of the Leased Premises for the Permitted Use under this Lease, or cause Tenant to incur any additional and material expense or obligation. A. Hazardous Materials: Except for household cleaners or other materials which are used in general offices, Tenant may not store, use nor bring any hazardous or toxic chemicals regulated by any Federal, State and/or local agency or authority ("Hazardous Materials"), upon the Leased Premises in violation of applicable Laws. Subject to Section 16.1 Landlord and/or Landlord's consultants may inspect the Leased Premises at any and all reasonable times upon at least one (1) business day prior notice to assure Tenant is in compliance with all Laws applicable to Hazardous Materials. 1. Compliance With Laws: Except as set forth in this Lease, Tenant shall, at Tenant's sole cost and expense, fully, diligently, and in a timely manner comply with all Laws, and (following written notice from Landlord detailing such requirements) the requirements of any applicable fire insurance underwriter or rating bureau, relating in any manner to Hazardous Materials used by Tenant in connection with its use of the Leased Premises (including but not limited to matters pertaining to (a) industrial hygiene, (b) environmental conditions on, in, under, or about the Leased Premises caused by Tenant or its employees, agents or contractors, and (c) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill, or release of any Hazardous Materials by Tenant or its employees, agents or contractors). Tenant shall, within ten (10) Business Days after receipt of Landlord's written request, provide Landlord with copies of documents and information evidencing Tenant's compliance with any and all such Laws, and shall reasonably promptly upon receipt notify Landlord in writing (with copies of any documents involved) of any claim (including any claim threatened in writing), citation, warning, complaint, or report pertaining to or involving failure by Tenant or the Leased Premises to comply with any and all such Laws. 2. Indemnification: Tenant shall indemnify, protect, defend, and hold Landlord, Landlord's affiliates, Lenders, and the officers, directors, shareholders, partners, employees, and managers of the foregoing harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits, and reasonable attorneys' and consultants' fees arising out of any third-party claim involving any Hazardous Materials brought onto the Leased Premises by or for Tenant or by any of Tenant's employees, agents, contractors, servants, visitors, suppliers, or invitees (except to the extent relating to or arising out of the negligence or willful misconduct of Landlord or the employees, agents or contractors of Landlord). Subject to Section 16.11, Tenant's obligations under this Paragraph shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created or suffered by Tenant, and the cost of investigation (including reasonable consultants' and attorneys' fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration date or earlier termination of this Lease. Tenant shall not have any liability relating, in any way, to contamination, spill, release, discharge, investigation, removal, remediation, restoration or abatement arising out of, or involving any Hazardous Materials not brought onto the Property, including the Leased Premises, by or for Tenant or by any of Tenant's employees, agents, contractors, servants, visitors, suppliers, or invitees. 3. Landlord's Obligations: Landlord represents and warrants to Tenant that no Hazardous Materials are present in, on or under the Property in violation of any Laws as of the Delivery Date, and covenants that no Hazardous Materials will be present in, on or under the Property as of the Delivery Date. In the event that at any time during the Lease Term any Hazardous Materials are present in,

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![](sumo-exhibit1014030.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;9 on or under the Leased Premises, Building or any portion of the Property in violation of applicable Laws (other than those Hazardous Materials for which Tenant is responsible under Sections 4.1A.(1) and (2) above), then Landlord shall, at Landlord's expense (which expense shall not be included in Operating Expenses), promptly thereafter cause the investigation, remediation, abatement or removal of the same so as to cure such violation of Law. In addition, Landlord shall indemnify, protect, defend and hold Tenant and Tenant's affiliates, and the officers, directors, shareholders, partners, members, employees, and managers of the foregoing (collectively, "Tenant Parties") from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits, and attorneys' and consultants' fees arising out of any third-party claim involving any such Hazardous Materials except for any Hazardous Materials for which Tenant is responsible pursuant to Section 4.1.(A) above. Subject to Section 16.11, Landlord's obligations under this Paragraph shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created or suffered by Landlord, and the cost of investigation (including consultants' and attorneys' fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration date or earlier termination of this Lease. 4.2 Compliance with Laws: A. Tenant's Obligations. Tenant shall not use the Leased Premises in any manner which violates any Laws. Tenant shall promptly comply with all Laws now in effect or hereafter adopted pertaining to Tenant's use of the Leased Premises or the portions of the Leased Premises required to be maintained and repaired by Tenant. B. Landlord's Obligations. Landlord shall promptly comply with all Laws pertaining to the Common Areas and those portions of the Leased Premises required to be maintained and repaired by Landlord or pertaining to those portions of the Property located outside of the Leased Premises. Landlord shall deliver the Leased Premises (including the Tenant Improvements) to Tenant in compliance with all Laws and all portions of the Property outside of the Leased Premises (excluding the interior buildouts of any other premises occupied by another tenant or available for lease) shall be in compliance with all Laws as of the Delivery Date. Landlord further warrants and covenants that as of the Commencement Date (1) the Building's roof (including membrane), foundation, footings, slabs, structural walls, exterior windows (including seals), skylights (including seals) and the doors, plumbing, fire/life safety system, lighting, heating, ventilation and air conditioning systems, electrical systems, and elevators serving the Leased Premises shall be in good operating condition and repair, and (2) the Building (excluding the interior buildouts of any other tenant's premises) and the Leased Premises shall comply with all applicable Laws (including ADA), except to the extent of any non-compliance resulting from, or triggered as a result of, any Leasehold Improvements (excluding the Tenant Improvements), in which event Tenant shall be required to correct any such non-compliance; provided that Landlord shall be responsible for any pre-existing non- compliance uncovered or revealed in connection with any Leasehold Improvements. In the event that at any time during the Lease Term any violation of applicable Laws in effect as of the Commencement Date or any latent defect in the Building (other than the Tenant Improvements) is discovered or revealed, then Landlord shall, at Landlord's expense (which expense shall not be included in Operating Expenses), promptly thereafter correct such violation of Laws or latent defect. 4.3 Insurance Requirements: Tenant shall not sell, keep or use any article in or about the Leased Premises which Landlord has notified Tenant in writing is prohibited by Landlord's fire and property damage insurance. Notwithstanding the foregoing, the restrictions in this paragraph shall not restrict or limit Tenant's use of the Leased Premises for the Permitted Use, nor restrict Tenant from using

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![](sumo-exhibit1014031.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;10 the Leased Premises for other permitted uses set forth in this Lease as long as Tenant agrees to be responsible for any increase in insurance premiums directly attributable to such other use. 4.4 Outside Areas: No materials, supplies, equipment, finished or semi-finished products, raw materials, or articles of any nature shall be stored upon or permitted to remain outside of the Building upon the Leased Premises except in fully fenced and screened areas which have been designed for such purpose and have been approved in writing by Landlord, in Landlord's reasonable discretion, for such use by Tenant. 4.5 Signs: Tenant shall have the right to install one (1) sign on the exterior of the Building in the location and manner shown on Exhibit G attached hereto and incorporated herein; Tenant shall also have the right to install lobby signage, subject to Landlord's prior written approval (which shall not be unreasonably withheld, condition or delayed) and provided such signage is consistent with the lobby signage of other tenants in the Building. All such Tenant signage shall first be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. All approved Tenant signage shall strictly conform to all Laws and shall, unless otherwise expressly set forth herein to the contrary, be installed by Tenant at Tenant's sole cost and expense if such signage is within the interior of the Leased Premises and shall be installed by Landlord at Tenant's sole cost and expense if such signage is in the Common Areas or on the exterior of the Building. Tenant shall, at the expiration or sooner termination of this Lease, remove all signs installed by or for Tenant and shall repair any damage caused by such removal, including but not limited to repainting/refinishing so that the repaired surface is restored to the extent reasonably practicable. Unless otherwise maintained by Landlord as part of Operating Expenses, all such Tenant signage shall be maintained by Tenant at all times, at Tenant's sole cost and expense, in such condition and repair as received, rerasonable wear and tear excepted. 4.6 Rules and Regulations: Tenant agrees to comply with the rules and regulations attached hereto as Exhibit D, and incorporated herein. If there is a conflict between the rules and regulations and any of the provisions of this Lease, the provisions of this Lease shall prevail. Landlord shall not be responsible for the violation of any such rules and regulations by any other person to whom such rules and regulations apply; provided, however, that Landlord shall enforce the rules and regulations on a uniform, non-discriminatory basis. Landlord shall have the right to amend or supplement the rules and regulations from time to time, provided that no such amendments or modifications of such rules and regulations shall be enacted if such would materially increase Tenant's obligations under this Lease (monetarily or otherwise), would materially diminish the rights granted to Tenant hereunder or would materially impact Tenant's access to or use of the Leased Premises. 4.7 Auctions: Tenant shall not conduct or permit to be conducted on any portion of the Leased Premises, (a) any public or private auction, fire sale, going out of business sale, distress sale, or other liquidation sale of tangible personal property, or (b) any so-called flea market, open-air market, or any other similar activity. 4.8 Parking: As part of Landlord's initial construction of the Building, Landlord shall be constructing two (2) levels of underground parking, which shall include up to twelve (12) parking spaces allocated exclusively for the occupants of the Retail Space (the "Retail Parking") and the remainder of which shall be allocated exclusively for occupants of the Office Space (the "Office Parking Area") (subject to the public's right to use the parking stalls in accordance with the terms of the Parking Covenant referred to below and subject to applicable Laws). The Retail Parking and Office Parking Area are generally depicted on Exhibit F attached hereto and incorporated herein by reference. Subject to the Parking Covenant below, Tenant shall have the right to use up to forty-six (46) of the unreserved parking spaces that are available to all tenants of the Building on a nonexclusive basis. All parking spaces, including light valet parking spaces, shall be located on the Property. Parking shall be free of charge to Tenant during the initial Lease Term

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![](sumo-exhibit1014032.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;11 and subsequent Extended Terms. Landlord shall hire a professional firm for the valet service ("Parking Operator") to provide valet services to the Retail Parking and Office Parking Area on an "as needed" basis (as reasonably determined by Landlord based upon demand), the cost of which shall be included as part of Operating Expenses. The Parking Operator will operate the valet service and otherwise conduct business in a first-class manner, commensurate with other parking operators in similar office buildings in the same geographic area as the Property. Notwithstanding anything to the contrary contained in this Section, Landlord agrees that Tenant shall at all times be entitled to the use and benefit of no less than forty-six (46) parking spaces and shall keep at least sixteen (16) electrical vehicle charging spaces available on a non- exclusive basis, and in the event Tenant determines that Tenant is regularly being denied the benefit of at least forty-six (46) parking spaces or electrical vehicle spaces, then Tenant may provide Landlord written notice thereof. Within ten (10) days following receipt of such notice, Landlord shall propose to Tenant a written proposal for improvement of parking procedures at the Building such that Tenant shall have access to such forty-six (46) spaces at all times and electrical parking vehicle spaces, which proposal may include replacement of the Parking Operator. Tenant may select one or more of the proposals set forth by Landlord or request a meeting with principals of Landlord to discuss alternate remedies. In the event Tenant requests a meeting with principals of Landlord, Landlord will make such principals available for a meeting with Tenant within fifteen (15) days from Tenant's request, at which meeting the parties will negotiate reasonably and in good faith to resolve Tenant's concerns in connection with the parking at the Building. The Office Parking Area and the Retail Parking shall have restricted access via separate electronic access gates and electronic parking passes or such other entry controls as reasonably selected by Landlord, in order to access such parking areas. At no time shall Tenant or its employees, guests or invitees use the Retail Parking except during Public Parking hours in which they are patronizing the retail stores. If parking passes/cards are used for access to the parking areas, Landlord shall initially provide Tenant with parking passes/cards for each of Tenant's employees at no cost to Tenant, which Landlord acknowledges may result in more parking passes distributed to Tenant than parking spaces Tenant is entitled to under this Lease. Tenant shall be responsible for safeguarding the issuance of all such parking passes/cards issued to Tenant. In the event Tenant requires additional parking passes/cards as a result of new employees or lost parking passes/cards, Landlord may charge a reasonable fee for the issuance of the same. If reasonably required by the Parking Operator or otherwise required by Landlord to monitor and manage the parking at the Property, within ten (10) Business Days after written request therefor from Landlord, Tenant shall furnish Landlord with a list of its and its employees' vehicle license numbers to whom parking passes/cards have been issued, and upon request from Landlord Tenant shall thereafter notify Landlord of any change in such list within five (5) Business Days after request from Landlord. Landlord may adopt reasonable rules and regulations relating to the valet parking service, or relating to parking generally, to monitor and manage the parking at the Property, provided that such rules and regulations do not materially and adversely impact Tenant's right to parking as described herein. Landlord reserves the right to have any vehicles owned by Tenant or its employees or invitees utilizing parking spaces not allowed for Tenant's use, or parking in areas not designated for such Tenant's use, to be towed away at Tenant's cost, and Tenant shall not at any time park its vehicles, or permit its employees, contractors and/or invitees to parking their vehicles, adjacent to marked loading areas so as to interfere in any way with the use of such loading areas; provided, however, that prior to any towing Landlord shall provide Tenant's office manager with electronic or telephonic notice of a violating vehicle and Tenant shall have 24 hours thereafter to cause the violation to be remedied prior to any towing. Tenant shall not at any time park or permit the parking of its vehicles or the vehicles of others under its control on any portion of the Property other than the Office Parking Area that is not designated by Landlord as a parking area. All trucks and delivery vehicles used for delivering goods to Tenant shall be (i) parked only in such areas of the Property as may be reasonably designated by Landlord for delivery parking, (ii) loaded and unloaded in a manner which does not unreasonably interfere with the use and enjoyment of the Building by other occupants of the Property, and (iii) permitted to remain on the

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![](sumo-exhibit1014033.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;12 Property only so long as is reasonably necessary to complete loading and unloading, and Landlord reserves the right to establish reasonable hours during which deliveries to the Property may be made. A. Public Parking/Parking Covenant: Tenant acknowledges and agrees that this Lease is subject and subordinate to the terms of the Parking Covenant attached hereto as Exhibit E ("Parking Covenant"); provided however, Tenant has no obligations under the Parking Covenant. Tenant shall have no right, title, interest or claim to any of the parking fees generated from the public use of the parking areas of the Property, such fees being the sole property of Landlord; provided however, all profit generated from the public parking shall be credited to the Operating Expenses associated with the Office Parking Area. Landlord warrants and represents to Tenant that parking fees for the public parking shall, at all times, be equal to one hundred and twenty-five percent (125%) of the parking fees charged by the City of Redwood at the Jefferson Garage. Landlord shall be obligated to maintain such public parking areas as part of the Operating Expenses. In the event Landlord elects or is required by any Law to implement additional parking programs in order to further limit or control the parking on the Property, Tenant agrees to participate in any such other program under such reasonable rules and regulations as are from time to time established by Landlord, provided further, that all of the parking spaces allocated to Tenant's use under this Lease remain on the Property for the Lease Term, and that any such any such additional parking program shall not, in any manner or to any extent, diminish the hours of use of, access to, or number of, or restrict ingress or egress to or from, the parking spaces granted or assigned to Tenant under this Lease. During the Public Parking hours, Landlord shall provide trained and licensed roving security guards, in sufficient numbers, to adequately monitor and ensure the security and safety of Tenant's partners, employees and visitors, and their property, in and about all of the parking areas; however, all costs of the same shall be included as part of Operating Expenses. Landlord shall provide that all parking areas are monitored regularly by surveillance security cameras. 4.9 Transportation Demand Management Programs: Should a government agency or municipality require Landlord to institute TDM (Transportation Demand Management) facilities and/or programs, Tenant agrees that the cost of TDM imposed facilities required by any such government agency or municipality within the Leased Premises and programs required by any such government agency or municipality, for the exclusive use or benefit of Tenant's partners and employees, including but not limited to employee showers, bicycle storage facilities, lockers, cafeteria, or lunchroom facilities, shall be paid by Tenant. Further, any costs or expenses associated with a TDM program which are required specifically for the Building and not provided by Tenant, such as an on-site TDM coordinator, shall be provided by Landlord with the Tenant's Allocated Share (based upon the areas dedicated to both the Office Area and the Retail Area) of such costs being included as a part of Operating Expenses. ARTICLE 5 TRADE FIXTURES AND LEASEHOLD IMPROVEMENTS 5.1 Trade Fixtures: Throughout the Lease Term, Tenant shall provide, install, and maintain in good condition all Trade Fixtures in the Leased Premises. All Trade Fixtures shall remain Tenant's property. 5.2 Leasehold Improvements: Tenant shall not construct any Leasehold Improvements (as defined in Section 16.9D below) or otherwise alter the Leased Premises without Landlord's prior approval if the cost of any particular Leasehold Improvement project exceeds One Hundred Fifty Thousand Dollars ($150,000.00), or such work affects the structural parts of the Building, the Building systems (i.e., electrical, plumbing, HVAC, etc.), or the exterior of the Building, or such work is visible from the exterior of the Building and would have a material and adverse impact on the visual aesthetics of the Building (provided, however, that Landlord's approval shall not be required for Leasehold Improvements that are solely cosmetic in nature, such as painting or replacement of carpeting ("Cosmetic Improvements"), regardless

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![](sumo-exhibit1014034.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;13 of the cost thereof). Where Landlord's prior approval is required, no improvement work shall be undertaken by Tenant until Landlord shall have first approved the plans and specifications therefore, which approvals shall not be unreasonably withheld, conditioned or delayed (Tenant agrees that where plans and specifications are required to be prepared in accordance with applicable Laws in connection with any Leasehold Improvements that do not require Landlord's prior written consent, Tenant shall nevertheless deliver to Landlord final as built plans and specifications for the same following Tenant's completion of any such Leasehold Improvements). Landlord shall respond to a request for approval within ten (10) Business Days. If Landlord fails to respond within such ten(10)-Business Day period and Tenant sends a second notice to Landlord (which must include a statement in all caps stating "SECOND REQUEST FOR APPROVAL OF LEASEHOLD IMPROVEMENTS – APPROVAL DEEMED GIVEN IF NO RESPONSE WITHIN FIVE (5) DAYS") and Landlord fails to respond to such second notice within five (5) days following Landlord's receipt of such notice, Landlord shall be deemed to have approved of any such Leasehold Improvements. All Leasehold Improvements shall be installed by Tenant at Tenant's expense, using a licensed and financially sound contractor reasonably acceptable to Landlord, and, to the extent applicable, in substantial compliance with the Landlord-approved plans and specifications therefor. All construction done by Tenant shall be done in accordance with all Laws and in a good and workmanlike manner using materials of good quality. Tenant shall not commence construction of any Leasehold Improvements, whether or not Landlord's prior approval as to such Leasehold Improvements are required, until (a) all required governmental approvals and permits shall have been obtained, (b) all requirements regarding insurance imposed by this Lease shall have been satisfied, and (c) in the case of any Leasehold Improvements that cost in excess of $25,000 Tenant shall have given Landlord at least five (5) days prior written notice of the actual date for which such construction shall commence. All Leasehold Improvements shall remain the property of Tenant during the Lease Term but shall not be altered or removed from the Leased Premises except pursuant to this Section 5.2. At the expiration or sooner termination of the Lease Term, all Leasehold Improvements shall be surrendered to Landlord as part of the realty and shall then become Landlord's property, and Landlord shall have no obligation to reimburse Tenant for all or any portion of the value or cost thereof; provided, however, that if Landlord requires Tenant to remove any Leasehold Improvements in accordance with the provisions of Article 15, then Tenant shall so remove such Leasehold Improvements and restore the Leased Premises to their condition, subject to reasonable wear and tear, casualty and condemnation, prior to the installation of such improvements prior to the expiration or sooner termination of the Lease Term. Notwithstanding anything to the contrary contained herein, so long as Tenant's written request for consent for a proposed Leasehold Improvement contains the following statement in large, bold and capped font "PURSUANT TO THE LEASE, IF LANDLORD CONSENTS TO THE SUBJECT LEASEHOLD IMPROVEMENT, LANDLORD SHALL NOTIFY TENANT IN WRITING WHETHER OR NOT LANDLORD WILL REQUIRE SUCH LEASEHOLD IMPROVEMENT TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE LEASE.", then no later than the time Landlord gives its consent for any Leasehold Improvement, if it so does, Landlord shall notify Tenant in writing whether or not Landlord will require that such Leasehold Improvement be removed upon the expiration or earlier termination of this Lease. If Tenant's written notice complies with the foregoing and if Landlord fails to timely notify Tenant whether Tenant shall be required to remove the subject Leasehold Improvement at the expiration or earlier termination of this Lease (or Landlord does not timely reply to Tenant's request for consent and Landlord's consent is deemed granted pursuant to this Section 5.2) then Tenant shall not be obligated to remove such Leasehold Improvement. Under no circumstances will Tenant be required to remove any of the Tenant Improvements and/or any Cosmetic Improvements.

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![](sumo-exhibit1014035.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;14 5.3 Compliance with Laws: All Leasehold Improvements work shall be performed in a manner that complies with all applicable Laws. 5.4 Landlord's Improvements: All fixtures, improvements or equipment which are installed or constructed by Landlord on, or attached by Landlord to, the Leased Premises shall become a part of the realty and belong to Landlord and Tenant shall have no responsibility to remove any portion of the same prior to the expiration or sooner termination of the Lease Term. 5.5 Liens: Tenant shall keep the Leased Premises and the Property free from any liens and shall pay when due all bills arising out of any work performed, materials furnished, or obligations incurred by Tenant, its agents, employees or contractors relating to the Leased Premises. If any claim of lien is recorded, Tenant shall bond against or discharge the same within thirty (30) days after the same has been recorded against the Leased Premises. Should any lien be filed against the Leased Premises or any action commenced affecting title to the Leased Premises, the party receiving notice of such lien or action shall promptly give the other party written notice thereof. ARTICLE 6 REPAIR AND MAINTENANCE 6.1 Tenant's Obligation to Maintain: Subject to the provisions of Section 6.2 (Landlord's Obligation to Maintain), Article 11 (Damage to Leased Premises), and Article 12 (Condemnation), Tenant shall, at all times during the Lease Term, clean, keep, maintain, repair, and replace when necessary, in as good condition and repair as received, reasonable wear and tear excepted, the Leased Premises and all appurtenances thereto, including but not limited to all walls, ceilings, floors, windows, doors, plate glass, (including cleaning interior but not exterior surfaces). Such obligation shall extend to any electrical, plumbing, HVAC, lighting facilities, boilers, pressure vessels, or other utilities contained within the Leased Premises only up to the point where such utilities join a main or other junction (e.g., sewer main or electrical transformer) from which such utilities are distributed. Tenant, in keeping such areas in such order, condition and repair, shall exercise and perform good maintenance practices. All repairs and replacements required of Tenant shall be promptly made with new materials of like kind and quality and shall be subject to Article 5 above; provided however, Tenant shall not be obligated to replace any capital improvements or equipment which may be part of the Leased Premises. In the event any capital improvements or equipment which is part of the Leased Premises required to be replaced, Tenant shall notify Landlord and Landlord shall replace such capital improvements or equipment and the costs of such replacements shall be reimbursed to Landlord by Tenant on an amortized basis in accordance with the amortization provisions set forth in Section 6.4 below. 6.2 Landlord's Obligation to Maintain: Subject to the provisions of Paragraph 4.2 (Compliance with Laws), Paragraph 6.1 (Tenant's Obligation to Maintain), Article 11 (Damage to Leased Premises) and Article 12 (Condemnation), (a) Landlord, at its sole cost and expense shall keep in good first class order, condition and repair (i) the structural elements of the Building, Parking Area, and other improvements located on the Property, including without limitation, beams, columns, the structure of structural walls, roof (including roof membrane), foundation and footings, and (ii) the exterior skin, exterior windows, skylight systems, glazing and other components of the exterior of the Building, and (b) Landlord, subject to the reimbursement requirements of Section 6.3 below, shall keep in good first-class order, condition and repair the Common Areas which includes, without limitation, the non-structural portions of the roof (including, but not limited to, the roof membrane); non-structural components of the Parking Areas; walls, ceilings, floors, windows, doors, plate glass, and walkways within the Common Areas; landscaping; signs; security and utility systems serving the Common Areas; and utility systems serving the Leased Premises (including, but not limited to electrical, plumbing, HVAC, lighting facilities, boilers, and pressure

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&nbsp;&nbsp;&nbsp;&nbsp;15 vessels). Landlord shall not be responsible for (a) any such repairs, maintenance or replacements required by any accident, fire or other peril comprising a Casualty except as otherwise required by Article 11, or (b) for the cost of the repair of damage caused to any part of the Property by any negligence or willful misconduct of Tenant or its agents contractors, employees or invitees to the extent not covered by insurance. Landlord shall not be obligated to maintain, repair or replace windows, doors or plate glass that are located on the interior of the Leased Premises for which Tenant shall be solely responsible. Landlord may engage contractors of its choice to perform the obligations required of it by this provision, and the necessity of any expenditure made to perform such obligations shall be at the sole but good faith discretion of Landlord. 6.3 Tenant's Obligation to Reimburse: As Additional Rent, Tenant shall pay (a) Tenant's Allocated Office Share of Operating Expenses (as defined below) incurred by Landlord in connection with the Office Space and (b) Tenant's Allocated Building Share of Operating Expenses incurred by Landlord in connection with both the Office Space and Retail Space, including, but not limited to, the Common Areas. Tenant shall have no obligation to pay any Operating Expenses incurred by Landlord solely in connection with only the Retail Space. Tenant shall pay Tenant's Allocated Share of Operating Expenses on a monthly estimated basis, via ACH, check, or other reasonable method of payment. Landlord shall deliver to Tenant Landlord's reasonable estimate of the Operating Expenses it anticipates will be incurred by Landlord for the next calendar year (Landlord agrees to make commercially reasonable efforts to deliver the same to Tenant no later than November 15th of each calendar year), which reasonable estimate shall indicate which Operating Expenses are expected to be incurred in connection with the Office Space and which Operating Expenses are expected to be incurred in connection with both the Retail and Office Space (including, but not limited to, the Common Areas) and shall set forth an amount equal to (i) Tenant's estimated monthly Allocated Office Share of Operating Expenses in connection with the Office Space and (ii) Tenant's estimated monthly Allocated Building Share of Operating Expenses in connection with both the Office Space and Retail Space. By March 15th of each calendar year, Landlord shall furnish to Tenant a statement, in reasonable detail, of the actual Operating Expenses paid (or if incurred but not yet paid, which Landlord intends to pay) by Landlord in accordance with this Article during the just-ending calendar year (the "Annual Statement"), and thereupon there shall be an adjustment between Landlord and Tenant, with payment to or a rent credit or refund by Landlord, as the case may require, within sixty (60) days after delivery by Landlord to Tenant of said statement, to the end that Landlord shall receive the entire amount of Tenant's share of all Operating Expenses for such calendar year and Tenant shall not have paid more than such amount. While Landlord shall generally have no right to further readjust Tenant's Allocated Office Share of Operating Expenses and/or Tenant's Allocated Building Share of Operating Expenses with respect to a particular Annual Statement following Landlord's delivery to Tenant of each such applicable Annual Statement, it is agreed that the foregoing limitation shall not apply to any supplemental or escape assessment bills for Real Property Taxes. Tenant shall have the right, during Landlord's regular business hours and on reasonable prior written notice (no less than twenty (20) days') to Landlord to review, at the location of Landlord's accounting records in the San Francisco Bay Area, Landlord's books and records regarding Operating Expenses for the year to which the Annual Statement relates. The review of Landlord's books and records shall be conducted by Tenant or a reputable certified public accountant (i.e., a member of a reputable, independent, certified public accounting firm, who has experience reviewing financial operating records of office building landlords; provided that such accountant is not paid on a contingency fee basis). If as a result of its review, Tenant determines that the actual Operating Expenses for the period covered by any statement are different than the amount shown on such statement, Tenant shall promptly notify Landlord of such determination, which notice shall be accompanied by a copy of the results of Tenant's review. Upon receipt of such notice and accompanying information, Landlord may object to Tenant's determination by providing Tenant with written notice of such objection within twenty (20) days following receipt by Landlord of Tenant's notice and accompanying information. Unless Landlord so objects, Landlord shall credit to Tenant (or refund to Tenant in the event no further Additional Rent may

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&nbsp;&nbsp;&nbsp;&nbsp;16 become due from Tenant) the excess as determined by the results of Tenant's review within thirty (30) days following receipt of Tenant's notice and accompanying information if there was an overpayment and in the event of an underpayment Tenant shall pay the deficiency within thirty (30) days of the completion of the review. If, however, Landlord timely objects, Landlord and Tenant each shall use their best efforts to cooperate in such negotiations and to promptly resolve any discrepancies between Landlord and Tenant in the accounting of such costs and expenses, however, Tenant shall continue to pay ongoing Operating Expenses under this Lease until the matter is resolved. If Landlord and Tenant are unable to resolve any such discrepancies within sixty (60) days following the date of receipt by Landlord of Tenant's original notice and accompanying information, Landlord and Tenant shall each make a separate determination of the Operating Expenses, or portion thereof in dispute, and shall submit the same to each other. If the two determinations of such Operating Expenses, or portion thereof, differ by less than ten percent (10%) of the lesser amount, then such actual Operating Expenses, or portion thereof, shall be determined to be the average of the two determinations. If Landlord's and Tenant's determinations differ by ten percent (10%) or more of the lesser amount, then the dispute shall be submitted to arbitration as provided below. Within ten (10) days after Landlord and Tenant shall have each made its separate determination of such Operating Expenses, or portion thereof, Landlord and Tenant shall jointly appoint a certified public accountant, who has not worked with either Landlord nor Tenant, with at least ten (10) years of experience in providing accounting services to landlords and tenants of first-class office space in the Redwood City, California commercial office market. The parties shall cause the accountant, within ten (10) days of his or her appointment, to reach a decision as to which of Landlord's or Tenant's determinations of such Operating Expenses, or portion thereof, is the closest to the actual Operating Expenses, or portion thereof, taking into account the requirements of this Lease, and shall notify the Landlord and Tenant thereof. The amount of Operating Expenses, or portion thereof, so selected by the accountant shall constitute the actual Operating Expenses, or portion thereof, and shall be binding upon Landlord and Tenant. Landlord and Tenant shall share the fees and expenses of the accountant equally; provided however, if the accountant's determination concludes that Operating Expenses, or portion thereof, for the particular calendar year were overstated by more than three and one-half percent (3.5%), then Landlord shall be responsible for payment to Tenant of the reasonable and out-of-pocket third-party costs and expenses incurred by Tenant in conducting the audit, as well as the arbitration, including the fees and expenses of the accountant, which payment shall be made by Landlord to Tenant within thirty (30) days following receipt by Landlord and Tenant of the accountant's determination. In the event that Landlord and Tenant cannot agree as to the appointment of a mutually acceptable accountant, or if the appointed accountant shall, at any time, be unable or unwilling to serve, and Landlord and Tenant cannot agree on a replacement, then the Landlord and/or the Tenant shall make an application to the local chapter of the American Institute of Certified Public Accountants to name an accountant or a substitute accountant, as the case may be. 6.4 Operating Expenses Defined: The term "Operating Expenses" shall mean all out-of- pocket expenses incurred by Landlord to own, operate, maintain, repair, replace, and manage any portion of the Property, including, but not limited to, all costs and expenses paid or incurred by Landlord in doing the following (including payments to independent contractors providing services for the performance of the following): (i) maintenance of the insurance required to be carried by Landlord under Section 9.2 of this Lease; (ii) maintaining, repairing, operating, and replacing, when necessary, any items in connection with the Property that Landlord is required to maintain or elects to maintain hereunder, excluding however, such maintenance, repair, operation and replacement that pursuant to the terms of this Lease is to be performed

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&nbsp;&nbsp;&nbsp;&nbsp;17 at Landlord's sole cost and/or expense; (iii) that portion of all compensation (including benefits and premiums for worker's compensation and other insurance) paid to, or for the benefit of, employees of Landlord providing property management services to the Property; and (iv) a property management fee equal to three percent (3%) of the Base Monthly Rent of the Property. With respect to the cost of any Permitted Capital Expense (defined below), Landlord shall amortize such expense and such amortized cost shall be included in Operating Expenses as follows: the annual amortization of any such capital expense shall be the sum of the (a) quotient obtained by dividing the amount of any Permitted Capital Expense by Landlord's reasonable and good faith estimate of the number of years of useful life of the item for which the expense is incurred plus (b) an amount equal to 7% (or such lesser interest rate actually paid by Landlord in the event Landlord borrows funds for the purpose of performing the work) of the remaining unamortized cost. Nothing set forth herein shall impose upon Landlord an obligation to so repair, maintain and/or replace any items unless such obligation is otherwise expressly set forth elsewhere in this Lease. Landlord shall reasonably create cost pools or otherwise allocate expenses between the Office Space and the Retail Space in order to equitably allocate expenses between the Office Space and the Retail Space. The term "Permitted Capital Expense" shall mean the cost of any capital repairs, improvements and replacements made by the Landlord to the Property which are (x) (i) required to be made in order to conform to changes subsequent to the Commencement Date in any applicable Laws (noncompliance with any laws in effect as of the Commencement Date of this Lease which is permitted under applicable law because such improvements were in compliance with applicable laws as of the date they were constructed shall be considered to be in compliance with applicable law under this Paragraph) and (ii) incurred for the purpose of reducing other operating expenses or utility costs (to the extent such expenses and costs are actually reduced), or (y) performed to install new or replace capital improvements or building service equipment when reasonably required because of normal wear and tear or otherwise reasonably performed in order to maintain the condition of the Building in conformance with general standards of the Building as of the Delivery Date (e.g., repainting). Notwithstanding any contrary provision of this Lease, Operating Expenses shall exclude the following: (a) costs for (i) the original construction of the Property including any repairs, modifications or improvements required due to problems or defects in the original construction or inadequacy of the original design of the Property, or (ii) any future improvement to the Property (as distinguished from repairs and replacements of then existing improvements); (b) costs of the design and construction of improvements to the Leased Premises or the premises of other tenants or other occupants and the amount of any allowances or credits paid to or granted to tenants or other occupants for any such design or construction or any costs to supervise such tenant improvements; (c) costs incurred in moving or relocating any tenant; (d) depreciation, interest and principal payments on mortgages and other debt costs; (e) marketing costs, legal fees, space planners' and architects' fees, advertising and promotional expenses, brokerage fees or other costs incurred in connection with any leasing of the Property; (f) costs for which the Landlord is reimbursed, or would have been reimbursed if Landlord had carried the insurance Landlord is required to carry pursuant to this Lease, or would

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&nbsp;&nbsp;&nbsp;&nbsp;18 have been reimbursed if Landlord had used commercially reasonable efforts to collect amounts it is entitled to receive from any tenant or occupant of the Property or insurance carrier; (g) any bad debt loss, rent loss, or reserves for bad debts or rent loss; (h) costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Property, including partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord's interest in the Property, and costs (including all attorneys' fees and costs of settlement, judgments and/or payments in lieu thereof) incurred in connection with any actual or perceived claims, litigation or other disputes between Landlord and its employees, between Landlord and property management, or between Landlord and other tenants, occupants or third parties; (i) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Property unless such wages and benefits are prorated to reflect time spent on operating and managing the Property vis-à-vis time spent on matters unrelated to operating and managing the Property; provided, that in no event shall Operating Expenses for purposes of this Lease include wages and/or benefits attributable to personnel above the level of property manager or supervising engineer; (j) late charges, penalties, liquidated damages, interest and other finance charges (except to the extent expressly permitted pursuant to the terms of this Lease); (k) amount paid as ground rental or as rental for the Property by the Landlord; (l) costs, including permit, license and inspection costs, incurred with respect to the installation of tenant improvements made for new tenants or other occupants in the Property or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Property; (m) any costs which under this Lease are expressly stated to be at the sole cost and expense of Landlord; (n) any amount paid by Landlord or to the parent organization or a subsidiary or affiliate of the Landlord for goods, supplies and/or services in the Property to the extent the same exceeds the costs of such supplies and/or services rendered by qualified, first-class unaffiliated third parties on a competitive basis; (o) rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment which if purchased the cost of which would be excluded from Operating Expenses as a capital cost, except equipment not affixed to the Property which is used in providing janitorial or similar services and, further excepting from this exclusion such equipment rented or leased to remedy or ameliorate an emergency condition in the Property; (p) all costs, items and services for which (i) Tenant or any other tenant in the Property is expressly required to reimburse Landlord pursuant to the terms of the applicable lease document, (ii) Landlord provides selectively to one or more tenants (other than Tenant), or in a manner, level or scope that is more favorable to such other tenant than is provided or offered to Tenant, without

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&nbsp;&nbsp;&nbsp;&nbsp;19 reimbursement; or (iii) Landlord is reimbursed under any warranty, insurance coverage or from any third party (and Landlord shall use commercially reasonable efforts to recover the amounts from such warranty, insurance coverage, or third party); (q) electric power costs for which any tenant directly contracts with a public service company; (r) costs incurred in connection with any sculpture, paintings, fountains or other objects of art (including cleaning, repair and maintenance of any art contained in the public art gallery in the lobby described in Section 6.5 below); (s) penalties for late payment; (t) fees and reimbursements payable to Landlord (including its parent organization, subsidiaries and/or affiliates) or by Landlord for management of the Property (except for the property management fee described in 6.4(iv) above); (u) any costs expressly excluded from Operating Expenses elsewhere in this Lease; (v) costs arising from the negligence or willful misconduct of Landlord or Landlord's employees, agents, contractors or invitees, or due to the violation by Landlord of this Lease or applicable Laws; (w) costs arising from the violation of any tenant or occupant of its lease or occupancy agreement; (x) costs arising from Landlord's charitable or political contributions; (y) any capital expense that is not a Permitted Capital Expense; (z) any costs that are solely Tenant's responsibility pursuant to other provisions of this Lease; (aa) any costs or expenses related to testing, surveying, removal, cleaning, abatement or remediation of Hazardous Materials existing as of the date of this Lease in or about the Property; (bb) any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord (for the avoidance of doubt, it is agreed that this exclusion is not intended to exclude costs incurred in connection with the valet service applicable to the Retail Parking and Office Parking Area); (cc) costs of repairs, restoration, or replacements occasioned by fire or other casualty, or caused by the exercise of the right of eminent domain, in either case, whether or not insurance proceeds or condemnation award proceeds are recovered or adequate for such purposes (provided, however, that any commercially reasonable insurance deductible shall be includable in Operating Expenses); (dd) costs incurred in connection with upgrading the Property to comply with disability, life, seismic, fire and safety codes, ordinances, statutes, or other laws in effect prior to the Commencement Date, including, without limitation, the then-applicable requirements of the ADA, including penalties or damages incurred due to such non-compliance;

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&nbsp;&nbsp;&nbsp;&nbsp;20 (ee) costs incurred (capital or otherwise) in order for the Property, or any portion thereof, to apply for, obtain or maintain a certification pursuant to the United States Green Building Council's Leadership in Energy and Environmental Design ("LEED") rating system, or other applicable certification agency, in connection with Landlord's sustainability practices for the Project and all costs of maintaining, managing, reporting and commissioning the Project or any part thereof that was designed and/or built to be sustainable and conform with the LEED rating system (or other applicable certification standard); (ff) reserves of any kind; (gg) any indemnity, defense costs or other monetary obligation of Landlord to Tenant under this Lease or to any other tenant under its lease; (hh) all costs of Landlord's general corporate or partnership overhead and general administrative expenses, including the salaries of management personnel to the extent they are not directly related to the Project and engaged in the operation, maintenance, and repair of the Project; (ii) Excepting the Parking Covenant, all fees, costs, expenses or dues payable pursuant to the terms of any covenants, conditions, restrictions, easements, other agreements or instruments affecting the Property, an owners' association pertaining to the Property or any other matters of record, including, without limitation any capital repairs or expenditures and costs incurred by Landlord due to the violation by Landlord or any tenant of the terms and conditions of any such covenants, conditions, restrictions, easements, other agreements or instruments affecting the use of the Property; and (jj) earthquake insurance deductibles in excess of $100,000 (however, it is agreed that such $100,000 limitation is intended to limit Tenant's share of any such earthquake deductible to $100,000, and is not intended to limit Landlord from including only $100,000 of any such earthquake deductible as part of Operating Expenses). 6.5 Main Street Lobby: As currently mandated by the City of Redwood City, the Building shall have a lobby, containing a public art gallery which shall be open to the public. ARTICLE 7 WASTE DISPOSAL AND UTILITIES 7.1 Waste Disposal: Tenant shall store its waste either inside the Leased Premises or in containers or dumpsters provided by Landlord outside of the Leased Premises on the Property, for which Landlord shall contract for the disposal thereof, as a part of Operating Expenses. Tenant shall contract for and cause all of its waste to be regularly removed (daily if necessary) from the Leased Premises. Tenant shall keep all fire corridors and mechanical equipment rooms in the Leased Premises free and clear of all obstructions at all times. Tenant acknowledges and agrees that Landlord does not provide janitorial services to the Leased Premises, and that Landlord does not provide after-hours janitorial services with respect to the Common Areas of the Building. 7.2 Utilities: Tenant shall promptly pay, as the same becomes due, all charges for water, gas, electricity, telephone, sewer service, waste pick-up, and any other utilities, materials or services furnished directly to or used by Tenant on or about the Leased Premises during the Lease Term. If any utility service is not separately metered to the Leased Premises, then Tenant shall pay its pro-rata share of the actual cost of such utility service with all others served by the service not separately metered; provided however, if

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&nbsp;&nbsp;&nbsp;&nbsp;21 such utilities are not separately metered or submetered to the Leased Premises and Landlord reasonably determines that Tenant is using a disproportionate amount of such utilities, then Landlord may charge Tenant such other amount as Landlord determines in Landlord's reasonable discretion in order to equitably allocate such expenses among the tenants of the Property using such utilities. All utilities used in the Leased Premises shall be separately metered pursuant to meters or sub-meters installed by Landlord as part of the Tenant Improvements. Tenant acknowledges that the general business hours of the Building are from 8:00am to 6:00pm Monday through Friday and Saturdays from 8:00am to 1:00pm, excluding nationally recognized holidays (the "Building Hours"). In the event Tenant utilizes the HVAC systems servicing the Leased Premises outside of the Building Hours, Landlord shall have the right to charge Tenant for such after-hours use at a rate equal to Landlord's actual cost to provide such after-hours service or Sixty Dollars ($60.00) per hour (for the entire Leased Premises), whichever is less. 7.3 Window Washing: Landlord shall be responsible for washing the exterior windows and skylights of the Building in such frequency as is consistent with the operation of a first-class office building. ARTICLE 8 PAYMENT OF TAXES 8.1 Real Property Taxes Defined: The term "Real Property Taxes" as used herein shall mean (a) all taxes, assessments, levies, general and special, foreseen and unforeseen (including all installments of principal and interest required to pay for any general or special assessments for public improvements, services, or benefits and any increases resulting from reassessments, new construction, or change in ownership or valuation), now or hereafter imposed by any governmental or quasi-governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assessed against or with respect to (i) the value, occupancy or use of the Property (as now constructed or as may at any time hereinafter be constructed, altered or otherwise changed), (ii) the fixtures, equipment, and other real or personal property of Landlord that are an integral part of the Property, (iii) the gross receipts, income, and rentals from the Property (not to exceed two percent (2%) of the gross receipts, income, and rentals from the Property), or (iv) the use of energy within the Property; (b) all charges, levies or fees imposed by reason of environmental regulation or other governmental control of the Property, to the extent levied on all commercial properties within the geographic area of the Property and not exclusively on the Property; (c) any excise, transaction, sales, privilege or other tax now or hereafter imposed upon Landlord as a result of and leases for any portion of the Property; and (d) all costs and fees (including reasonable attorneys' fees) incurred by Landlord in contesting any Real Property Tax and in negotiating with public authorities as to any Real Property Tax but only to the extent of actual savings as a result thereof. If at any time during the Lease Term the taxation or assessment of the Property shall be altered so that in lieu of or in addition to any Real Property Tax described above there shall be levied, assessed or imposed (whether by reason of a change in the method of taxation or assessment, creation of a new tax or charge, or any other cause) an alternate, substitute, or additional tax or charge (a) on the value, use or occupancy of the Property, (b) on or measured by the gross receipts, income, or rentals from the Property (not to exceed two percent (2%) of the gross receipts, income, and rentals from the Property), or on Landlord's business of leasing the Property, or (c) computed in any manner with respect to the operation of the Property, then any such tax or charge, however designated, shall be included within the meaning of the term Real Property Taxes for purposes of this Lease. If any Real Property Tax is based upon property or rents unrelated to the Property, then only that part of such Real Property Tax that is fairly allocable to the Property shall be included within the meaning of the term Real Property Taxes. Notwithstanding the foregoing, Real Property Taxes shall not include estate, inheritance, transfer, gift or franchise taxes of Landlord, the federal or state income tax imposed on Landlord's income from all sources or any fines or penalties.

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&nbsp;&nbsp;&nbsp;&nbsp;22 Notwithstanding anything to the contrary contained in this Section 8.1, there shall be excluded from Real Property Taxes (i) all excess profits taxes, franchise taxes, capital stock taxes, documentary transfer or recording taxes, income taxes and other taxes to the extent applicable to Landlord's general or net income (as opposed to the equivalent of a sales tax or rent tax), (ii) any items included as Operating Expenses, (iii) any items directly paid by Tenant; and/or (iv) penalties, late charges or interest resulting from Landlord's failure or inability to make timely and complete payments. 8.2 Tenant's Obligation to Reimburse: As Additional Rent, Tenant shall pay Tenant's Allocated Share of all Real Property Taxes assessed against the Property which become due during the Lease Term or such other amount as Landlord reasonably determines in Landlord's good faith, discretion in order to equitably allocate such expenses among the tenants of the Property. Tenant shall pay its Allocated Share of Real Property Taxes on a monthly estimated basis in the same manner as Tenant's payment of monthly estimated Operating Expenses under Section 6.3 above (a reconciliation of Tenant's payment of estimated Real Property Taxes shall be performed in the Annual Statement in accordance with the terms of Section 6.3 above). All Real Property Taxes which can be paid by Landlord in installments, shall be paid by Landlord in the maximum number of installments permitted by applicable Laws. 8.3 Taxes on Tenant's Property: Tenant shall pay before delinquency any and all taxes, assessments, license fees, and public charges levied, assessed, or imposed against Tenant, Tenant's estate in this Lease, the property of Tenant situated upon the Property, or Leasehold Improvements, which become due during the Lease Term. In addition, should Real Property Taxes increase during the Lease Term solely as a result of Leasehold Improvements constructed by or on behalf of Tenant, then Tenant shall be solely responsible for the portion of such increased Real Property Taxes attributable to such Leasehold Improvements constructed by or on behalf of Tenant. ARTICLE 9 INSURANCE 9.1 Tenant's Insurance: Tenant shall maintain in full force and effect during the Lease Term the following insurance: A. Tenant shall maintain a policy or policies of commercial general liability insurance, including property damage, against liability for personal injury, bodily injury, death, and damage to property occurring in or about, or resulting from an occurrence in or about, the Leased Premises with combined single limit coverage of not less than the amount of Tenant's Minimum Liability Insurance coverage set forth in Article 1. Such commercial general liability insurance shall contain "contractual liability" insuring Tenant's performance of Tenant's obligation to indemnify Landlord as set forth in Article 10. B. Tenant shall maintain a policy or policies of property insurance against "all risks" at least as broad as Special Form policy, with a sprinkler leakage endorsement, for loss of any Leasehold Improvements, floor and wall coverings, and business personal property on a full insurable replacement cost basis with no coinsurance clause and Business Income insurance covering at least twelve months of loss of Base Rent; provided, however, that Tenant shall have the right to self-insurance business income and continuing expense coverage. The proceeds from any of such policies for Leasehold Improvements shall be used for the repair or replacement of such items so insured unless this Lease is terminated, in which case such proceeds shall be allocated between Landlord and Tenant in proportion to the amount that each party paid for the construction of the Leasehold Improvements.

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&nbsp;&nbsp;&nbsp;&nbsp;23 C. If Tenant undertakes or authorizes any construction, alteration, improvements or the like in the Leased Premises, then Tenant shall maintain broad form builder's risk insurance with coverage in an amount reasonably satisfactory to Landlord. D. Tenant shall maintain a policy or policies of workers compensation insurance and any other employee benefit insurance sufficient to comply with all Laws. E. If applicable, Tenant shall maintain a policy or policies of automobile liability insurance covering all owned, non-owned, and hired vehicles with a $1,000,000 per accident limit for bodily injury and property damage. F. Landlord and such others Landlord reasonably designates by written notice to Tenant shall be included as additional insureds on General Liability and Automobile Liability insurance described in this Article and (i) general liability and automobile liability coverage shall be primary insurance which provides that the insurer shall be liable for the full amount of the loss up to and including the total amount of liability set forth in the declarations without the right of contribution from any other insurance coverage of Landlord, (ii) all insurance required by this Article shall be carried with companies having an AM Best rating of not less than A- VII, (iv) if available, Tenant's insurance policies state that should any of the aforementioned or subject policies be cancelled prior to the expiration date thereof, notice shall be given in accordance with the policy provisions, which shall not be less than thirty (30) days' notice of cancellation except for non-payment of premium which shall not be less than ten (10) days' notice of cancellation, (v) General Liability and Automobile Liability shall contain a "cross liability" provision providing that Landlord, although named as an Additional Insured, shall nevertheless be entitled to recover under the policy for any loss suffered by Landlord by reason of the sole negligence of Tenant, and (vi) shall not have a "deductible" in excess of Fifty Thousand Dollars ($50,000.00) per occurrence. Duly executed certificates of such policies, together with satisfactory evidence of the payment of the premium therefor, shall be deposited with Landlord prior to the time Tenant enters into possession of the Leased Premises and upon renewal of such policies, but not less than ten (10) days prior to the expiration of the term of such coverage. 9.2 Landlord's Insurance: During the Lease Term, Landlord shall carry the following insurance: A. Landlord shall maintain a policy or policies of fire and property damage insurance in so-called "all-risk fire and extended coverage" form at least as broad as the current ISO Special Form policy insuring Landlord (and such others as Landlord may designate) against loss of rents and from physical damage to improvements upon the Property (excluding the Leasehold Improvements and the leasehold improvements of all other tenants) for full replacement cost. Landlord may so insure the improvements upon the Property separately, or may insure the improvements upon the Property with other buildings and improvements which Landlord elects to insure together under the same policy or policies; provided, however, that such blanket coverage shall provide the full protection as to the Property required under this Section 9.2 and the premiums for same shall not exceed the premiums which could be obtained in the insurance market for the Property alone. The foregoing notwithstanding, such fire and property damage insurance, at Landlord's election, (i) may cover loss caused by earthquake and/or flood (provided it is available at commercially reasonable rates), and (ii) may provide coverage for loss of rents for a period of up to twelve (12) months (or such longer number of months as may be required by any lender of Landlord, not to exceed twenty-four (24) months), and (iii) may contain "deductibles" as reasonably selected by Landlord. Landlord is not obligated to cause such insurance to cover any Trade Fixtures, Leasehold Improvements, or any inventory or other personal property of Tenant.

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&nbsp;&nbsp;&nbsp;&nbsp;24 B. Landlord shall maintain a policy or policies of commercial general liability insurance insuring Landlord (and such others as are designated by Landlord) against liability for personal injury, bodily injury, death, and damage to property occurring or resulting from an occurrence in, on or about the Property, with combined single limit coverage of Two Million Dollars ($2,000,000), or such greater coverage as Landlord may, in its sole but good faith discretion, from time to time determine is necessary for its protection. 9.3 Tenant's Obligation to Reimburse: The cost of the insurance which Landlord is either obligated or elects to carry pursuant to this Article 9 and any reasonable deductible amount paid (subject to the express limitation on earthquake deductibles set forth in Section 6.4 above) by Landlord and excluded from the coverage of such insurance shall be part of Operating Expenses and Tenant's Allocated Share of the same shall be paid by Tenant to Landlord pursuant to Article 6. 9.4 Release and Waiver of Subrogation: The parties hereto release each other, and their respective agents and employees, from any liability for damage to property that is caused by or results from any risk insured against under any valid and collectible property insurance policy required to be carried by either of the parties; provided, however, that any such person or entity shall not be released from such liability to the extent of damage of the type not covered by such insurance. Each party shall cause each insurance policy required to be obtained by it, hereunder, to provide that the insurer waives all right of recovery by way of subrogation against the other party and its agents and employees in connection with any injury or damage covered by such policy. ARTICLE 10 LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY 10.1 Limitation on Landlord's Liability: Landlord shall not be liable to Tenant nor shall Tenant be entitled to any abatement of rent, for any loss to Tenant's business resulting from any cause whatsoever including, without limitation, Landlord's and/or its contractor's, employee's, and/or agent's active or passive negligence, provided, however, that Landlord shall not be released from liability for loss or damage caused (a) by the gross negligence or willful misconduct of Landlord, its contractors, employees or agents, or (b) by the negligence of Landlord, its contractors, employees or agents to the extent that the injury or damage is not covered by the insurance required to be carried by Tenant under this Lease. 10.2 Indemnification of Landlord: Subject to Paragraph 9.4 above, Tenant shall hold harmless, indemnify and defend Landlord and Landlord's employees and agents, with competent counsel reasonably satisfactory to Landlord, from all liability, penalties, losses, damages, costs, expenses, causes of action and/or judgments for third party claims arising by reason of any death, bodily injury, personal injury or property damage (a) resulting from any cause or causes whatsoever (other than the negligence or willful misconduct of Landlord, its agents, employees or contractors or Landlord's breach of this Lease) occurring in or about or resulting from an occurrence in or about the Leased Premises during the Lease Term or while Tenant is occupying the Leased Premises, or (b) resulting from the negligence or willful misconduct of Tenant or its agents, employees, contractors, guests and/or invitees in connection with this Lease, or (c) resulting from Tenant's sale, use, storage or disposal of Hazardous Materials during the Lease Term. However, notwithstanding the foregoing, Tenant shall not be required to indemnify, defend and/or hold Landlord harmless as set forth in this Section 10.2 to the extent resulting from the negligence or willful misconduct of Landlord or its agents, contractors, or employees. 10.3 Indemnification of Tenant: Landlord shall hold harmless, indemnify and defend Tenant and Tenant's employees and agents, with competent counsel reasonably satisfactory to Tenant, from all liability, penalties, losses, damages, costs, expenses, causes of action and/or judgments for third party

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&nbsp;&nbsp;&nbsp;&nbsp;25 claims arising by reason of any death, bodily injury, personal injury or property damage resulting from (a) the negligence or willful misconduct of Landlord, its agents, employees or contractors, and (b) presence of Hazardous Materials in, on or around the Property to the extent the same were not released by Tenant or Tenant's agents, employees or contractors. However, notwithstanding the foregoing, Landlord shall not be required to indemnify, defend and/or hold Tenant harmless as set forth in this Section 10.3 to the extent resulting from the negligence or willful misconduct of Tenant or its agents, contractors, or employees. 10.4 Indemnities Generally. The terms and provisions of this Article 10 are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Landlord or Tenant, respectively, pursuant to this Lease, to the extent such policies cover the matter that is the subject of such indemnification obligation. The provisions of this Article 10 shall survive the expiration or sooner termination of this Lease with respect to any claims or liability arising in connection with any event occurring prior to such expiration or termination. 10.5 Waiver of Consequential Damages. In any event, each party's liability shall be limited to actual damages, and under no circumstances shall either party be liable for any special, consequential, exemplary or punitive damages; provided, however, (a) the foregoing waiver of consequential damages by Tenant shall not apply in connection with the indemnification provisions set forth in Section 10.3 and (b) the foregoing waiver of consequential damages by Landlord shall not apply in connection with the indemnification provisions set forth in Section 10.2, any consequential damages recoverable by Landlord under California Law in accordance with the terms of Section 13.2 of this Lease below, and/or any consequential damages recoverable by Landlord under the express terms of Section 15.2 below. ARTICLE 11 DAMAGE TO LEASED PREMISES 11.1 Landlord's Duty to Restore: Except as set forth above, if the Leased Premises are damaged by any peril after the Commencement Date of this Lease, Landlord shall restore the Leased Premises unless the Lease is terminated pursuant to this Article. All insurance proceeds available from fire and property damage insurance carried by Landlord pursuant to Article 9 shall be paid to and become the property of Landlord subject to Landlord's restoration obligations set forth in this Article 11. If this Lease is terminated pursuant to this Article then all insurance proceeds available from insurance carried by Tenant which covers loss to property that is Landlord's property or would become Landlord's property on the termination of this Lease shall be paid to and become the property of Landlord, provided that Tenant shall be entitled to retain insurance proceeds applicable to the portion of the Leasehold Improvements paid for Tenant. If this Lease is not so terminated, then upon receipt of the insurance proceeds (if the loss is covered by insurance) and the issuance of all necessary governmental permits, Landlord shall commence and diligently prosecute to completion the restoration of the Leased Premises, to the extent then allowed by Law, to substantially the same condition in which the Leased Premises were immediately prior to such damage. Landlord's obligation to restore shall be limited to the Leased Premises as they existed as of the Commencement Date, excluding any Leasehold Improvements, Trade Fixtures, and/or personal property constructed or installed by Tenant in the Leased Premises. Tenant shall forthwith perform such improvements in the Leased Premises as are necessary to restore any damage to the Tenant Improvements, provided that Tenant shall not be required to spend more than the insurance proceeds available to Tenant (or that would have been available to Tenant had Tenant maintained the insurance required to be carried by Tenant under Section 9.1 above) in connection with such damage. 11.2 Landlord's Right to Terminate: Landlord shall have the option to terminate this Lease in the event any of the following events (each, a "Casualty") occurs, which option may be exercised only by

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&nbsp;&nbsp;&nbsp;&nbsp;26 delivery to Tenant of a written notice of election to terminate, not later than sixty (60) days after following such damage: A. The Leased Premises or Building is damaged by any peril either (i) covered by the type of insurance Landlord is required to carry pursuant to Article 9 or (ii) covered by valid and collectible insurance actually carried by Landlord and in force at the time of such damage or destruction, to such an extent that the reasonable time to restore the portion of the Building required to be restored by Landlord is expected to exceed two hundred seventy (270) days from the date of the issuance of all necessary governmental approvals. B. The Leased Premises or the Building is damaged by any peril both (i) not covered by the type of insurance Landlord is required to carry pursuant to Article 9 and (ii) not covered by valid and collectible insurance actually carried by Landlord (provided Landlord has carried insurance at the full replacement costs) and in force at the time of such damage or destruction together with the deductible amounts, unless Tenant elects to pay to Landlord the uninsured amount necessary to fully restore the Leased Premises or Building, in which case the Lease shall not terminate. Such election by Tenant must be made, in writing, within thirty (30) days of notice from Landlord that some or all of the damage is uninsured, and Tenant shall be required to fund the restoration cost for which it is responsible under this paragraph on a pro rata progress payment basis during restoration. C. The Leased Premises are damaged by any peril during the last twelve (12) months of the Lease Term to such an extent that the reasonable time to restore the Leased Premises exceeds one half of the remaining term of this Lease provided, however, that Landlord may not terminate this Lease pursuant to this subparagraph if Tenant, at the time of such damage, has an express written option to further extend the term of this Lease for a period of at least five (5) years and Tenant exercises such option to so further extend the Lease Term within thirty (30) days following the date of such damage. 11.3 Tenant's Right to Terminate: If the Leased Premises or any portion of the Common Areas reasonably necessary for Tenant's use of the Leased Premises, or any portion of the Parking Areas such that Tenant does not have access to the number of parking spaces contemplated by this Lease are damaged by any peril and Landlord does not elect to terminate this Lease or is not entitled to terminate this Lease pursuant to this Article, then as soon as reasonably practicable, following Tenant's written request for the same, Landlord shall furnish Tenant with the reasonable written opinion of Landlord's architect or construction consultant as to when the restoration work required of Landlord may be completed. Should the Leased Premises (or applicable portion of the Common Areas or Parking Areas) be materially damaged such that the Leased Premises (or applicable portion of the Common Areas or Parking Areas) are reasonably unsuitable for Tenant's continued use of the same as a result of such damage, Tenant shall have the option to terminate this Lease in the event any of the following occurs, which option may be exercised only by delivery to Landlord of a written notice of election to terminate within thirty (30) days after Tenant receives from Landlord the estimate of the time needed to complete such restoration: A. The Leased Premises (or applicable portion of the Common Areas or Parking Areas) are materially damaged by any peril such that the Leased Premises (or applicable portion of the Common Areas or Parking Areas) are not reasonably suitable for Tenant's continued use of the same as a result of such damage and, in the reasonable opinion of Landlord's architect or construction consultant, the restoration of the Leased Premises (or applicable portion of the Common Areas or Parking Areas) cannot be substantially completed within two hundred twenty (220) days after the date of such damage, or B. The Leased Premises (or applicable portion of the Common Areas or Parking Areas) are damaged by any peril within the last twelve (12) months of the Lease Term (as extended by the previous

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&nbsp;&nbsp;&nbsp;&nbsp;27 exercise of any option to extend the Lease Term), and, in the reasonable opinion of Landlord's architect or construction consultant, the reasonable time to restore the Leased Premises exceeds thirty (30) days after the date of such damage. 11.4 Abatement of Rent: In the event of damage to the Leased Premises, Rent shall be abated from the date of such damage during the period of Landlord's restoration of the Leased Premises based upon the ratio of the square footage of the Leased Premises in proportion to the square footage of the portion of the Leased Premises damaged or destroyed and which are not used by Tenant as a result of such damage or destruction. In the event of damage to the Common Areas or Parking Areas, Rent shall be equitably abated during the period of Landlord's restoration thereof. Tenant hereby waives the provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, and the provisions of any similar law, hereinafter enacted. ARTICLE 12 CONDEMNATION 12.1 Permanent Taking of Leased Premises: If all or any part of the Leased Premises, Parking Area, or Common Areas required for Tenant's access to, use or occupancy of the Leased Premises is permanently taken by means of (a) any taking by the exercise of the power of eminent domain, whether by legal proceedings or otherwise, (b) a voluntary sale or transfer by Landlord to any condemnor under threat of condemnation or while legal proceedings for condemnation are pending, or (c) any taking by inverse condemnation (a "Condemnation"), this Lease shall terminate as to the Leased Premises so taken and the Rent shall be reduced in the same proportion that the square footage of that part of the Leased Premises so taken (less any addition thereto by reason of any reconstruction) bears to the original square footage of the Leased Premises and/or equitably in connection with the loss of use of the Parking Area and/or Common Areas (as applicable). If so much of the Leased Premises or the Property is taken such that the remaining portion of the Leased Premises is not sufficient for Tenant's intended use, or access to the Leased Premises or Parking Areas is materially adversely affected, then Tenant shall have the right to terminate this Lease. 12.2 Restoration Following the Taking : If any part of the Leased Premises or any Common Area is taken by Condemnation, then Landlord shall use commercially reasonable efforts to make such repairs and alterations that are reasonably necessary to make that which is not taken a complete architectural unit, but Landlord shall not be obligated to (a) spend more than the amount of any condemnation award recovered by Landlord for such restoration to the Leased Premises, or (b) deviate significantly from the work originally required to construct the Leased Premises; provided that if Landlord does not restore the Leased Premises or Common Area, as applicable, to a first-class standard within two hundred seventy (270) days from the date of Condemnation (subject to extension as a result of any delays resulting from Force Majeure Events, not to exceed one (1) year), Tenant shall have the right to terminate this Lease. 12.3 Temporary Taking: If any portion of the Leased Premises (or Common Areas or Parking Area) is temporarily taken by Condemnation for a period which does not extend beyond the natural expiration of the Lease Term, this Lease shall not terminate as to such Leased Premises temporarily taken, but Rent shall be abated for the duration of such Condemnation (i) in the same proportion that the square footage of that part of the Leased Premises so taken bears to the original square footage of the Leased Premises and/or (ii) equitably in connection with the loss of use of the Parking Area and/or Common Areas (as applicable), and Tenant's Allocated Share shall also be equitably adjusted for the duration of such Condemnation; provided, however, if such taking is to continue for a period of two hundred seventy (270) days or longer, then Tenant shall have the right to terminate this Lease.

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&nbsp;&nbsp;&nbsp;&nbsp;29 a petition seeking liquidation or reorganization under said bankruptcy laws or any other debtor's relief law or statute of the United States or any state thereof, or (iii) otherwise directs (or seeks) the winding up or liquidation of Tenant; provided, however that if any such petition, decree or order is not voluntarily filed or made by Tenant, that Tenant shall not be in default until such petition, decree or order remains undischarged for a period of thirty (30) days; or G. If Tenant fails to execute and deliver any documents required to be executed and delivered by Tenant under Sections 16.2C and/or 16.5 below within the time periods required therein, Tenant's failure to execute and deliver such document within five (5) Business Days following written notice from Landlord of such failure. 13.2 Landlord's Remedies: In the event of any Event of Default by Tenant, beyond any applicable notice and cure period, Landlord shall have the following remedies, in addition to all other rights and remedies provided by any Law or otherwise provided in this Lease, to which Landlord may resort cumulatively, or in the alternative. A. Landlord may keep this Lease in effect and enforce by an action at law or in equity all of its rights and remedies under this Lease, including (i) the right to recover the rent and other sums as they become due by appropriate legal action, (ii) the remedies of injunctive relief and special performance to compel Tenant to perform its obligations under this Lease, and (iii) the right to cause a receiver to be appointed to administer and manage the Leased Premises. It is expressly agreed that the remedies herein include the remedies provided in Civil Code Section 1951.4 or any successor statute, such that Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover rent as it becomes due, so long as this Lease provides that Tenant may sublet or assign its rights hereunder subject only to reasonable limitations. B. Landlord may make any payment or perform any obligation of Tenant. All sums paid by Landlord and all necessary costs of such performance by Landlord, together with interest on the same at a rate of seven percent (7%) per annum from the date the sum is paid by Landlord until Landlord is reimbursed by Tenant, shall be reimbursed to Landlord on demand by Landlord. Landlord shall have the same rights and remedies in the event of nonpayment of such amounts by Tenant as in the case of failure by Tenant in the payment of rent and the same shall be deemed additional rent hereunder. C. In the event Tenant commits an Event of Default and abandons the Leased Premises, this Lease shall not terminate and Tenant shall continue to be entitled to possession of the Leased Premises, unless Landlord gives Tenant written notice of its election to so terminate this Lease, which Landlord may do at the time of such Event of Default and abandonment or at any time thereafter and which shall cause this Lease to terminate, regardless of whether Landlord has theretofore exercised any other of its remedies. No act by or on behalf of Landlord intended to mitigate the adverse effect of such breach shall constitute a termination of Tenant's right to possession unless Landlord gives Tenant written notice of termination. Should Landlord not terminate this Lease by giving Tenant written notice, Landlord may enforce all its rights and remedies under this Lease including the right to recover the rent as it becomes due under the Lease as provided in California Civil Code Section 1951.4, or any successor statute. D. Landlord may, at Landlord's election, terminate this Lease by giving Tenant written notice of termination, in which event this Lease shall terminate on the date set forth for termination in such notice. No act by or on behalf of Landlord intended to mitigate the adverse effect of Tenant's default shall constitute a termination of the Lease or Tenant's right to possession unless Landlord gives Tenant written notice of termination. Any such termination shall not relieve Tenant from the payment of any sums then due Landlord or from any claim for damages resulting from Tenant's default. Following termination of the

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&nbsp;&nbsp;&nbsp;&nbsp;30 Lease, and without prejudice to any other remedies Landlord may have, Landlord may then or any time thereafter (i) reenter the Leased Premises upon surrender by Tenant or expel or remove Tenant therefrom together with any other persons occupying it, using such legal proceedings as are then available, (ii) repossess and use the Leased Premises or re-lease it or any part thereof for such term, at such rent, and upon such other terms and conditions as Landlord in its sole discretion may determine, and (iii) remove all property of Tenant therefrom at Tenant's expense in accordance with Article 15. E. In the event Landlord terminates this Lease, Landlord shall be entitled, at Landlord's election, to damages in an amount as set forth in California Civil Code Section 1951.2, or any successor statute. For purposes of computing damages pursuant to said Section 1951.2, (i) the Agreed Interest Rate shall be used where permitted, and (ii) rent due under this Lease shall include the Base Monthly Rent and the Additional Rent, determined on a monthly basis where necessary to compute such damages. Such damages shall include without limitation 1. The worth at the time of award of the unpaid rent which had been earned at the time of termination; 2. The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; 3. The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of the award exceeds the amount of such rental loss that could be reasonably avoided (it is agreed that the burden for proving the loss that could have been reasonably avoided shall be determined in accordance with then applicable Laws), computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%); and 4. Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease, or which in the ordinary course of things would be likely to result therefrom, including without limitation, the following: (a) expenses for cleaning, repairing or restoring the Leased Premises; (b) expenses for altering, remodeling or otherwise improving the Leased Premises for the purpose of re-leasing, including installation of leasehold improvements (whether such installation be funded by a reduction of rent, direct payment or allowance to a new tenant, or otherwise), (c) broker's fees, advertising costs and other expenses of re-leasing the Leased Premises; (d) costs of carrying the Leased Premises, such as taxes, insurance premiums, utilities, and security precautions; (e) expenses in retaking possession of the Leased Premises; and (f) reasonable attorney's fees and court costs incurred by Landlord in retaking possession of the Leased Premises and in releasing the Leased Premises or otherwise incurred as a result of Tenant's default. F. Nothing in this paragraph shall limit Landlord's right to indemnification from Tenant as provided in Article 10. G. Tenant agrees that any notice given by Landlord pursuant to Paragraph 13.1 of this Lease shall satisfy the requirements for notice under California Code of Civil Procedure Section 1161, and Landlord shall not be required to give any additional notice in order to be entitled to commence an unlawful detainer proceeding. 13.3 Landlord's Default and Tenant's Remedies: In the event Landlord fails to perform any of its obligations under this Lease and fails to cure such default within fifteen (15) days after written notice from Tenant specifying the nature of such default where such default could reasonably be cured within said

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&nbsp;&nbsp;&nbsp;&nbsp;31 fifteen (15) day period, or fails to commence such cure within said fifteen (15) day period and thereafter continuously, with due diligence, prosecute such cure to completion where such default could not reasonably be cured within said fifteen (15) day period, then Tenant shall have the following remedies only: A. Tenant may proceed in law, or in equity, to compel Landlord to perform its obligations and/or to recover Tenant's actual damages. B. If Tenant provides notice to Landlord of an event or circumstance that requires the action of Landlord with respect to the repairs or maintenance within Landlord's express obligations pursuant to this Lease, and Landlord fails to provide such action as required by the terms of this Lease within the period set forth above, then Tenant may take the required action if: (i) Tenant delivers to Landlord an additional written notice advising Landlord that Tenant intends to take the required action if Landlord does not begin the required repair or maintenance within fifteen (15) days after the written notice (or such shorter time period as may be commercially reasonable, in the event of an emergency involving imminent peril to person or property); and (ii) Landlord fails to begin the required work within such fifteen (15) day period (or such shorter time period as may be commercially reasonable, in the event of an emergency involving imminent peril to person or property). If such action was required under the terms of this Lease to be taken by Landlord, Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's reasonable and out of pocket costs and expenses incurred by Tenant in taking such action plus interest from the date such expenditure is incurred to the date of actual payment at the Agreed Interest Rate (collectively, "Tenant's Self-Help Expenses"). Notwithstanding anything herein to the contrary, if, at any time during the Lease Term, Landlord is required to reimburse Tenant for any Tenant's Self-Help Expenses, and Landlord fails to pay such sum to Tenant within thirty (30) days after Tenant has delivered to Landlord written request therefor (together with reasonable supporting documentation for such Tenant's Self-Help Expenses), Tenant may thereafter, without further or additional notice to Landlord, offset the amount of any such Tenant's Self-Help Expenses against up to fifty percent (50%) of each monthly Rent payment thereafter due and payable by Tenant to Landlord under this Lease until such time as Tenant has recouped all of Tenant's Self-Help Expenses through such offset rights or by way of Landlord reimbursement. Notwithstanding the introductory paragraph of this Section 13.3, Tenant may exercise its rights in connection with Landlord's failure to deliver the Leased Premises to Tenant, in the Delivery Condition, by the Anticipated Delivery Date (including Tenant's right to terminate the Lease) in the manner set forth in Article 2. Except as otherwise expressly set forth in Section 13.3.B, above, or in Exhibit C, Tenant waives the provisions of Sections 1932(1), 1941 and 1942 of the California Civil Code and/or any similar or successor law regarding Tenant's right to terminate this Lease or to make repairs and deduct the expenses of such repairs from the rent due under the Lease. Tenant hereby waives any right of redemption or relief from forfeiture under the laws of the State of California, or under any other present or future law, including the provisions of Sections 1174 and 1179 of the California Code of Civil Procedure and/or any similar or successor law. 13.4 Waiver: One party's consent to or approval of any act by the other party requiring the first party's consent or approval shall not be deemed to waive or render unnecessary the first party's consent to or approval of any subsequent similar act by the other party. The receipt of acceptance by Landlord of any rent with or without knowledge of the breach of any provision hereof shall not be deemed a waiver of any such breach unless such waiver is in writing and signed by Landlord. No delay or omission in the exercise of any right or remedy accruing to either party upon any breach by the other party under this Lease shall impair such right or remedy or be construed as a waiver of any such breach theretofore or hereafter occurring. The waiver by either party of any breach of any provision of the Lease shall not be deemed to be a waiver of any subsequent breach of the same or of any other provisions herein contained.

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&nbsp;&nbsp;&nbsp;&nbsp;32 ARTICLE 14 ASSIGNMENT AND SUBLETTING 14.1 By Tenant: The following provisions shall apply to any assignment, subletting or other transfer by Tenant or any subtenant or assignee or other successor in interest of the original Tenant (collectively referred to in this paragraph as "Tenant"): A. Except as otherwise provided in this Article 14, Tenant shall not do any of the following (collectively referred to herein as "Transfer"), whether voluntarily, involuntarily, or by operation of law, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed: (i) assign or otherwise transfer its interest in this Lease or in the Leased Premises; (ii) sublet all or any part of the Leased Premises or allow it to be sublet, occupied, or used by any person or entity other than Tenant; (iii) transfer any right appurtenant to this Lease or the Leased Premises; (iv) mortgage or encumber the Lease (or otherwise use the Lease as a security device) in any manner; or (v) materially amend or modify a sublease or other transfer that has been previously approved by Landlord in a manner that increases the space that is the subject of the sublease or that extends the sublease term or other transfer or that changes the identity of the subtenant or transferee. Tenant shall reimburse Landlord for all reasonable costs and attorney's fees actually incurred by Landlord in connection with the processing and/or documentation of any requested Transfer, whether or not Landlord's consent is granted; provided, however, that such cost and attorneys' fees shall not exceed $5,000. Any Transfer so approved by Landlord shall not be effective until Tenant has delivered to Landlord an executed counterpart of the document evidencing the Transfer which (i) is in form reasonably approved by Landlord, (ii) is consistent with the terms and conditions as stated in Tenant's notice given to Landlord pursuant to subparagraph B, below, and (iii) in the event of an assignment, contains the agreement of the proposed Transferee to assume all obligations of Tenant related to the Transfer arising after the effective date of such Transfer and to remain jointly and severally liable therefor with Tenant. Any attempted Transfer without Landlord's consent shall constitute a breach of this Lease by Tenant and shall be voidable at Landlord's option. Landlord's consent to any one Transfer shall not constitute a waiver of the provisions of this paragraph as to any subsequent transfer nor a consent to any subsequent Transfer. No Transfer, even with the consent of Landlord, shall relieve Tenant of its personal and primary obligation to pay the rent and to perform all of the other obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord from any person shall not be deemed to be a waiver by Landlord of any provision of this Lease nor to be a consent to any Transfer. B. Tenant shall give Landlord prior written notice of any desired Transfer that requires Landlord's approval and of the proposed terms of such Transfer including but not limited to (i) the name and legal composition of the proposed Transferee; (ii) in the case of an assignment of the Lease, an audited financial statement, if available, or an unaudited financial statement if an audited statement is not available, of the Transferee (provided that such obligation shall not apply to a Transferee whose stock is traded on a public stock exchange); and (iii) the nature of the proposed Transferee's business to be carried on in the Leased Premises. Tenant's notice shall not be deemed to have been served or given until such time as Tenant has provided Landlord with all information required by this subparagraph. C. In the event that Tenant seeks to make any Transfer that requires Landlord's approval, Landlord shall notify Tenant of Landlord's approval or disapproval of the Transfer by giving Tenant written notice within eight (8) Business Days after Tenant's notice of intent to Transfer has been given to Landlord. In the event that Landlord fails to notify Tenant in writing of such approval or disapproval within such period, and in the event Landlord's failure to respond continues for a period of two (2) Business Days following Landlord's receipt of a second written notice from Tenant which notifies Landlord of Landlord's failure to respond and reminds Landlord of the deemed approval provisions of this

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&nbsp;&nbsp;&nbsp;&nbsp;33 Section, then Landlord shall be deemed to have approved the Transfer. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Transfer that is an assignment, Landlord shall have the right to withhold its consent where (i) Transferee's intended use of the Leased Premises is inconsistent with the Permitted Use; or (ii) Transferee's financial condition is inadequate to support the obligations of the Transferee under such Transfer. Additionally, in the event of a sublease of more than one floor of the Leased Premises for a sublease term equal to or greater than one-half (1/2) of the then-remaining Lease Term, Landlord may terminate this Lease as to that part of the Leased Premises proposed to be so sublet so that Landlord is thereafter free to lease the portion proposed to be so sublet to whomever it pleases on whatever terms are acceptable to Landlord. In the event Landlord elects to so terminate this Lease as to the portion of the Leased Premises proposed to be so sublet, then this Lease shall terminate as to the portion to be so sublet on the date that the Transfer would have commenced. Upon such partial termination, Tenant shall be released from any further obligation under the Lease with respect to the space proposed to be sublet and the Base Monthly Rent shall be reduced to an amount which bears the same relationship to the original amount thereof as the area of that part of the Leased Premises which remains subject to the Lease bears to the original area of the Leased Premises, and Landlord and Tenant shall execute a commercially reasonable cancellation and release agreement to effect such termination. Notwithstanding the foregoing, within fifteen (15) days of Tenant's receipt of any notice by Landlord to terminate this Lease as to the portion of the Leased Premises to be sublet, Tenant may withdraw its request for the Transfer by written notice to Landlord and continue in possession of the Leased Premises under the terms of the Lease. If Landlord consents to an assignment the Lease or subleasing of all or a part of the Leased Premises, Tenant may do so, but without being released of its liability for the performance of all of its obligations under the Lease. If Tenant assigns its interest in this Lease, then Tenant shall pay to Landlord fifty percent (50%) of all consideration received by Tenant with respect to the assignment of this Lease over and above the obligations of Tenant under this Lease, after subtraction of the Transfer Costs (as defined below). If Tenant sublets all or part of the Leased Premises, then Tenant shall pay to Landlord fifty percent (50%) of the positive difference, if any, between (i) all rent and other consideration paid by the subtenant to Tenant, less (ii) all rent paid by Tenant to Landlord pursuant to this Lease which is allocable to the area so sublet, after subtraction of the Transfer Costs. Such amount shall be paid to Landlord on the same basis, whether periodic or in lump sum, that such rent and other consideration is paid to Tenant by its subtenant. Tenant's obligations under this subparagraph shall survive any assignment or sublease. Upon Landlord's written request (to be delivered no more than quarterly), Tenant shall deliver an itemized statement of the method by which the amount to which Landlord is entitled was calculated, certified by Tenant as true and correct. Landlord shall have the right to inspect Tenant's and the transferee's books and records relating to the payments due pursuant to this subparagraph upon reasonable advanced written notice and at no cost to Tenant. Following Landlord's written request therefore, Tenant and the transferee shall deliver to Landlord copies of all bills, invoices, or other documents upon which its calculations are based. As used herein, the term "consideration" shall mean any monetary consideration of any kind received by Tenant for the Transfer (including, without limitation, key money, bonus money, and any payment in excess of fair market value for services rendered by Tenant, but shall not include any payment for the sale of any personal property of Tenant to the Transferee in connection with such Transfer). "Transfer Costs" means (i) the expenses incurred by Tenant for any changes, alterations and improvements to the Leased Premises in connection with the Transfer (including any tenant improvement allowances (provided, however, no such allowances may be converted by the transferee to a rent credit)), (ii) any brokerage commissions in connection with the Transfer, and (iii) reasonable attorneys' fees, and Landlord's review fee incurred by Tenant in connection with the Transfer.

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&nbsp;&nbsp;&nbsp;&nbsp;34 D. Subject to Section 14.1F below, if Tenant is a corporation or limited liability company, any dissolution, merger, consolidation, or other reorganization of Tenant, or the sale or transfer of stock or membership interest in Tenant that results in greater than fifty percent (50%) of the capital stock or membership interests of Tenant being held by new shareholders or members that are not either existing shareholders or members or affiliated with existing shareholders of members (a "Change of Control"), shall be deemed a voluntary assignment of Tenant's interest in this Lease, provided, however, that this paragraph shall not apply to a corporation or other entity the capital stock or ownership of which is publicly traded or part of a initial public offering. If Tenant is a partnership, any withdrawal or substitution (whether voluntary, involuntary, or by operation of law and whether occurring at one time or over a period of time) of any partner(s) owning more than fifty percent (50%) of the capital or profits interests of the partnership, or the dissolution of the partnership, shall be deemed a voluntary assignment of Tenant's interest in this Lease. E. For the purposes of this Lease, sale of Tenant's capital stock through any public exchange, the issuances for purposes of raising financing shall not be deemed an assignment, subletting or any other Transfer of the Lease or the Leased Premises. F. Notwithstanding any contrary term or provision of this Article 14, (A) a Change of Control, or (B) the assignment, subletting or other transfer by Tenant of all or any portion of this Lease or the Leased Premises to (i) an entity that owns the majority ownership interest in Tenant or a subsidiary the majority ownership interest of which is owned by Tenant, or an entity that is commonly-owned with Tenant, or (ii) any entity which purchases all or substantially all of the assets of Tenant, or (iii) any entity into which Tenant is merged or consolidated (with respect to (A) above, Tenant, and with respect to (B) above, all such persons or entities described in clauses (i), (ii), and (iii), being sometimes herein referred to as a "Permitted Transferee", and such transactions being referred to as "Permitted Transfer") shall not be deemed a Transfer under this Section 14 (hence, the aforesaid events shall not be subject to obtaining Landlord's prior consent, Landlord shall not have any recapture rights in connection with a Permitted Transfer that is a sublease, and Landlord shall not have any right to receive any excess consideration in connection therewith), provided in all instances that: 1. any such Permitted Transfer was not formed as a subterfuge to avoid the obligations of this Section; 2. Tenant give Landlord prior or prompt notice of any such assignment or sublease to a Permitted Transferee (however, if Tenant is prohibited from giving such prior notice as a result of a confidentiality agreement or applicable law, Tenant shall provide such notice promptly after the assignment or sublease); 3. any such assignment or sublease shall be subject to all of the terms and provisions of this Lease, and such assignee or sublessee (i.e. any such Permitted Transferee), other than as a result of a Change of Control or in the case of a Permitted Transfer resulting from a merger or consolidation as described above where Tenant remains the surviving entity thereafter, shall assume, in a written document reasonably satisfactory to Landlord and delivered to Landlord, all the obligations of Tenant under this Lease arising after the date of the Transfer; 4. in the event of a merger or acquisition, the Permitted Transferee shall have a net worth which is at least equal to the Tenant's net worth immediately prior to the transfer; and 5. Tenant shall remain fully liable for all obligations to be performed by Tenant under this Lease.

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&nbsp;&nbsp;&nbsp;&nbsp;35 14.2 By Landlord: Landlord and its successors in interest shall have the right to transfer their interest in the Leased Premises and the Property at any time and to any person or entity. In the event of any such transfer, the Landlord originally named herein (and in the case of any subsequent transfer, the transferor) from the date of such transfer shall be automatically relieved, without any further act by any other person or entity, of all liability for the performance of the obligations of the Landlord hereunder which may accrue after the date of such transfer (but shall not be relieved of any obligations occurring during its period of ownership of the Property), conditioned upon (a) the assumption in writing by the transferee of all such obligations of Landlord, (b) Tenant's receipt from Landlord written notification of the transfer and (c) any funds held by the transferor in which Tenant has an interest (including, without limitation, the security deposit) shall have been delivered to the transferee. As used herein, the term "Landlord" shall mean the Landlord originally named herein but following any transfer of its interest in the Leased Premises and the Property (and provided the conditions in this Section 14.2 have been satisfied), the term "Landlord" shall thereafter mean the transferee of such interest. ARTICLE 15 TERMINATION 15.1 Surrender of the Leased Premises: Immediately prior to the expiration or upon the earlier termination of this Lease, Tenant shall remove all Tenant's Trade Fixtures and other personal property, repair all damage caused by the installation and removal of such property, and vacate and surrender the Leased Premises to Landlord immediately upon expiration or the earlier termination in the condition that Tenant is required to maintain the Leased Premises under this Lease and in substantially the same condition as existed upon the completion of the initial Tenant Improvements and Tenant Improvements, reasonable wear tear excepted (however, reasonable wear tear excepted shall not include wear and tear that would have been avoided by reasonably appropriate maintenance practices). Subject to the terms of Section 5.2 above, if Landlord so requests, either before or after the expiration or earlier termination of this Lease, Tenant shall prior to the expiration or earlier termination of this Lease, or within thirty (30) days of Landlord's request, whichever is later: (a) remove any Leasehold Improvements designated by Landlord (other than the initial Tenant Improvements and/or any Cosmetic Improvements), (b) repair all damage caused by such removal, and (c) restore the Leased Premises to the condition existing prior to the time such removed Leasehold Improvements were initially installed, reasonable wear and tear excepted. Landlord may hire independent contractors to inspect any systems for which Tenant was responsible for the purpose of determining whether they have been properly maintained by Tenant, and Tenant shall pay the reasonable cost thereof within thirty (30) days after receipt of a statement therefor from Landlord if it is determined that Tenant failed to maintain the Leased Premises as required by this Lease. If the Leased Premises are not so surrendered at the expiration or earlier termination of this Lease, Tenant shall be liable to Landlord for all reasonable out- of-pocket costs incurred by Landlord in returning the Leased Premises to the required condition, plus interest on all costs incurred at the Agreed Interest Rate. Any personal property of Tenant or any other person left on the Leased Premises after Tenant has abandoned, vacated, or surrendered the Leased Premises shall be deemed to be abandoned and Landlord may dispose of such property in accordance with the provisions of California Civil Code Sections 1980 et seq., or any successor statute. 15.2 Holding Over: This Lease shall terminate without further notice at the expiration of the Lease Term. Any holding over by Tenant after expiration of the Lease Term without Landlord's written consent shall not constitute a renewal or extension of the Lease or give Tenant any rights in or to the Leased Premises. Any holding over after such expiration with the consent of Landlord shall be construed to be a tenancy from month to month on the same terms and conditions herein specified except as expressly agreed to the contrary by Landlord and Tenant in writing. In any event, with respect to any holding over after such expiration, with or without Landlord's consent, the Base Monthly Rent shall be increased to one hundred

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&nbsp;&nbsp;&nbsp;&nbsp;36 twenty five percent (125%) of the Base Monthly Rent last in effect (unless otherwise expressly agreed in writing between Landlord and Tenant) for the first two (2) months of any such holding over and shall thereafter be increased to an amount equal to one hundred twenty fifty percent (150%) of the Base Monthly Rent last in effect (unless otherwise expressly agreed in writing between Landlord and Tenant). In the event of any holding over by Tenant after the expiration of the Lease Term which exceeds sixty (60) days and is without Landlord's written consent, Tenant shall indemnify Landlord against loss or liability resulting from any such holding beyond the expiration of such sixty (60) day period, including, without limitation, any claims made by any succeeding tenant or losses to Landlord due to lost opportunities to lease to succeeding tenants; provided, however, Landlord has notified Tenant prior to the date that is sixty (60) days following the commencement of any such holdover that a potential claim against Landlord may exist should Tenant continue to holdover beyond the expiration of the first sixty (60) days of such holdover. ARTICLE 16 GENERAL PROVISIONS 16.1 Landlord's Right to Enter: Landlord and its agents may enter the Leased Premises at any reasonable time (upon reasonable prior written notice to Tenant (which may be given via email at the address set forth in the Basic Lease Information Summary (or to such other email recipient as Tenant has notified Landlord of in writing)), which notice shall be no less than one (1) Business Days' notice, except in the case of emergency as provided below) for the purpose of (a) inspecting the same, (b) posting notices of non-responsibility, (c) supplying any service to be provided by Landlord to Tenant, if applicable, (d) showing the Leased Premises to prospective purchasers, mortgagees or, during the last nine (9) months of the Lease Term, tenants, (e) making necessary alterations, additions or repairs, if applicable, (f) performing Tenant's obligations when Tenant has failed to do so, and/or (g) attending to an emergency. In the case of an emergency that threatens imminent risk of property damage or personal injury in which Landlord is unable to contact Tenant, Landlord may enter the Leased Premises by means of a master key, and Landlord shall have the right to use any means Landlord may deem necessary to enter the Leased Premises. Notwithstanding the foregoing, prior notice shall not be required for any such entry by Landlord in the event of an emergency (a) where immediate repairs are required to preserve any portion of the Leased Premises or Property, (b) to continue essential services to the Property, or (c) to avoid danger to life or property. Landlord shall use commercially reasonable efforts to minimize interference with the conduct of Tenant's business in connection with such entries into the Premises. All information of Tenant revealed by such entry shall be kept strictly confidential, and at Tenant's request, the party entering the Leased Premises shall sign a commercially reasonably form of confidentiality agreement reflecting such confidentiality. 16.2 Subordination: The following provisions shall govern the relationship of this Lease to any underlying lease, mortgage or deed of trust which now or hereafter affects the Property, and any renewal, modification, consolidation, replacement, or extension thereof (a "Security Instrument"). A. This Lease is subject and subordinate to all Security Instruments existing as of the date of this Lease or created after the date of this Lease, provided that the subordination of this Lease to any Security Instrument shall be conditioned upon the delivery to Tenant of an SNDA from the holder of such Security Instrument. However, if any Lender so elects at any time, this Lease shall become prior and superior to any such Security Instrument. B. Concurrent with the execution hereof, Landlord shall deliver to Tenant, at Landlord's sole cost and expense, a subordination, non-disturbance and attornment agreement in the form attached hereto as Exhibit H ("SNDA") executed by Landlord and any existing holder of a Security Instrument as of the date of this Lease; provided, however, it is agreed that such initial delivery of the SNDA may be

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&nbsp;&nbsp;&nbsp;&nbsp;37 accomplished by delivery of a PDF version of a signed SNDA without notarization of signatures, provided that Landlord delivers to Tenant original notarized signatures from Landlord and any existing holder of a Security Instrument as of the date of this Lease within thirty (30) days following the date of this Lease. Within ten (10) Business Days of a written request from Landlord for the same, Tenant shall execute an SNDA in such commercially reasonable form as may be requested by any future holder of a Security Instrument, provided that such form is not materially less favorable to Tenant than the form attached hereto as Exhibit H. Upon execution of the SNDA by Tenant, Landlord shall promptly record the SNDA in the Public Records of the County of San Mateo, California, at Landlord's sole cost and expense 16.3 [Intentionally Omitted] 16.4 Mortgagee Protection: In the event of any default on the part of Landlord, the cure rights of any holder of a Security Instrument shall be as set forth in the then-effective SNDA. 16.5 Estoppel Certificates and Financial Statements: Each party agrees, following any request by the other party not more often than twice during any calendar year (except in connection with a prospective sale or financing), to execute and deliver to the requesting party within ten (10) Business Days after written request an estoppel certificate upon which the requesting party and others it reasonably designates may rely (a) certifying that this Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect, (b) stating the date to which the rent and other charges have been paid, including any rents or charges that have been paid in advance, (c) acknowledging that there are not, to the requested party's knowledge, any uncured defaults on the part of the requesting party hereunder, or if there are uncured defaults on the part of the requesting party, stating the nature of such uncured defaults and (d) certifying such other information about this Lease as may be reasonably requested by the requesting party. In the event that such other party fails to execute and deliver any such estoppel certificate within such ten (10)-Business Day period, provided that the requesting party has delivered written notice to the other party, specifying such other party's failure to execute and deliver such estoppel certificate during such ten (10)-business day period, and such other party has not cured such failure within ten (10) Business Days following the date of delivery of such notice, such other party's failure to execute any such estoppel certificate shall be a conclusive admission by Tenant or Landlord, as the case may be, that all matters so requested by the other party are true and accurate. At any time during the Lease Term (but no more frequently than once per calendar year (except in connection with a prospective sale or financing of the Property by Landlord, in which case twice per calendar year)) and only following the parties' execution of a commercially reasonable non-disclosure agreement). Tenant shall, upon ten (10) Business Days' prior written notice from Landlord, provide Tenant's most recent financial statement and financial statements covering the twenty-four (24) months prior to the date of such most recent financial statement to Landlord (except to the extent financial statements for such period have already been provided to Landlord in connection with any prior year's request) and any existing lender or to any potential lender or buyer of the Property, subject to customary confidentiality agreements reasonably satisfactory to Tenant. Such statements shall be prepared in accordance with Tenant's standard accounting practices consistently applied, and shall be audited by an independent certified public accountant but only in the event such audited financials have already been prepared at the time of the request. 16.6 Notices: Any notice required or desired to be given regarding this Lease shall be in writing, shall be addressed to the party to be served at its address(es) set forth in the Basic Lease Information Summary, and may be personally served, or in lieu of personal service, may be given by certified mail return receipt requested, or via overnight courier that guarantees next day delivery. If given by certified mail, such notice shall be deemed to have been given on the date of receipt as evidenced by the receipt. If

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&nbsp;&nbsp;&nbsp;&nbsp;38 given by overnight courier that guarantees next day delivery, such notice shall be deemed given one (1) business day after being deposited with such overnight courier will all expenses for such delivery paid. In all other cases, notices shall be deemed delivered when actually received. Concurrent with delivery of any notice hereunder as set forth herein, the party delivering said notice will deliver to the other party a courtesy copy via email at the address set forth in the Basic Lease Information Summary. Either party may change its notice address by giving written notice to the other party of same in accordance with this paragraph. The attorney for any party may give any such notice on behalf of a party. 16.7 Attorneys' Fees: In the event either party shall bring any action or legal proceeding, or otherwise incur any legal fees, in connection with an alleged breach of any provision of this Lease, to recover rent, to terminate this Lease or to otherwise enforce, protect or establish any term or covenant of this Lease or right of either party, the prevailing or party not in violation of this Lease shall be entitled to recover, reasonable attorneys' fees and court costs from the other. 16.8 Entity Authority: If a party to this Lease is a corporation, a partnership, limited liability company or other entity (a) such party represents and warrants that each individual executing this Lease on behalf of said entity is duly authorized to execute and deliver this Lease on behalf of said entity in accordance with the organizational documents of said entity and that this Lease is binding upon said entity in accordance with its terms. 16.9 Additional Definitions: Any term that is given a special meaning by any provision in this Lease shall have such meaning when used in this Lease or any addendum or amendment hereto. As used herein, the following terms shall have the following meanings: A. Agreed Interest Rate: The term "Agreed Interest Rate" shall mean an interest rate equal to the lesser of seven percent (7%) or the maximum applicable rate permitted by Law. B. Effective Date: The term "Effective Date" shall mean the reference date of this Lease appearing above. C. Laws: The term "Law" or "Laws" shall mean all laws, rules, regulations, ordinances, directives, covenants, easements, and permits to the extent relating to the Property (including but not limited to matters pertaining to (a) industrial hygiene, (b) environmental conditions on, in, under, or about the Property, including soil and groundwater conditions, and (c) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill, or release of any Hazardous Materials), now in effect or which may hereafter come into effect. For avoidance of doubt, the terms "Laws" includes, without limitation, the Americans With Disabilities Act ("ADA"), Title 24, City Ordinances and all other Federal, State, and Local laws. D. Leasehold Improvements: The term "Leasehold Improvements" shall mean all improvements, additions, alterations, and fixtures installed in the Leased Premises by Tenant or at its expense which are not Trade Fixtures. E. Business Days: The term "Business Days" shall mean all days other than weekends and days in which banks are closed in the State of California. F. Trade Fixtures: The term "Trade Fixtures" shall mean anything affixed to the Leased Premises by Tenant at its expense for purposes of trade, manufacture, or ornament (except where Tenant replaced similar work or material originally installed by Landlord) that is specifically unique to Tenant's business as opposed to being useful to tenants of the Leased Premises generally, which can be

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&nbsp;&nbsp;&nbsp;&nbsp;39 removed without injury to the Leased Premises (or removal causes injury and Tenant repairs the injury) unless such thing has, by the manner in which it is affixed, become an integral part of the Leased Premises, provided, however, that all of Tenant's signs shall be Trade Fixtures regardless of how affixed to the Leased Premises. 16.10 Miscellaneous: Should any provision of this Lease prove to be invalid or illegal, such invalidity shall in no way affect, impair or invalidate any other provision hereof, and such remaining provisions shall remain in full force and effect. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Any executed copy of this Lease shall be deemed an original for all purposes. This Lease shall, subject to the provisions regarding assignment, apply to and bind the respective heirs, successors, executors, administrators and assigns of Landlord and Tenant. This Lease shall be construed and enforced in accordance with the laws of the State of California. The language in all parts of this Lease shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either Landlord or Tenant, regardless of which party caused the same to be prepared. The captions used in this Lease are for convenience only and shall not be considered in the construction or interpretation of any provision hereof. Where any party is obligated not to perform any act, such party is also obligated to restrain any others within its control from performing such act, including agents, invitees, contractors, subcontractors, and employees. Landlord shall not become or be deemed a partner or a joint venturer of Tenant by reason of this Lease. This Lease may be executed in counterparts and faxes, emailed and/or other electronic signatures (e.g., Docusign signatures) shall be deemed originals for all purposes. This Lease shall be interpreted neutrally regardless of which party was responsible for drafting the same. 16.11 Limitation on Tenant's Recourse: Without limiting anything to the contrary set forth in this Lease Agreement (including, without limitation, the provisions of Section 13.3 above), Tenant agrees to look solely to Landlord's interest in the Property (and any rent, income, awards or proceeds thereof) in connection with any liability in connection with a default by Landlord under the terms of this Lease and that Tenant shall not have recourse against any other assets of Landlord whatsoever. In no event shall any director, officer, employee, shareholder, managing member, member, manager, general partner, limited partner, principal or other agent of Landlord or Tenant have any personal liability for any obligations or liabilities of such party under this Lease Agreement or for any claim based on, in respect of, or by reason of, the obligations of such party under this Lease Agreement, and each party hereby expressly waives and releases all such parties from any personal liability. In any event, each party's liability shall be limited to actual damages, and under no circumstances shall either party be liable for any special, consequential, exemplary or punitive damages; provided, however, the foregoing waiver of consequential damages by Landlord and Tenant shall not apply in connection with the indemnification provisions set forth in Sections 10.2, 10.3 and/or 15.2 above and/or any consequential damages recoverable by Landlord or Tenant under California Law in accordance with the terms of Section 13.2 of this Lease above. 16.12 Entire Agreement: The Lease and all exhibits and addenda attached hereto (and by this reference incorporated herein), are the entire agreement between the parties, and there are no binding agreements or representations between the parties except as expressed herein. Tenant acknowledges that except as otherwise provided in this Lease, neither Landlord nor Landlord's agent(s) has made any representation or warranty as to (a) whether the Leased Premises may be used for the Permitted Use under existing Law or (b) the suitability of the Leased Premises or the Common Area for the conduct of Tenant's business. There are no oral agreements between Landlord and Tenant affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between Landlord and Tenant or displayed by Landlord to Tenant with respect to the subject matter of this Lease. There are no representations between Landlord and Tenant other than those

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&nbsp;&nbsp;&nbsp;&nbsp;40 contained in this Lease, and all reliance with respect to any representations is upon the representations contained herein. No subsequent change or addition to this Lease shall be binding unless in writing and signed by the parties hereto. 16.13 Waiver of Jury Trial: Landlord and Tenant hereby waive the right to have any dispute relating to this Agreement or, in any way relating to Tenant's occupancy of the Leased Premises, tried before a jury. 16.14 Brokers: Except for the Brokers referenced in the Basic Lease Information Summary, each party represents that no other broker has represented such party with respect to this Lease transaction. In the event that any broker, other than the Brokers, if applicable, claims to have taken part in any dealings, negotiations, or consultations with respect to the Leased Premises or this transaction, then the party having failed to disclose such contact will be responsible for and will defend, indemnify, and save harmless the other party from and against all reasonable costs, fees (including reasonable attorneys' fees), expenses, liabilities, and claims incurred or suffered by such party as a result thereof. The provisions of this Section shall survive the termination of this Lease. 16.15 California Disability Compliance: Pursuant to California Civil Code § 1938, Landlord hereby states that the Leased Premises have not undergone inspection by a Certified Access Specialist ("CASp") (defined in California Civil Code § 55.52). Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises." Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of the Leased Premises hereunder, such CASp inspection shall be performed at Tenant's sole cost and expense. In the event any repairs, upgrades, alterations and/or modifications to the Leased Premises are necessary to correct any such violations of construction-related accessibility standards identified by such CASp inspection as required by applicable Law, the terms of Section 4.2 of this Lease shall govern the parties' respective responsibility for correction of the same. In the event of any conflict between the terms and provisions of this Section and the remaining terms and provisions of this Lease, the remaining terms and provisions of this Lease shall control. 16.16 Rooftop and Riser Rights. For no additional cost, but subject to Landlord's prior written approval as to the plans and specifications for the same (which approval shall not be unreasonably withheld, conditioned or delayed), Tenant may install, at Tenant's sole cost and expense, one or more communications dishes, antenna or comparable communications equipment, or supplemental HVAC units upon the roof of the Building, and use the Building telecommunications rooms, risers, shafts and other pathways to install required conduit, connections and ducting to serve the Leased Premises, including from the roof for connection of Tenant's rooftop equipment to the Leased Premises (all such equipment, installations and connections, collectively, the "Rooftop Related Equipment"). Landlord may require Tenant to install reasonable screening around the Rooftop Related Equipment installed on the roof of the Building, at Tenant's sole cost and expense. Tenant shall be responsible, at Tenant's sole cost and expense, for (i) obtaining all permits or other governmental approvals required in connection with the Rooftop Related Equipment, and (ii) installing, repairing and maintaining and causing the Rooftop Related Equipment to

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&nbsp;&nbsp;&nbsp;&nbsp;41 comply with all applicable Laws. The Rooftop Related Equipment shall remain the property of Tenant and Tenant shall remove the Rooftop Related Equipment upon the expiration or earlier termination of the Lease, and Tenant shall restore the roof and any other portion of the Building affected by the Rooftop Related Equipment to its condition prior to installation, excepting ordinary wear and tear. Tenant may not assign, lease, rent, sublet or otherwise transfer any of its interest in the Rooftop Related Equipment except in connection with a Transfer or Permitted Transfer that is an assignment pursuant to the provisions of Section 14.1 above. 16.17 Force Majeure: If either party is delayed, hindered or prevented from the performance of an obligation because of a Force Majeure Event the performance shall be excused for the period of delay. As used herein, the term "Force Majeure Event" shall mean an actual delay in the performance of any obligation under this Lease resulting from industry-wide strikes, lockouts, labor troubles, fire, wind, damage or destruction to the Building, explosion, casualty, flood, hurricane, tornado, acts of God, sabotage, war, invasion, civil unrest, earthquakes, or actual, industry-wide delay affecting all similar works of construction in the vicinity of the Building, power failure, riots, insurrection, or pandemic); provided, however, that (x) no such delay shall constitute a "Force Majeure Event" unless the party so affected thereby uses reasonable efforts to mitigate such delay and (y) "Force Majeure Event" shall not include any inability or delay resulting from insufficient funds or any delay due to the failure to receive any governmental approvals or permits or governmental entitlements. If Landlord contends that a Force Majeure Event has occurred, then Landlord shall notify Tenant (a "Force Majeure Notice"). If Tenant contends that a Force Majeure Event has occurred, then Tenant shall give Landlord a Force Majeure Notice. Force Majeure Notice shall identify (a) the action, inaction or circumstance which constitutes such Force Majeure Event, (b) the Lease obligation which the notifying party is unable to timely perform as a result of such Force Majeure Event (which shall include a stipulation of the original deadline for such performance), (c) the date upon which the noticing party contends such Force Majeure Event commenced, along with reasonable evidence thereof, (d) the date upon which such Force Majeure is anticipated to end if and to the extent the sending party is reasonably able to make such determination, and (e) a description of all steps that the notifying party is taking or intends to take to mitigate the effects and reduce the duration of such Force Majeure Event. Notwithstanding the foregoing, no party shall be excused from the prompt payment of Rent, Additional Rent or any other payments required under the terms of this Lease as a result of a Force Majeure Event. 16.18 Confidentiality: Landlord and Tenant acknowledge that the content of this Lease and any related documents are confidential information. Each party shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than (i) to such party's financial, legal, accounting and space planning consultants, and each such party shall be required to keep the information confidential, (ii) to any proposed Transferees, (iii) to such party's current or prospective purchasers, investors, shareholders or lenders, and each such party shall be required to keep the information confidential, (iv) to a court of competent jurisdiction, arbitrator or mediator in connection with a dispute between Landlord and Tenant, (v) as otherwise required by law, or (vi) disclosures that are reasonably necessary to comply with the rules of the Securities and Exchange Commission or any stock exchange. If any applicable law or court require Landlord or Tenant to file a copy of this Lease or a portion hereof in a manner that provides the general public with access thereto, then such party shall provide the other party with prior written notice thereof and shall file a copy hereof that is redacted to remove the material economic terms hereof to the extent permitted by law. 16.19 Recording: Neither Landlord nor Tenant shall record this Lease. Tenant shall have the right to record, at Tenant's cost, a memorandum of this Lease in a form reasonably approved by Landlord, which the Landlord shall execute, acknowledge and deliver to Tenant within ten (10) Business Days following Tenant's request therefor.

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&nbsp;&nbsp;&nbsp;&nbsp;42 IN WITNESS WHEREOF, Landlord and Tenant hereafter execute this Lease as a binding agreement between them, as of the Effective Date. [SIGNATURES APPEAR ON FOLLOWING PAGE]

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&nbsp;&nbsp;&nbsp;&nbsp;43 LANDLORD 855 Main Street RWC, LLC, a California limited liability company By: /s/ Mark C. Johnson Name: Mark C. Johnson Its: Managing Member Dated: 8/12/2021 TENANT DELPHIX CORP., a Delaware corporation By: /s/ Stewart Grierson Name: Its: Dated: Exhibits and Addenda: Exhibit A: Depiction of Property Exhibit B: Depiction of Leased Premises Exhibit C: Tenant Improvements Exhibit D: Rules and Regulations Exhibit E: Parking Covenant Exhibit F: Depiction of Parking Areas Exhibit G: Depiction and Location of Exterior Building Signage Exhibit H: Subordination, Nondisturbance and Attornment Agreement Addendum 1: Commencement Date Certificate Addendum 2: Option to Extend DocuSign Envelope ID: 33F5F941-B281-4BDC-8664-4D619938FA09 CFO Stewart Grierson 8/12/2021

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&nbsp;&nbsp;&nbsp;&nbsp;A-1 EXHIBIT A [PAGE 1] PROPERTY DEPICTION This exhibit, entitled "Property Depiction", is and shall constitute Exhibit A to that certain Lease Agreement dated August 12, 2021 (the "Lease"), by and between 855 Main Street RWC, LLC, a California limited liability company ("Landlord") and DELPHIX CORP., a Delaware corporation ("Tenant") for the leasing of the Leased Premises which are part of the property commonly referred to as 855 Main Street, Redwood City, California 94063. The portion of the Property that consists of land is depicted as follows:

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Exhibit A [PAGE 2] VOL. 84 IRON MONUMENT NO _TAG IN MONUMENT WELL PER [5][4] 5.335.224) FITS SPLIT CURBS: ON MANN ST 'SET NAIL_AND BRASS TAG PLS 9387 ON PROPERTY LUNE EXTENSION FOUND NAIL 4 HW) 3 2 2 mc (v3) N (e T £S. £2 ' \ \| i} \ 1 1 \ MAP REFERENCES fi] 1M 79, TOWN OF MEZESVILLE [2] 2M 79, SWEENEY'S ADDITION TO REDWOOD CITY [3] 8 LS 38-41, RECORD OF SURVEY [4] 25 LLS 83, RECORD OF SURVEY PER [4] (NO REFERENCE FOUND FOR ORIGINATION OF TAG) LANDS OF FELLOWS HALL ASSN OF R C APN: 053-233-130 (366 OR 449) N86'27°06"E 130.14" 230.14'(CALC PER PRIVATE INGRESS AND EGRESS EASEMENT EXTINGUISHED PER SOMMON OWNERSHIP or (OR 322 AND 847 OR 24). (coR OF LOT 21 70 FOUND NAL & TAG) & TAG LS 5615 APN: 053- (2007148694) FOUND NAIL é& TAG LS 5615 PER [4] (NO REFERENCE FOUND FOR ORIGINATION OF TAG) DEED REFERENCES [5] 2012-148562 [6) 2015-048426 Zi 2018-072546 _ na6:29'06"E 300.35 '(NB6'30'00°E SEARCHED NOT FOUND, 60D SPIKE AND WASHER TAGGED 157701 PER [4] LANDS OF PENG SOLON CHIH LIANG \|- 233-220 ne _ 300,36 1413005115) _ a BROADWAY (85° RW13]) LANDS OF ODD FELLOWS HALL ASSN OF RC APN: 053-233-050 (366 OR 449) 4) \| NI TE INGRESS AND EGRESS /A\ x fy EASEMENT EXTINGUISHED PER \| Pi vcs OnEL) \| COMMON OWNERSHIP (842 OR 203). 8a s i Lor 28, 855 "ta Street (MERGED PARCEL) / or, AS (MOTH VARIES) (MAN ST. LOTS) LLC 28,126t SQ. LANDS OF BLoCK i 24 et \ a "9 ' 2M 712] 1M Told (ON 2018- 072546) op une rer \| lee 855 MAIN STREET sie 8 > $05%23'53°E (DN 2015-048426) ft2] ae - , ~ = 8a a APN: 053-233-120 ct ag (DN 2018-072546) 8 q Ry > Be — "= = ; \3 (DN 2012-0148562) sale roto —_ APN: 053-233-060 Lor 20, SS gz ma — ss Block 7 2c 3 sagszoW 180.22" "38 2m 702) a 3! - _ LUNE 10 BE \es PARCEL. ONE \ & 1N86:20'31"E 0.50" LANDS OF REMOVED ies Bo 22 855 MAIN STREET RWC, LLC id vs 10 8 Nos4s 3y_-\| Eu silo L 'DN 2018-072546) LINE = ze = wu Pars) ow 2018-048. met REMOVED (SIDE WALK EASEMENT) 2 1 DETAIL. 3 > mace op 172" 053-233-110 14 m \ NTS sz PB seossor'w _ 100.0014) 4a 1 \ a 7 ze LANDS OF 4 ' 4 Seess0rMA] 150.14 ee 855 MAIN STREET Lor g \| a hase . Block 7 & SIDEWALK EASEMENT ém LANDS OF a= (ON 2012-0148562) 2M79123 = 1424 S.F. (WIDTH \| m \| ne Re 00 APN: 053-233-070 HES) SET NAIL_AND BRASS TAG 4 ae 30" \ iNT LINE {= asses \ PLS 9387 ON PROPERTY (2002-259625) gs PARCEL TWO 86°52 02% we NAL AND a —— OLD UNE PER [1][2] {LINE EXTENSION NOT A PART OF THIS SURVEY 5 3 25 US 83 N03'27'58'W: WASHER 137701 L — , an20! 33. SS (AWN ST. Lots) (was's6'o7"e 135 vata), g6'32'017E_ 87.70 _. 4M ott Ngers2'27"e _135.55'(TIE) NaeSeOTE _ 100.00 = 8052758 3.33" T ; LEGI FOUND NAIL é& TAG NBGISOSE 6.30! \| SEE DEALS' FOR CLARITY 1. DISTANCES SHOWN ARE IN FEET AND DECIMALS THEREOF. LS 7701 PER [4] SOS23'53"E 5.11 1 Na6'20'31"E 0.50' H 2. THE PURPOSE OF THIS MAP IS TO MERGE THE PROPERTY PRIVATE UTILITY AND (SIDE WALK EASEMENT) 1 DESCRIBED IN 2012-048562 AND 2015-048426 INTO ONE MoCESS EASEMENT 1 SIE CECA BARCEL S268 SF \ P \| ww 4 \ { PARCEL MAP 2018-003 { LANDS OF \| BASIS OF BEARINGS CSW \|ST2 'BEARINGS iF IR THIS MAP IS CALCULATED BEARING ND DISTANGE AT THE CENTERLINE. OF WALNUT. STREET BEING ° CERTAN RECORD. OF LAND SURVEYS. PAGE B5. 'SAN MATEO. COUNTY RECORDS. ' RON. MONUMENT g NO TAG i & MONUMENT WELL SPER Bt my SI 3 Ng627°06"E 1.37(SIDEWALK\ \ — ~" EASEMENT) 4 7 ra) ' MAG NAIL AND --- WASHER L57701 : PER [4] PG. 55 REFERENCE MAP OR DEED PER [4] FOUND MONUMENT. AS NOTED SET MONUMENT AS NOTED 855 MAIN STREET RWC, LLC a BEING A MERGER OF LOTS 28 AND 29 OF 1 CSW/Stuber-St M 79, TOWN OF MEZESVILLE AND LOTS 19, 20 ring Group, In AND 21 OF 2 M 79, SH WEENYS ADDITION TO iit Mapping \| Lang Planning \| Construction Management SAN MATEO. COUNTY FecoRDS 45 Leveroni Court 415,883, 9850 _-REDWOOD CITY, SAN MATEO COUNTY, STATE OF CALIFORNIA Novato, CA 94949 415,883, 9835 SEPTEMBER, 2018 ozs PROVECT# 5141701 SHEET 2 OF 2 886\3784508.8 A-2 xhibit E ]

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&nbsp;&nbsp;&nbsp;&nbsp;B-1 886\3784508.8 EXHIBIT B LEASED PREMISES DEPICTION This exhibit, entitled "Leased Premises Description", is and shall constitute Exhibit B to that certain Lease Agreement dated August 12, 2021 (the "Lease"), by and between 855 Main Street RWC, LLC, a California limited liability company ("Landlord") and DELPHIX CORP., a Delaware corporation ("Tenant") for the leasing of the Leased Premises which are part of the property commonly referred to as 855 Main Street, Redwood City, California 94063. The Leased Premises consist of the rentable square footage of space specified in the Basic Lease Information Summary and has the address specified in the Basic Lease Information Summary, and is depicted below: [ATTACHED]

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Exhibit B [Page 1] Re o1ne te ALE SOUURT ced wh Rese Final Composite Grawing AS LLE Re SM Taye Peri Jenee \| P+ bisee Spietnn Done 886\3784508.8 A-2 kh omcmtens sd ae -2 \ xhibit ge ] [INTENTIONALLY OMITTED]

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886\3784508.8 Exhibit B [Page 2] 119.21 \| 655 Main vacant ARSMOL Fra Tae 2 Stevenson \| CANA Ths of a) LESS Systems \| A-3 - \ xhibit ge ] [INTENTIONALLY OMITTED]

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&nbsp;&nbsp;&nbsp;&nbsp;C-2-1 EXHIBIT C TENANT IMPROVEMENTS This exhibit ("Exhibit"), entitled "Tenant Improvements", is and shall constitute Exhibit C to that certain Lease Agreement dated August 12, 2021 (the "Lease"), by and between 855 Main Street RWC, LLC, a California limited liability company ("Landlord") and DELPHIX CORP., a Delaware corporation ("Tenant") for the leasing of the Leased Premises which are part of the property commonly referred to as 855 Main Street, Redwood City, California 94063. The terms, conditions and provisions of this Exhibit C are hereby incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease. 1. Tenant Improvements. Subject to the conditions set forth below, Landlord agrees to construct and install the Tenant Improvements at the Property at Landlord's sole cost and expense in a good and workman like manner and otherwise pursuant to the terms of this Exhibit. 2. Definition. "Tenant Improvements" as used in this Lease shall mean the construction of the improvements set forth on the plans and specifications prepared by DES and dated 07/07/2021 (the "Tenant Improvement Plans"), including all items and specifications set forth on Schedule 1 attached hereto ("Tenant Improvement Requirements"). In the event of a conflict between the Tenant Improvement Plans and the Tenant Improvement Requirements, the Tenant Improvement Requirements shall control. (a) Landlord and Tenant agree that Schedule 1 represents the approved budget for the Tenant Improvements based upon the current DD drawings and Principal Builder's estimate dated 8/5/21. The total costs applied to the Tenant Improvement Allowance per Schedule 1 is $3,332,255. This amount includes hard costs, soft costs, architectural, MEP, security design and the allowances identified on Schedule 1. It is understood and agreed that the Landlord has the prerogative to select the contractor to perform the work and pay solely for any delta between the Schedule 1 budget and the selected contractor's budget. (b) Landlord and Tenant agree that the Schedule 1 amounts may change as the scope and specifications become more defined and allowance amounts determined as well as additional change orders are approved. Landlord and Tenant agree that they will agree upon and approve of an updated and final Schedule 1 at the issuance of the building permit that will reflect the actual costs budgeted and applied to the Tenant Improvement Allowance. 3. Delivery Date. Landlord shall not be deemed to have delivered possession of the Leased Premises to Tenant until all of the following have been completed ("Delivery Condition"): (a) The Tenant Improvements are sufficiently complete such that Tenant may occupy the Leased Premises for the conduct of Tenant's business without material interference from Landlord and/or Landlord's contractors and Landlord has received all occupancy permits from the appropriate governmental agencies (provided, however, it is agreed that a Temporary Certificate of Occupancy shall suffice for purposes of this requirement (as opposed to a Final Certificate of Occupancy being required in order for the Delivery Condition to have occurred), provided that Landlord ultimately obtains a Final Certificate of Occupancy prior to the expiration of the Temporary Certificate of Occupancy (as the same may be extended)); (b) The Tenant Improvements have been substantially completed in compliance with all Laws and in accordance with the Tenant Improvement Requirements;

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&nbsp;&nbsp;&nbsp;&nbsp;C-2-2 (c) The Leased Premises and Building sytsems serving the Leased Premises (including the roof and the mechanical, electrical, and/or plumbing systems) and all Common Areas are in good operating condition and are clean of debris and hazardous materials; and (d) Tenant has been granted access to the Leased Premises for Tenant's occupancy of the Leased Premises. 4. Punchlist. Landlord shall make commercially reasonable efforts to substantially complete the Tenant Improvements by the Anticipated Delivery Date. When Landlord believes that the Leased Premises are in the Delivery Condition, Landlord shall deliver a notice to Tenant (a) stating that Landlord believes that the Leased Premises are in the Delivery Condition and (b) which designates a date (a "Delivery Initial Walk-Through Date") not less than five (5) Business Days after, but approximately five (5) Business Days after, the giving of such notice, for the Tenant to conduct a scheduled inspection of the Leased Premises (it being understood that Landlord shall have the right to accompany Tenant during any such inspection). Tenant shall be deemed to have acknowledged that the Leased Premises are in the Delivery Condition as of such Delivery Initial Walk-Through Date, unless Tenant indicates in a notice given to Landlord on or before the fifth (5th) Business Day after the Delivery Initial Walk-Through Date that the Leased Premises are not in the Delivery Condition ("Delivery Deficiency Notice"). If Tenant does not send a Delivery Deficiency Notice, Landlord and Tenant shall reasonably cooperate to establish a reasonable number of dates for the parties to conduct one or more inspections of the Leased Premises to identify punchlist items in respect thereof. No later than twenty-one (21) days following the Delivery Initial Walk-Through Date, Tenant shall deliver to Landlord a list of the elements of Tenant Improvements that remain incomplete (each such list being referred to herein as a "Draft Delivery Punchlist"). No later than five (5) Business Days following receipt of a Draft Delivery Punchlist, Landlord shall notify Tenant whether Landlord contests any items on the Draft Delivery Punchlist. Landlord's failure to reply to the Draft Delivery Punchlist within such five (5) Business Day period will be deemed Landlord's acceptance of the Draft Delivery Punchlist. Within three (3) Business Days following Tenant's receipt of Landlord's comments to the Draft Delivery Punchlist, Tenant shall revise the Draft Delivery Punchlist and re-submit it to Landlord. This process will repeat until the parties agree on a Draft Delivery Punchlist (the "Delivery Punchlist"). Landlord shall use commercially reasonable efforts to complete the items identified on the Delivery Punchlist approved by Tenant within thirty (30) days thereafter (and in any event will complete such items within 90 days thereafter). 5. Extensions of the Anticipated Delivery Date. The Anticipated Delivery Date will be extended one day for each day of (a) Tenant Delay (as defined below) or (b) actual delay in the delivery of the Leased Premises to Tenant in the Delivery Condition to the extent resulting from a Force Majeure Event. As used herein, "Tenant Delay" means any actual delay that would not have occurred but for (i) any Change Order (defined below) approved by Tenant in accordance with the terms of Section 6 below (however Tenant acknowledges and agrees that Landlord shall have no obligation to cease or temporarily halt ongoing construction of the Tenant Improvements between the date of Tenant's Change Request(s) and the date of Tenant's execution of a Change Order with respect to the same); and/or (ii) the failure of Tenant to furnish within the time provided in this Lease any information required by this Lease to be furnished by Tenant to Landlord. 6. Change Requests. No changes or revisions to the Tenant Improvement Plans and/or the Tenant Improvement Requirements shall be made by Landlord unless approved in writing by both parties. Upon Tenant's request and submission by Tenant, at Tenant's sole cost and expense (subject to the application of any unused Tenant Improvement Allowance and Excess Tenant Improvement Allowance), of the necessary information and/or plans and specifications for any changes or revisions to the Tenant Improvement Plans and/or the Tenant Improvement Requirements ("Change Requests") and the approval by Landlord of such

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&nbsp;&nbsp;&nbsp;&nbsp;C-2-3 Change Request(s), which approval Landlord agrees shall not be unreasonably withheld, Landlord shall perform the additional work associated with the approved Change Request(s), subject, however, to the following provisions of this Section 6. Prior to commencing any additional work related to the approved Change Request(s), Landlord shall submit to Tenant a written statement of the cost of such additional work and Landlord's reasonable estimate as to the Tenant Delays that Landlord anticipates Landlord will incur in connection with the same, and a proposed tenant change order therefor ("Change Order") in the standard form then in use by Landlord. Tenant shall execute and deliver to Landlord such Change Order and shall pay the entire cost of such additional work (which is not covered by any unused Tenant Improvement Allowance and Excess Tenant Improvement Allowance) in the following described manner. If Tenant fails to execute or deliver such Change Order then Landlord shall not be obligated to do any additional work related to such approved Change Request(s) and/or Change Orders, and Landlord may proceed to perform only the Tenant Improvements as specified in the Tenant Improvement Plans and/or the Tenant Improvement Requirements. Any costs which Landlord would not have incurred but for such approved Change Order (including any costs incurred by Landlord in connection with the continued performance of the Tenant Improvements during the period between Tenant's submission of a Change Request and Tenant's execution of a Change Order which Landlord would not have incurred had Landlord stopped performance of the Tenant Improvements during the period between submission of such Change Request and Tenant's execution of a Change Order associated therewith in order to not have to undo any portion of the Tenant Improvements upon execution of such Change Order) shall be paid for in accordance with the terms of Section 8 of this Exhibit C below. 7. Tenant Improvement Allowance. Landlord shall provide an allowance to Tenant for the planning, designing, and construction of the Tenant Improvements to be performed in the Leased Premises, as described in the Tenant Improvement Plans and Tenant Improvement Requirements, in the amount of Three Million Four Hundred Seven Thousand One Hundred Eighty Dollars ($3,407,180.00) (the "Tenant Improvement Allowance"). In the event the costs of the Tenant Improvements will exceed the Tenant Improvement Allowance, Landlord shall provide Tenant with an additional allowance of up to Nine Hundred Seventy Three Thousand Four Hundred Eighty Dollars ($973,480.00.00) (the "Excess Tenant Improvement Allowance"); provided, however, in the event any such Excess Tenant Improvement Allowance funds are used by Landlord in the construction of the Tenant Improvements, such Excess Tenant Improvement Allowance funds used by Landlord in the construction of the Tenant Improvements shall be amortized over the initial Lease Term (with interest thereon at Landlord's cost of funds) and shall be repaid to Landlord with payments to be made on a monthly basis commencing as of the Commencement Date; provided, however, Landlord agrees that Tenant shall have the right to prepay such Excess Tenant Improvement Allowance funds used by Landlord in the construction of the Tenant Improvements without interest or penalty). Tenant shall not be entitled to any credit, abatement or payment from Landlord in the event that the amount of the Tenant Improvement Allowance exceeds the actual Tenant Improvement Costs (defined below). The Tenant Improvement Allowance, and the Excess Tenant Improvement Allowance (if applicable), shall only be used for the planning and construction of the Tenant Improvements in accordance with the terms of this Exhibit C. Landlord agrees that, subject to the terms of Section 8 of this Exhibit C below, Landlord shall be solely responsible for the payment of all Tenant Improvement Costs incured by Landlord in the construction of the Tenant Improvements to the extent in excess of the Tenant Improvement Allowance and, if applicable, the Excess Tenant Improvement Allowance. The costs to be paid out of the Tenant Improvement Allowance and, if applicable, the Excess Tenant Improvement Allowance shall include all reasonable costs and expenses associated with the design, preparation, approval, planning, construction and installation of the Tenant Improvements (the "Tenant Improvement Costs"), including, without limitation, all of the following:

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&nbsp;&nbsp;&nbsp;&nbsp;C-2-4 (i) All costs of the design, preparation, approval and planning of the Tenant Improvement Plans (but only to the extent in excess of the space plan allowance Landlord has agreed to provide Tenant in the amount of Three Thousand Six Hundred Fifty and 55/100 Dollars ($3,650.55)), and engineering costs associated with completion of the State of California energy utilization calculations under Title 24 legislation; (ii) All costs of obtaining building permits and other necessary authorizations from local governmental authorities; (iii) All costs of interior design and finish schedule plans and specifications including as- built drawings; (iv) All direct and indirect costs of procuring, constructing and installing the Tenant Improvements in the Leased Premises, including, but not limited to, the construction fee for overhead and profit and the cost of all on-site supervisory and administrative staff, office, equipment and temporary services rendered by the Contractor in connection with the construction of the Tenant Improvements; provided, however, that the construction fee for overhead and profit, the cost of all on-site supervisory and administrative staff, office, equipment and temporary services shall not exceed amounts which are reasonable and customary for such items in the local construction industry; (v) Utility connection fees; (vi) Inspection fees and filing fees payable to local governmental authorities; and (viii) All costs of all permanently affixed equipment and non-Trade Fixtures provided for in the Approved Plans and Specifications, including the cost of installation. 8. Excess Tenant Improvement Costs. The term "Excess Tenant Improvement Costs" as used herein shall mean and refer to the difference between the Tenant Improvement Cost and the Tenant Improvement Allowance and Excess Tenant Improvement Allowance. Landlord shall be responsible for all Excess Tenant Improvement Costs; provided however, to the extent the Excess Tenant Improvement Costs results from either (i) all costs related to any and all Change Requests/Change Orders, or (ii) all extra costs incurred as a result of Tenant Delays, Tenant shall be responsible for such portion of the Excess Tenant Improvement Costs ("Tenant Contribution"). Tenant shall faithfully pay all of the Tenant Contribution to Landlord, in cash, within ten (10) days of Landlord's delivery to Tenant of a written invoice therefore together with a reconciliation of such costs. In the event Tenant fails to pay the Tenant Contribution to Landlord within such ten (10) day period, each day that payment is not made thereafter shall be considered a Tenant Delay. Additionally, Landlord shall have the same rights and remedies granted to Landlord under the Lease with respect to failures to pay Rent with respect to any failure by Tenant to pay all Tenant Contribution when and as required by this Section (it being agreed that such Tenant Contribution shall be treated the same as Additional Rent for all purposes under the Lease). 9. Selection of Contractor. Landlord shall obtain compentitive bids from both Butler Construction and Principal Builders based on a guaranteed maximum price or stipulate sum contract. While Landlord shall have the sole authority and discretion to select the contractor; provided, however, Landlord agrees that, in the event Landlord does not select the contractor with the lowest bid, then, notwithstanding anything to the contrary, the delta between the low bid and the high bid shall be paid solely by Landlord and in no event shall such delta be paid using any portion of the Tenant Improvement Allowance or Excess Tenant Improvement Allowance.

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&nbsp;&nbsp;&nbsp;&nbsp;C-2-5 10. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar as they are applicable, in whole or in part, to this Exhibit, are hereby incorporated herein by reference. In the event of any conflict between the terms of the Lease and this Exhibit, the terms of this Exhibit shall prevail.

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SCHEDULE 1 TO EXHIBIT C TENANT IMPROVEMENT REQUIREMENTS [ATTACHED] C-2-6 886\3784508.8 -2-6 EDULE XHIBIT NANT E ENT UI EMENTS [INTENTIONALLY OMITTED]

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&nbsp;&nbsp;&nbsp;&nbsp;D-1 EXHIBIT D RULES AND REGULATIONS This exhibit ("Exhibit"), entitled "Rules and Regulations", is and shall constitute Exhibit D to that certain Lease Agreement dated August 12, 2021 (the "Lease"), by and between 855 Main Street RWC, LLC, a California limited liability company ("Landlord") and DELPHIX CORP., a Delaware corporation ("Tenant") for the leasing of the Leased Premises which are part of the property commonly referred to as 855 Main Street, Redwood City, California 94063. The terms, conditions and provisions of this Exhibit D are hereby incorporated into and are made a part of the Lease; provided, however, in the event of any conflict between the terms and provisions of this Exhibit D and the other terms and provisions of the Lease, the other terms and provisions of the Lease shall control. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease. 1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant or used by Tenant for any purpose other than ingress and egress to and from the Leased Premises. No rubbish, litter, trash, or material shall be placed, emptied, or thrown in those areas. At no time shall Tenant permit Tenant's employees to loiter in exterior Common Areas except for the purpose for which such Common Area serve. 2. Plumbing fixtures and appliances shall be used only for the purposes for which designed and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed in the fixtures or appliances. 3. Subject to Tenant's signage rights set forth in the Lease, no signs, advertisements or notices shall be painted or affixed to exterior windows, doors or other exterior parts of the Building, except those of such color, size, style and in such places as are first approved in writing by Landlord. Except in connection with the hanging of lightweight pictures and wall decorations and Tenant's rights under the Lease with respect to Leasehold Improvements and Trade Fixtures, no nails, hooks or screws shall be inserted into any part of the Leased Premises or Building except by the Building maintenance personnel without Landlord's prior approval, which approval shall not be unreasonably withheld. 4. All keys and combinations to any safes that are incorporated into the Leased Premises shall be returned to Landlord at the expiration or early termination of the Lease. 5. All contractors, contractor's representatives and installation technicians performing work in the Building shall be subject to Landlord's prior approval, which approval shall not be unreasonably withheld, conditioned or delayed and shall be required to comply with Landlord's commercially reasonable rules, regulations, policies and procedures, which may be revised from time to time, and which do not materially adversely affect Tenant's rights under the Lease or impose any material additional expense on Tenant. 6. Movement in or out of the Building of furniture or equipment, or dispatch or receipt by Tenant of merchandise or materials requiring the use of elevators, stairways, lobby areas or loading dock areas, shall be restricted to hours reasonably designated by Landlord. Tenant shall obtain Landlord's prior approval by providing a detailed listing of the activity, which approval shall not be unreasonably withheld, conditioned or delayed. If approved by Landlord, the activity shall be under the supervision of Landlord and performed in the manner reasonably required by Landlord. Tenant shall assume all risk for damage to articles moved and injury to any persons resulting from the activity except as otherwise provided in the Lease. If equipment, property, or personnel of Landlord or of any other party is damaged or injured as a result of or in connection with the activity, Tenant shall be solely liable for any resulting damage, loss or injury except as otherwise provided in the Lease.

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&nbsp;&nbsp;&nbsp;&nbsp;D-2 7. Landlord shall have the right to approve the weight, size, or location of heavy equipment or articles in and about the Leased Premises, which approval shall not be unreasonably withheld, conditioned or delayed. Damage to the Building by the installation, maintenance, operation, existence or removal of Tenant's Property shall be repaired at Tenant's sole expense. 8. Corridor doors, when not in use, shall be kept closed. 9. Tenant shall not: (1) make or permit any improper, objectionable or unpleasant noises or odors in the Building that unreasonably interfere with or annoy the other occupants of the Building; (2) solicit business or distribute or cause to be distributed, in any portion of the Building, handbills, promotional materials or other advertising; or (3) conduct or permit other activities in the Building that constitute a nuisance. 10. No animals except (a) fully domesticated dogs, and (b) trained assistance animals assisting handicapped persons, shall be brought into the Building or kept in or about the Leased Premises. 11. No burning candle or other open flame is permitted in the Leased Premises, Building or about the Property, provided however, Tenant shall be allowed the use of/installation of gas kitchen or other food preparation and service appliances or articles in designated kitchen and food service areas in the Leased Premises. 12. Tenant shall not use, or permit any part of the Leased Premises to be used for lodging, regular sleeping or for any illegal purpose. 13. Bicycles and other vehicles are not permitted inside the Building or on the walkways outside the Building, except in areas reasonably designated by Landlord. 14. Landlord may from time to time adopt reasonable systems and procedures for the security and safety of the Building and the Property, its occupants, entry, use and contents. Tenant, its agents, employees, contractors, guests and invitees shall comply with Landlord's reasonable systems and procedures. 15. The Building shall be a non-smoking Building and neither Tenant nor any other tenant, nor their agents, employees, contractors, guests or invitees shall smoke or permit smoking in the Common Areas, except for any designated smoking area mutually agreed upon by Landlord and Tenant. 16. Deliveries to and from the Leased Premises shall be coordinated by Tenant with property management personnel in the areas and through the entrances and exits reasonably designated by Landlord. Tenant shall not make deliveries to or from the Leased Premises in a manner that unreasonably interferes with the use by other tenants of the Building or their premises or of the Common Areas, any pedestrian use, or any use which is inconsistent with good business practice. 17. All garbage and other refuse shall be kept inside the Leased Premises in the kind of container specified by Landlord and, if directed by Landlord, shall be placed outside of the Leased Premises prepared for collection in a manner consistent with good business practice. 18. Tenant shall utilize commercially reasonable termite and pest extermination services as necessary to control termites and pests in the Leased Premises. Except as included in Operating Expenses, Tenant shall bear the cost of such extermination services used by Tenant.

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&nbsp;&nbsp;&nbsp;&nbsp;D-3 19. Except as provided in the Lease, no aerial or antenna (including satellite dishes, vent, stacks, etc.) shall be erected on the roof or exterior walls of the Leases Premises, or on the grounds, without in each instance, the written consent of Landlord first being obtained. Any of these items so installed without such written consent shall be subject to removal by Landlord at any time without notice. Any repair to the Leased Premises required, as a result of the installation or removal of these items will be paid in full by Tenant. 20. Only for the duration of the COVID-19 pandemic, Landlord shall have the right to require tenants to implement and enforce reasonable screening and contact tracing protocols intended to reduce the likelihood of transmission of COVID-19 at or in connection with the Property, provided that such protocol shall not require Tenant to disclose to Landlord or to any agent, employee, or contractor of Landlord any identifying information regarding any individual employees or guests of Landlord or any of Landlord's agents or contractors.

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EXHIBIT E PARKING COVENANT [ATTACHED] 886\3784508.8 E-1 HIBIT I G NANT [INTENTIONALLY OMITTED]

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EXHIBIT F DEPICTION OF PARKING AREAS OFFICE TENANT PARKING VISITOR PARKING RETAIL PARKING PUBLIC PARKING EXCLUSIVE OFFICE TENANT PARKING LIGHT VALET BASEMENT 1 82 STALLS TOTAL 184 STALLS LIGHT VALET BASEMENT 2 102 STALLS F-1 886\3784508.8 -1 XHIBIT EPICTION F RKING REAS [INTENTIONALLY OMITTED]

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EXHIBIT G DEPICTION AND LOCATION OF SIGNAGE [ATTACHED] G-1 886\3784508.8 -1 XHIBIT PI TI N D ATION F GE [INTENTIONALLY OMITTED]

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EXHIBIT H SUBORDINATION NONDISTURBANCE AND ATTORNMENT AGREEMENT [ATTACHED] H-1 886\3784508.8 -1 XHIBIT RDINATION DI BANCE D NMENT EE ENT [INTENTIONALLY OMITTED]

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&nbsp;&nbsp;&nbsp;&nbsp;1 ADDENDUM 1 COMMENCEMENT DATE CERTIFICATE Landlord: 855 Main Street RWC, LLC, a California limited liability company Tenant: DELPHIX CORP., a Delaware corporation Lease Date: August 12, 2021 Leased Premises: A portion of the first (1st) floor and a portion of the fourth (4th) floor located at 855 Main Street, Redwood City, California 94063, as more particularly described in the Lease. The Commencement Date of the Lease is ________________, 202_. The expiration date of the initial Lease Term is ________________, 202_. The Base Monthly Rent for the initial Lease Term is as follows: Period Base Monthly Rent _______ - _______ (Months 1 – 12) $189,828.60 (NNN) _______ - _______ (Months 13 – 24) $195,523.46 (NNN) _______ - _______ (Months 25 – 36) $201,389.16 (NNN) _______ - _______ (Months 37 – 48) $207,430.84 (NNN) _______ - _______ (Months 49 – 60) $213,653.76 (NNN) LANDLORD 855 Main Street RWC, LLC, a California limited liability company By: Name: Its: Dated: TENANT DELPHIX CORP., a Delaware corporation By: Name: Its: Dated:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADDENDUM 2 OPTION TO EXTEND This Addendum 2 ("Addendum"), entitled "Option to Extend", is and shall constitute Addendum 2 to that certain Lease Agreement dated August 12, 2021 (the "Lease"), by and between 855 Main Street RWC, LLC, a California limited liability company ("Landlord") and DELPHIX CORP., a Delaware corporation ("Tenant") for the leasing of certain premises (the "Leased Premises") which are part of the property commonly referred to as 855 Main Street, Redwood City, California 94063. The terms, conditions and provisions of this Addendum 2 are hereby incorporated into and are made a part of the Lease. Any capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms as set forth in the Lease. 1. Grant of Extension Option. Subject to the provisions, limitations and conditions set forth in Section 5 below, Tenant shall have an option ("Option") to further extend the term of the Lease for five (5) years (the "Extended Term"). 2. Tenant's Option Notice. Tenant shall have the right to deliver written notice to Landlord of its intent to exercise this Option (the "Option Notice"), which exercise shall be irrevocable. If Landlord does not receive the Option Notice from Tenant on a date which is neither more than twelve (12) months nor less than nine (9) months prior to the end of the initial term of the Lease, all rights under this Option shall automatically terminate and shall be of no further force or effect. Upon the proper exercise of this Option, subject to the provisions, limitations and conditions set forth in Paragraph 5 below, the initial term of the Lease shall be extended for the Extended Term. 3. Establishing the Initial Base Monthly Rent for the Extended Term. The initial Base Monthly Rent for the Extended Term shall be equal to the then Fair Market Rental Rate, as hereinafter defined. As used herein, the "Fair Market Rental Rate" payable by Tenant for the Extended Term shall mean the Base Rent payable by similar tenants for comparable space at which non-equity tenants, as of the commencement of the lease term for the Extended Term, will be leasing non-sublease, non-equity, unencumbered space comparable in size, location and quality to the Premises for a comparable term, which comparable space is located in the Building and in other comparable first-class buildings in the vicinity of the Building, taking into consideration the condition and value of existing tenant improvements in the Premises. The Fair Market Rental Rate shall include the periodic rental increases that would be included for space leased for the period of the Extended Term. If Landlord and Tenant are unable to agree on the Fair Market Rental Rate for the Extended Term within thirty (30) days of receipt by Landlord of the Option Notice for the Extended Term, Landlord and Tenant each, at its cost and by giving notice to the other party, shall appoint a competent and impartial commercial real estate broker (hereinafter "broker") with at least five (5) years' full-time commercial real estate brokerage experience in the geographical area of the Premises to set the Fair Market Rental Rate for the Extended Term. If either Landlord or Tenant does not appoint a broker within thirty (30) days after the other party has given notice of the name of its broker, the single broker appointed shall be the sole broker and shall set the Fair Market Rental Rate for the Extended Term. If two (2) brokers are appointed by Landlord and Tenant as stated in this paragraph, they shall meet promptly and attempt to set the Fair Market Rental Rate. In addition, if either of the first two (2) brokers fails to submit their opinion of the Fair Market Rental Rate within the time frames set forth below, then the single Fair Market Rental Rate submitted shall automatically be the initial Base Monthly Rent for the Extended Term and shall be binding upon Landlord and Tenant. If the two (2) brokers are unable to agree within ten (10) days after the second broker has been appointed, they shall attempt to select a third broker, meeting the qualifications stated in this paragraph

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;within ten (10) days after the last day the two (2) brokers are given to set the Fair Market Rental Rate. If the two (2) brokers are unable to agree on the third broker, either Landlord or Tenant by giving ten (10) days' written notice to the other party, can apply to the Presiding Judge of the Superior Court of the county in which the Premises is located for the selection of a third broker who meets the qualifications stated in this paragraph. Landlord and Tenant each shall bear one-half (1/2) of the cost of appointing the third broker and of paying the third broker's fee. The third broker, however selected, shall be a person who has not previously acted in any capacity for either Landlord or Tenant. Within fifteen (15) days after the selection of the third broker, the third broker shall select one of the two Fair Market Rental Rates submitted by the first two brokers as the Fair Market Rental Rate for the Extended Term. The determination of the Fair Market Rental Rate by the third broker shall be binding upon Landlord and Tenant. Upon determination of the initial Base Monthly Rent for the Extended Term pursuant to the terms outlined above, Landlord and Tenant shall immediately execute an amendment to the Lease setting forth the initial Base Monthly Rent for the Extended Term and the actual commencement date and expiration date of the Extended Term provided however, the failure by either party to execute such amendment shall not void or nullify Tenant's extension of the Lease Term for the Extended Term. Tenant shall have no other right to further extend the initial term of the Lease under this Addendum unless Landlord and Tenant otherwise expressly agree in writing. 4. Condition of Premises and Brokerage Commissions for the Extended Term. If Tenant timely and properly exercises this Option, in strict accordance with the terms contained herein: (1) Tenant shall accept the Premises in its then "As-Is" condition and, accordingly, Landlord shall not be required to perform any additional improvements to the Premises; and (2) Tenant hereby agrees that it will be solely responsible for any and all brokerage commissions and finder's fees payable to any broker now or hereafter procured or hired by Tenant or who otherwise claims a commission based on any act or statement of Tenant ("Tenant's Broker") in connection with the Option. Tenant hereby further agrees that Landlord shall in no event or circumstance be responsible for the payment of any such commissions and fees to Tenant's Broker, and Tenant shall indemnify, defend and hold Landlord free and harmless against any liability, claim, judgment, or damages with respect thereto, including attorneys' fees and costs. 5. Limitations On, and Conditions To, Extension Option. This Option is personal to Tenant and may not be assigned, voluntarily or involuntarily, separate from or as part of the Lease, except to a Permitted Transferee. At Landlord's option, all rights of Tenant under this Option shall terminate and be of no force or effect if any of the following individual events occur or any combination thereof occur: (1) Tenant is in default of any provision of the Lease on the date Landlord receives the Option Notice or at any time prior to the commencement of the Extended Term, in either case beyond any applicable notice and cure period (it being agreed that a default by Tenant under the Lease following Tenant's delivery of the Option Notice and prior to the commencement of the Extended Term shall result in the Landlord having the right to declare Tenant's exercise of the Option null and void); and/or (2) Tenant has assigned its rights and obligations under all or part of the Lease or Tenant has subleased all or part of the Premises, other than a Permitted Transferee; and/or (3) Tenant has failed to exercise properly this Option in a timely manner in strict accordance with the provisions of this Addendum; and/or (4) if the Lease has been terminated earlier, pursuant to the terms and provisions of the Lease. 6. Time is of the Essence. Time is of the essence with respect to each and every time period set forth in this Addendum.

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DocuSign Envelope ID: B39B15D7-BB27-49C8-B4D5-B509719B6C47

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DocuSign Envelope ID: B39B15D7-BB27-49C8-B4D5-B509719B6C47

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![](sumo-exhibit1014088.jpg)

LANDLORD: 855 Main Street RWC, LLC, a California limited liabQ1iJJ·.1.¥-J�Htl'<�-- Its: Managing Member Dated: TENANT: DELPHIX CORP., a Delaware corporation Name: ____ _ _ _ _ Its: _________ _ Dated: _ _ _ ____ _ 3 By: /s/ Steve Carbone DocuSign Envelope ID: B39B15D7-BB27-49C8-B4D5-B509719B6C47 Steve Carbone VP Finance 5/10/2022 By: /s/ Mark C. Johnson Name: Mark C. Johnson May 5, 2022

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## Exhibit 23.1

**Exhibit 23.1**

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-263532, 333-257230, 333-254249, and 333-248869) of Sumo Logic, Inc. of our report dated March 16, 2023 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Francisco, California

March 16, 2023

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Ramin Sayar, certify that:

1. I have reviewed this Annual Report on Form 10-K of Sumo Logic, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| Date: March 16, 2023 | By: | /s/ Ramin Sayar |
|  | Name: | Ramin Sayar |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF**

**THE SARBANES-OXLEY ACT OF 2002**

I, Stewart Grierson, certify that:

1. I have reviewed this Annual Report on Form 10-K of Sumo Logic, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| Date: March 16, 2023 | By: | /s/ Stewart Grierson |
|  | Name: | Stewart Grierson |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial Officer) |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER**

**PURSUANT TO**

**18 U.S.C. SECTION 1350,** 

**AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

I, Ramin Sayar, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Sumo Logic, Inc. for the fiscal year ended January 31, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Sumo Logic, Inc.

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| | | |
|:---|:---|:---|
| Date: March 16, 2023 | By: | /s/ Ramin Sayar |
|  | Name: | Ramin Sayar |
|  | Title: | Chief Executive Officer |
|  |  | (Principal Executive Officer) |

---

I, Stewart Grierson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Sumo Logic, Inc. for the fiscal year ended January 31, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Sumo Logic, Inc.

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| | | |
|:---|:---|:---|
| Date: March 16, 2023 | By: | /s/ Stewart Grierson |
|  | Name: | Stewart Grierson |
|  | Title: | Chief Financial Officer |
|  |  | (Principal Financial Officer) |

---

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