FAIR VALUE MEASUREMENTS
 3 Months Ended
Apr. 30, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Our assets and liabilities measured at fair value on a recurring basis consisted of the following as of April 30, 2022 and January 31, 2022:
 April 30, 2022
 Fair Value Hierarchy Category
(in thousands)Level 1Level 2Level 3
Assets:   
Money market funds$25,135 $— $— 
Commercial paper, classified as cash and cash equivalents— 74,967 — 
Contingent consideration receivable— — 204 
Total assets$25,135 $74,967 $204 
Liabilities:   
Foreign currency forward contracts$— $246 $— 
Contingent consideration — business combinations— 4,830 — 
Total liabilities$— $5,076 $— 
 
 January 31, 2022
 Fair Value Hierarchy Category
(in thousands)Level 1Level 2Level 3
Assets:   
Money market funds$127,041 $— $— 
Commercial paper, classified as cash and cash equivalents— 29,995 — 
Foreign currency forward contracts— 33 — 
Contingent consideration receivable — — 271 
Total assets$127,041 $30,028 $271 
Liabilities:   
Foreign currency forward contracts$— $91 $— 
Contingent consideration — business combinations— 7,776 — 
Total liabilities$— $7,867 $— 

In January 2020, we completed the sale of an insignificant subsidiary. In accordance with the terms of the sale agreement, 100% of the aggregate purchase price is contingent in nature based on a percentage of net sales of the former subsidiary’s products during the thirty-six month period following the transaction closing. We include the fair value of the contingent consideration receivable within prepaid expenses and other current assets and other assets on our condensed consolidated balance sheets. The estimated fair value of this asset as of April 30, 2022 and 2021, which is measured using Level 3 inputs, was $0.2 million and $0.5 million, respectively. We received payments of $0.1 million during each of the three months ended April 30, 2022 and 2021. The change in the estimated fair value of this contingent receivable was not material during the three months ended April 30, 2022 and 2021.

The following table presents the changes in the estimated fair values of our liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the three months ended April 30, 2021:

 Three Months Ended
April 30,
(in thousands)2021
Fair value measurement at beginning of period$15,704 
Changes in fair values, recorded in operating expenses241 
Payments of contingent consideration(7,609)
Foreign currency translation and other(25)
Fair value measurement at end of period$8,311 
 
Our estimated liability for contingent consideration represents potential payments of additional consideration for business combinations, payable if certain defined performance goals are achieved. Changes in fair value of contingent consideration are recorded in the condensed consolidated statements of operations within selling, general and administrative expenses.

As of January 31, 2022, the $7.8 million fair value of the contingent consideration liability was based on actual achievement through the performance periods ended January 31, 2022, and was transferred to Level 2 of the fair value hierarchy as the fair
value was determined based on other significant observable inputs. Payments of contingent consideration earned under these agreements were $2.7 million and we recorded a benefit of $0.2 million for changes in the fair values of contingent consideration obligations associated with business combinations for the three months ended April 30, 2022.

There were no transfers between levels of the fair value measurement hierarchy during the three months ended April 30, 2022 and 2021.

Fair Value Measurements
 
Money Market Funds — We value our money market funds using quoted active market prices for such funds.

Short-term Investments, Corporate Debt Securities, and Commercial Paper — The fair values of short-term investments, as well as corporate debt securities and commercial paper classified as cash equivalents, are estimated using observable market prices for identical securities that are traded in less-active markets, if available. When observable market prices for identical securities are not available, we value these short-term investments using non-binding market price quotes from brokers which we review for reasonableness using observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model.

Foreign Currency Forward Contracts — The estimated fair value of foreign currency forward contracts is based on quotes received from the counterparties thereto. These quotes are reviewed for reasonableness by discounting the future estimated cash flows under the contracts, considering the terms and maturities of the contracts and market foreign currency exchange rates using readily observable market prices for similar contracts.

Contingent Consideration Assets and Liabilities — Business Combinations and Divestitures — The fair value of the contingent consideration related to business combinations and divestitures is estimated using a probability-adjusted discounted cash flow model. These fair value measurements are based on significant inputs not observable in the market. The key internally developed assumptions used in these models are discount rates and the probabilities assigned to the milestones to be achieved. We remeasure the fair value of the contingent consideration at each reporting period, and any changes in fair value resulting from either the passage of time or events occurring after the acquisition date, such as changes in discount rates, or in the expectations of achieving the performance targets, are recorded within selling, general, and administrative expenses. Increases or decreases in discount rates would have inverse impacts on the related fair value measurements, while favorable or unfavorable changes in expectations of achieving performance targets would result in corresponding increases or decreases in the related fair value measurements. We utilized discount rates ranging from 5.2% to 5.4%, with a weighted average discount rate of 5.3%, in our calculation of the estimated fair value of our contingent consideration asset as of April 30, 2022. We utilized discount rates ranging from 3.5% to 3.9%, with a weighted average discount rate of 3.7% in our calculation of the estimated fair value of our contingent consideration asset as of January 31, 2022.

Other Financial Instruments

The carrying amounts of accounts receivable, contract assets, accounts payable, and accrued liabilities and other current liabilities approximate fair value due to their short maturities.

The estimated fair values of our term loan borrowings were approximately $99 million and $100 million at April 30, 2022 and January 31, 2022, respectively. The estimated fair values of the term loans are based upon indicative bid and ask prices as determined by the agent responsible for the syndication of our term loans. We consider these inputs to be within Level 3 of the fair value hierarchy because we cannot reasonably observe activity in the limited market in which participation in our term loans are traded. The indicative prices provided to us as at each of April 30, 2022 and January 31, 2022 did not significantly differ from par value. The estimated fair value of our revolving credit borrowings, if any, is based upon indicative market values provided by one of our lenders.

The estimated fair value of our 2021 Notes was approximately $332 million and $330 million at April 30, 2022 and January 31, 2022, respectively. The estimated fair value of the 2021 Notes was determined based on quoted bid and ask prices in the over-the-counter market in which the 2021 Notes traded. We consider these inputs to be within Level 2 of the fair value hierarchy.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets, operating lease right-of-use assets, and property, plant and equipment, are measured at fair value when there is an indication of impairment and
the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized.

As of April 30, 2022, the carrying amount of our noncontrolling equity investments in privately-held companies without readily determinable fair values was $5.1 million. These investments are included within other assets on the condensed consolidated balance sheets. As of January 31, 2022, the carrying amount of our noncontrolling equity investments in privately-held companies without readily determinable fair values was $5.1 million, of which $4.4 million was remeasured to fair value based on an observable transaction during the year ended January 31, 2022. These investments were included within other assets on the consolidated balance sheet as of January 31, 2022. An unrealized gain of $3.1 million, which adjusted the carrying value of a noncontrolling equity investment based on an observable transaction, was recorded in other income (expense), net on the consolidated statement of operations for the three months ended April 30, 2021. There were no observable price changes in our investments in privately-held companies during the three months ended April 30, 2022. We did not recognize any impairments during the three months ended April 30, 2022 and 2021.