2/24/2018 S-1 Table of Contents • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation Our subscription agreements typically have monthly or annual contractual terms, and a small percentage have multi­year contractual terms. Revenue is recognized ratably over the related contractual term generally beginning on the date that our platform is made available to a customer. Our agreements are generally non­cancelable. We typically bill in advance for monthly contracts and annually in advance for contracts with terms of one year or longer. Deferred commissions Sales commissions and the related payroll taxes earned by our outbound sales team, as well as commissions earned by third­party resellers, are considered to be incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit that we have determined to be five years. We determined the period of benefit by taking into consideration our historical customer attrition rates, the useful life of our technology, and the impact of competition in our industry. Changing the period of benefit by one year would result in a change to expense of approximately $1.0 million or less in each of the periods presented. Amortization of deferred commissions is included in sales and marketing expenses. Common stock valuations Since August 2015, we have granted RSUs as the only stock­based payment awards to our employees, excluding the Co­Founder Grants. While we stopped granting stock options in August 2015, we currently have stock options outstanding that will continue to vest through 2019 if the requisite service is provided. The fair values of the common stock underlying the RSUs were determined by our Board of Directors, with input from management and contemporaneous third­party valuations, which were performed at least quarterly. If RSUs were granted a short period of time prior to the date of a valuation report, we retrospectively assessed the fair value used for financial reporting purposes after considering the fair value reflected in the subsequent valuation report and other facts and circumstances on the date of grant as discussed below. Given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately­Held­Company Equity Securities Issued as Compensation, or AICPA Guide, our Board of Directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including: • The results of contemporaneous valuations of our common stock by unrelated third parties; • The rights, preferences, and privileges of our convertible preferred stock relative to those of our common stock; • Market multiples of comparable public companies in our industry as indicated by their market capitalization and guideline merger and acquisition transactions; • Our performance and market position relative to our competitors, who may change from time to time; • Our historical financial results and estimated trends and prospects for our future performance; • Valuations published by institutional investors that hold investments in our capital stock; • The economic and competitive environment; • The likelihood and timeline of achieving a liquidity event, such as an initial public offering or sale, given prevailing market conditions; 84 https://www.sec.gov/Archives/edgar/data/1467623/000119312518055809/d451946ds1.htm 92/235