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Item 5. Market for Registrant’s Common Equity

2022-08-29 compared with 2021-09-17 · 13 added, 103 removed, 18 unchanged (87% of the section changed)

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Holders of Record

As of September 10, 2021, there were 423 stockholders of record of our Class A common stock, and the closing price of our Class A common stock was $123.70 per share as reported on the Nasdaq Global Select Market.

As of August 22, 2022, there wer e 270 stockholders of record of our Class A common stock, and the closing price of our Class A common stock was $29.49 per share as reported on the Nasdaq Global Select Market.

Because many of our shares of Class A 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.

As of September 10, 2021, there were 304 stockholders of record of our Cl ass B common stock.

As of August 22, 2022, there were 237 stockholders of record of our Cl ass B common stock.

Dividend Policy

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table presents information with respect to the Company’s repurchases of shares of Class A common stock during the quarter ended June 30, 2022.

Period Total Number of Shares Purchased (1)

Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

April 1 - 30 225 $ 8.80 — —

May 1 - 31 — — — —

June 1 - 30 — — — —

Total 225 $ 8.80 — —

(1) The shares purchased were repurchases of unvested shares of our Class A common stock that had been issued upon early exercise of stock options.

Pursuant to the associated option award agreements, upon termination of employment of a person holding unvested shares, we were entitled to repurchase the unvested shares.

Recent Sale of Unregistered Securities

Issuances of Options to Purchase Common Stock and Restricted Stock Units

During the fiscal year ended June 30, 2021, we granted under our Amended and Restated 2012 Stock Plan options to purchase an aggregate of 16,221,339 shares of our common stock and 11,860,237 RSUs to be settled in shares of our common stock.

Equity and Cash Incentive Plans for more information on the terms of the options grander under our Amended and Restate 2012 Stock Plan.

Issuances of Redeemable Convertible Preferred Stock

From September 11, 2020 to October 8, 2020, we sold an aggregate of 21,836,687 shares of our Series G redeemable convertible preferred stock to 40 accredited investors at a purchase price of $19.93 per share, for an aggregate purchase price of $435.1 million.

Redeemable Convertible Preferred Stock and Stockholders’ Deficit for more information on the terms of our Series G redeemable convertible preferred stock.

Issuances of Convertible Promissory Notes

From April 29, 2020 to May 6, 2020, we issued convertible promissory notes to 24 accredited investors with an aggregate principal amount of $75.0 million.

All of the 2020 convertible promissory notes were converted into shares of our Series G-1 redeemable convertible preferred stock on September 11, 2020 in connection with our Series G preferred stock financing.

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Issuances of Warrants

During the fiscal year ended June 30, 2021, we issued an aggregate of 7,788,592 shares of Class A common stock and 7,788,592 shares of Class B common stock to three accredited investors in connection with the exercise of outstanding warrants.

PayBright Acquisition

In connection with the closing of the transaction contemplated by the Stock Purchase Agreement entered into with PayBright, Inc.

("PayBright") and the shareholders of PayBright on January 1, 2021, we issued an aggregate of 3,622,445 shares of our common stock to the shareholders of PayBright at closing plus an aggregate of 2,587,362 shares of our common stock into escrow and subject to forfeiture if certain post-closing revenue milestones are not met.

On January 12, 2021, these shares were reclassified into an aggregate of 1,811,222 shares of our Class A common stock and 1,811,222 shares of our Class B common stock issued to the shareholders of PayBright at closing and an aggregate of 1,293,681 shares of our Class A common stock and 1,293,681 shares of our Class B common stock issued into escrow.

Returnly Acquisition

In connection with the closing of the transaction contemplated by the Agreement and Plan of Merger and Reorganization entered into with Returnly Technologies, Inc.

("Returnly"), a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the securityholders of Returnly, on May 1, 2021, we issued an aggregate of 2,989,697 shares of our Class A common stock to the securityholders of Returnly at closing and issued 304,364 shares of our Class A common stock which are held in escrow and subject to forfeiture upon the termination of certain employees or if certain revenue milestones are not met.

We believe that all of the foregoing transactions were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act, or Regulation D promulgated thereunder, or Regulation S under the Securities Act, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.

The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

All recipients had adequate access, through their relationships with us, to information about us.

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Table o f Contents

Stock Performance Graph

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The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance.

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SELECTED FINANCIAL DATA

The following selected consolidated statements of operations data for the years ended June 30, 2021, 2020, and 2019 and the selected consolidated balance sheet data as of June 30, 2021 and June 30, 2020 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The selected consolidated balance sheet data as of June 30, 2019 is derived from our audited consolidated financial statements which are not included in this Annual Report on Form 10-K.

Our historical results are not necessarily indicative of the results that may be expected for any other period in the future.

You should read this information in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, the accompanying notes, and other financial information included elsewhere in this Annual Report on Form 10-K.

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Year Ended June 30,

2021 2020 2019

(in thousands, except share and per share data)

Consolidated Statement of Operations Data

Merchant network revenue $ 379,551 $ 256,752 $ 132,363

Virtual card network revenue 49,851 19,340 7,911

Total network revenue 429,402 276,092 140,274

Interest income (1)

326,417 186,730 119,404

Gain (loss) on sales of loans (1)

89,926 31,907 (440)

Servicing income 24,719 14,799 5,129

Total Revenue, net $ 870,464 $ 509,528 $ 264,367

Operating Expenses (2)

Loss on loan purchase commitment $ 246,700 $ 161,452 $ 73,383

Provision for credit losses 65,878 105,067 78,025

Funding costs 52,700 32,316 25,895

Processing and servicing 73,767 49,831 32,669

Technology and data analytics 256,082 122,378 76,071

Sales and marketing 184,279 25,044 16,863

General and administrative 370,251 121,230 88,902

Total Operating Expenses 1,249,657 617,318 391,808

Operating Loss $ (379,193) $ (107,790) $ (127,441)

Other income (expense), net (54,073) (4,432) 7,022

Loss Before Income Taxes $ (433,266) $ (112,222) $ (120,419)

Income tax (benefit) expense (2,343) 376 36

Net Loss $ (430,923) $ (112,598) $ (120,455)

Excess return to preferred stockholders on repurchase — (13,205) (14,113)

Net Loss Attributable to Common Stockholders $ (430,923) $ (125,803) $ (134,568)

Other Comprehensive Income (Loss)

Foreign currency translation adjustments $ 7,042 $ (302) $ —

Unrealized gains on investments 29 — —

Net Other Comprehensive Income (Loss) 7,071 (302) —

Comprehensive Loss $ (423,852) $ (112,900) $ (120,455)

Per share data:

Net loss per share attributable to Class A and Class B common stockholders - basic and diluted $ (2.72) $ (2.63) $ (2.84)

Weighted average common shares outstanding - basic and diluted 158,367,923 47,856,720 47,345,328

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(1) Upon purchase of a loan from our originating bank partners at a price above the fair market value of the loan or upon the origination of a loan with a par value in excess of the fair market value of the loan, a discount is included in the amortized cost basis of the loan.

For loans held for investment, this discount is amortized over the life of the loan into interest income.

When a loan is sold to a third-party loan buyer, the unamortized discount is released in full at the time of sale and recognized as part of the gain or loss on sales of loans.

However, the cumulative value of the loss on loan purchase commitment or loss on origination, the interest income recognized over time from the amortization of discount while retained, and the release of discount into gain (loss) on sales of loans, together net to zero over the life of the loan.

The following table details activity for the discount, included in loans held for investment, for the periods indicated:

Year Ended June 30,

2021 2020 2019

(in thousands)

Balance at the beginning of the period $ 28,659 $ 13,068 $ 5,201

Additions from loans purchased, net of refunds 264,725 157,426 70,700

Amortization of discount (101,078) (35,251) (21,833)

Unamortized discount released on loans sold (139,129) (106,584) (41,000)

Balance at the end of the period $ 53,177 $ 28,659 $ 13,068

(2) Amounts include stock-based compensation as follows:

Year Ended June 30,

2021 2020 2019

(in thousands)

General and administrative $ 183,055 $ 13,682 $ 22,647

Technology and data analytics 83,390 12,285 13,913

Sales and marketing 19,181 4,040 4,179

Processing and servicing 2,407 82 132

Total stock-based compensation in operating expenses $ 288,033 $ 30,089 $ 40,871

June 30, 2021 June 30, 2020 June 30, 2019

(in thousands)

Consolidated Balance Sheet Data

Cash and cash equivalents $ 1,466,558 $ 267,059 $ 320,448

Loans held for investment 2,022,320 1,034,312 735,414

Total assets 4,866,967 1,402,251 1,148,505

Funding debt 680,602 817,926 569,234

Notes issued by securitization trusts 1,176,673 — —

Redeemable convertible preferred stock — 804,170 798,074

Total stockholders’ equity (deficit) 2,581,153 (367,096) (263,414)

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Table o f Contents

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity