What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 112 added, 99 removed, 470 unchanged (31% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

June 30, December 31,

September 30, December 31,

Current assets

27 unchanged sentences

Stockholders’ Equity (Deficit)

Preferred stock, $ 0.001 par, 10,000,000 shares authorized and 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021

Preferred stock, $ 0.001 par, 10,000,000 shares authorized and 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.001 par, 500,000,000 shares authorized;

and 91,036,107 and 89,954,657 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

and 91,477,997 and 89,954,657 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 695,324 658,374

6 unchanged sentences

(In thousands, except share and per share data)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

2022 2021 2022 2021

16 unchanged sentences

Loss on financial instruments ( 59 ) — ( 446 ) ( 3,035 )

Loss on extinguishment of debt ( 76 ) — ( 76 ) —

Loss before income taxes ( 20,212 ) ( 11,219 ) ( 53,608 ) ( 33,473 )

Provision for income taxes 156 — 243 —

Provision (benefit) for income taxes ( 163 ) — 80 —

Net loss $ ( 20,049 ) $ ( 11,219 ) $ ( 53,688 ) $ ( 33,473 )

6 unchanged sentences

Basic and diluted 91,182,235 87,641,416 90,703,061 56,320,288

(1) Includes amortization of acquired technology of $ 0.9 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.2 million and $ 0.2 million for the six months ended June 30, 2022 and 2021, respectively.

(1) Includes amortization of acquired technology of $ 1.4 million and $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 2.6 million and $ 0.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The above financial statements should be read in conjunction with the Notes to the Unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

(In thousands, except share data)

Three months ended June 30, 2022

Three months ended September 30, 2022

Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Shares Amount Shares Amount

Balance March 31, 2022

Balance June 30, 2022

— $ — 91,036,107 $ 91 $ 682,946 $ ( 347,492 ) $ 335,545

3 unchanged sentences

Exercised stock options — — 327,861 — 827 — 827

Payments for taxes related to net settlement of equity awards — — — — ( 596 ) — ( 596 )

Net loss — — — — — ( 20,049 ) ( 20,049 )

Balance June 30, 2022

Balance September 30, 2022

— $ — 91,477,997 $ 91 $ 695,324 $ ( 367,541 ) $ 327,874

Three months ended June 30, 2021

Three months ended September 30, 2021

Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Shares Amount Shares Amount

Balance March 31, 2021

72,225,916 $ 443,540 6,755,179 $ 7 $ 3,974 $ ( 277,910 ) $ ( 273,929 )

Balance June 30, 2021 — $ — 87,186,730 $ 87 $ 640,457 $ ( 289,285 ) $ 351,259

Stock-based compensation — — — — 3,352 — 3,352

Exercised stock options — — 749,800 1 1,480 — 1,481

Payment of Series B Dividend upon initial public offering — ( 4,969 ) — — — — —

Issuance of common stock upon initial public offering, net of underwriting discounts and commissions — — 6,900,000 7 192,803 — 192,810

Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 72,225,916 ) ( 438,571 ) 72,225,916 72 438,498 — 438,570

Conversion of redeemable convertible preferred stock warrants to common stock warrants upon initial public offering — — — — 5,727 — 5,727

Costs in connection with initial public offering — — — — ( 5,674 ) — ( 5,674 )

Exercised warrants — — 211,323 — 645 — 645

Net loss — — — — — ( 11,219 ) ( 11,219 )

Balance June 30, 2021

— $ — 87,186,730 $ 87 $ 640,456 $ ( 289,285 ) $ 351,258

Balance September 30, 2021 — $ — 88,147,853 $ 88 $ 645,934 $ ( 300,504 ) $ 345,518

ALKAMI TECHNOLOGY, INC.

2 unchanged sentences

(In thousands, except share data)

Six months ended June 30, 2022

Nine months ended September 30, 2022

Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

6 unchanged sentences

Exercised stock options — — 931,116 1 2,109 — 2,110

Payments for taxes related to net settlement of equity awards — — — — ( 596 ) — ( 596 )

Net loss — — — — — ( 53,688 ) ( 53,688 )

Balance June 30, 2022

Balance September 30, 2022

— $ — 91,477,997 $ 91 $ 695,324 $ ( 367,541 ) $ 327,874

Six months ended June 30, 2021

Nine months ended September 30, 2021

Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

4 unchanged sentences

Exercised stock options — — 4,120,002 4 6,413 — 6,417

Exercised warrants — — 211,323 — 645 — 645

Payment of Series B Dividend upon initial public offering — ( 4,969 ) — — — — —

6 unchanged sentences

Net loss — — — — — ( 33,473 ) ( 33,473 )

Balance June 30, 2021

Balance September 30, 2021

— $ — 88,147,853 $ 88 $ 645,934 $ ( 300,504 ) $ 345,518

3 unchanged sentences

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Deferred taxes ( 80 ) —

Loss on extinguishment of debt 76 —

Changes in operating assets and liabilities:

12 unchanged sentences

Capitalized software development costs ( 2,778 ) ( 1,275 )

Acquisition of business ( 132,031 ) ( 326 )

Acquisition of business, net of cash acquired (1)

( 131,339 ) ( 18,326 )

Net cash used in investing activities

4 unchanged sentences

Debt issuance costs paid ( 773 ) —

Proceeds from stock option exercises 1,282 4,935

Proceeds from exercise of warrants — 645

Proceeds from ESPP issuance 1,841 —

Payments for taxes related to net settlement of equity awards ( 596 ) —

Proceeds from stock option exercises 2,109 6,417

Deferred IPO issuance costs paid — ( 4,520 )

7 unchanged sentences

Cash and cash equivalents and restricted cash, end of period $ 104,128 $ 321,276

Supplemental disclosure of noncash financing activities

Deferred IPO offering costs not yet paid $ — $ 663

(1) See Note 3 for additional information regarding noncash investing activities for the nine months ended September 30, 2022 and 2021, related to the acquisition of MK.

The above financial statements should be read in conjunction with the Notes to the Unaudited Condensed Consolidated Financial Statements.

18 unchanged sentences

Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2021, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2022.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2022.

The Company has no sources of other comprehensive income, and accordingly, net loss presented each period is the same as comprehensive loss.

7 unchanged sentences

The Company defines restricted cash as cash that is legally restricted as to withdrawal or usage.

The amounts included in restricted cash on the condensed consolidated balance sheets at June 30, 2022 and December 31, 2021 represent the additional cash proceeds in deposit with an escrow agent for satisfaction of contingent consideration related to the acquisition of ACH Alert, LLC (“ACH Alert”).

The amounts included in restricted cash on the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021 represent the additional cash proceeds in deposit with an escrow agent for satisfaction of contingent consideration related to the acquisition of ACH Alert, LLC (“ACH Alert”).

In addition, restricted cash representing additional cash proceeds in deposit with an escrow agent for satisfaction of a holdback provision related to the acquisitions of MK Decisioning Systems, LLC (“MK”) and Segmint Inc.

(“Segmint”) is included in the condensed consolidated balance sheets at June 30, 2022 and December 31, 2021.

(“Segmint”) is included in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021.

See Note 3 for further information.

June 30, December 31,

September 30, December 31,

(in thousands) 2022 2021

11 unchanged sentences

The capitalized software development costs are reported in property and equipment, net in the condensed consolidated balance sheets.

The Company had $ 4.9 million and $ 2.6 million in capitalized internal software development costs as of June 30, 2022 and December 31, 2021, respectively.

The Company had $ 5.3 million and $ 2.6 million in capitalized internal software development costs as of September 30, 2022 and December 31, 2021, respectively.

Capitalized software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three to five years from when the asset is placed in service.

2 unchanged sentences

Generally, contract assets arise as a result of reallocating revenues when discounts are more heavily weighted in the early years of a multi-year contract or the client contract has substantive minimum fees that escalate over the term of the contract.

Contract assets totaled $ 0.6 million and $ 0.7 million as of June 30, 2022 and December 31, 2021, respectively, which are included in other assets in the accompanying condensed consolidated balance sheets.

Contract assets totaled $ 0.5 million and $ 0.7 million as of September 30, 2022 and December 31, 2021, respectively, which are included in other assets in the accompanying condensed consolidated balance sheets.

Contract liabilities are comprised of billings or payments received from the Company’s clients in advance of performance under the contract and are represented in deferred revenues in the condensed consolidated balance sheets.

2 unchanged sentences

The Company anticipates that the adoption of Topic 842 will impact its consolidated balance sheets as most of its operating lease commitments will be subject to the new standard and recognized as right-of-use assets and corresponding operating lease liabilities upon the adoption of ASU 2016-02.

The Company expects to adopt the standard in fiscal year 2022 using the modified retrospective transition approach and interim periods beginning 2023.

The Company expects to adopt the standard in fiscal year 2022 using the modified retrospective transition approach and for interim periods beginning 2023.

The Company continues to evaluate quantitative impacts that the adoption of this standard will have.

10 unchanged sentences

An entity that early adopts this guidance in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application.

The Company early adopted the standard during the second quarter of 2022 and has applied the related accounting to the business combination completed in the current fiscal year and will apply the standard to all business combinations completed prospectively.

The Company early adopted the standard during the second quarter of 2022, has applied the related accounting to the business combination completed in the current fiscal year and will apply the standard to all business combinations completed prospectively.

The adoption of ASU 2021-08 did not have a material impact on the consolidated financial statements.

2 unchanged sentences

On October 4, 2020, the Company announced the acquisition of substantially all of the assets of ACH Alert for approximately $ 25 million in cash consideration.

The ACH Alert acquisition also involved $ 4.9 million of additional cash consideration that the Company placed on deposit with an escrow agent to be paid upon the continued employment of one of the owners of ACH Alert, of which $ 2.5 million was paid in October 2021 and $ 2.4 million is to be paid in October 2022.

The Company has classified the amounts held in escrow as restricted cash on the condensed consolidated balance sheets and is accruing the estimated payouts over the requisite service period as a component of acquisition-related expenses on the condensed consolidated statements of operations.

For the three and six months ended June 30, 2022, the Company recognized compensation expense of $ 0.6 million and $ 1.3 million, respectively, and for the three and six months ended June 30, 2021, the Company recognized compensation expense of $ 0.6 million and $ 1.2 million, respectively, related to this agreement.

For the three and nine months ended September 30, 2022, the Company recognized compensation expense of $ 0.5 million and $ 1.7 million, respectively, and for the three and nine months ended September 30, 2021, the Company recognized compensation expense of $ 0.6 million and $ 1.9 million, respectively, related to this agreement.

MK Decisioning Systems, LLC

10 unchanged sentences

The Company remeasures the fair value of the contingent consideration on an ongoing basis and records the adjustment to the condensed consolidated statements of operations.

For the three and six months ended June 30, 2022, the Company recorded a gain on revaluation of contingent consideration of $ 0 and $ 2.7 million, respectively.

As of June 30, 2022, the fair value of the contingent earn-out was $ 12.8 million.

For the three and nine months ended September 30, 2022, the Company recorded a gain on revaluation of contingent consideration of $ 0 and $ 2.7 million, respectively.

As of September 30, 2022, the fair value of the contingent earn-out was $ 12.8 million.

Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and stock price forecasts) and the probability of achieving the specific targets using a geometric binomial model.

Based on the final purchase accounting, the Company estimated that approximately 62 % of the maximum $ 25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement.

As of June 30, 2022 the Company determined that approximately 51 % of the maximum $ 25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement.

As of September 30, 2022, the Company determined that approximately 51 % of the maximum $ 25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement.

Transaction costs included in the condensed consolidated statements of operations for both the three and nine months ended September 30, 2021 were $ 0.3 million.

For the nine months ended September 30, 2022 and 2021, the Company had noncash investing activities of $ 12.8 million and $ 17.5 million, respectively, related to unpaid consideration for the acquisition of MK.

On April 25, 2022, the Company consummated its previously announced merger with Segmint pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated March 25, 2022 with Segmint surviving as a wholly owned subsidiary of the Company.

Segmint operates a marketing analytics and messaging delivery platform with patented software that enables financial institutions and merchants to understand and leverage data, interact with customers and measure results.

The aggregate consideration paid in exchange for all of the outstanding equity interests of Segmint at closing was approximately $ 135.1 million (the "Merger Consideration").

The aggregate consideration paid in exchange for all of the outstanding equity interests of Segmint was approximately $ 135.0 million (the "Merger Consideration").

A portion of the Merger Consideration of approximately $ 3.1 million was placed into escrow to secure certain post-closing indemnification obligations in the Merger Agreement.

As of June 30, 2022, the allocation of the purchase price for Segmint has not been finalized, and the one-year measurement period has not ended.

As of September 30, 2022, the allocation of the purchase price for Segmint has not been finalized.

The preliminary purchase price allocations are based upon the preliminary valuation of assets and liabilities.

These estimates and assumptions are subject to change as the Company obtains additional information during the measurement period.

The following table summarizes the fair value amounts recognized as of the acquisition date for each major class of asset acquired or liability assumed:

(in thousands) Preliminary Fair Value as of April 25, 2022

The following table summarizes the fair value amounts recognized as of the

acquisition date for each major class of asset acquired or liability assumed, as well as adjustments made during the measurement period:

(in thousands) Preliminary Fair Value as of April 25, 2022 Measurement Period Adjustments Adjusted Fair Value as of September 30, 2022

Cash $ — $ 601 $ 601

Trade accounts receivables 1,788 7 1,795

7 unchanged sentences

Deferred revenues, current 145 — 145

Deferred tax liability — 336 336

Other non-current liabilities 625 — 625

1 unchanged sentence

Net assets acquired $ 135,130 $ ( 90 ) $ 135,040

Less cash acquired — ( 601 ) ( 601 )

Total cash consideration for acquisition, less cash acquired $ 135,130 $ ( 691 ) $ 134,439

The measurement period adjustments recorded for the three months ended September 30, 2022 are related to post-closing working capital adjustments, cash account amounts received as part of assets, revised estimates for intangible assets, and assumption of deferred tax liabilities.

The table below outlines the purchased identifiable intangible assets:

8 unchanged sentences

As a result of the acquisition of the stock of Segmint, the goodwill is not deductible for tax purposes.

For the three and six months ended June 30, 2022 the Company recognized acquisition-related expenses, net of $ 0.2 million and $ 0.8 million, respectively, related to the acquisition of Segmint.

The Company estimated and recorded a net deferred tax liability of $ 0.3 million after offsetting the acquired available tax attributes with the intangible assets shown in the table above.

Refer to Note 10 for discussion of the partial release of the Company’s pre-existing valuation allowance relating to the net deferred tax liability.

For the three and nine months ended September 30, 2022, the Company recognized acquisition-related expenses of $ 0.2 million and $ 1.1 million, respectively, related to the acquisition of Segmint.

Property and Equipment, Net

Depreciation and amortization expense was $ 0.6 million and $ 1.2 million for the three and six months ended June 30, 2022, respectively, and $ 0.6 million and $ 1.2 million for the three and six months ended June 30, 2021, respectively.

Property and equipment, net includes the following amounts at June 30, 2022 and December 31, 2021:

(in thousands) Useful Life June 30, 2022 December 31, 2021

Depreciation and amortization expense was $ 0.6 million and $ 1.9 million for the three and nine months ended September 30, 2022, respectively, and $ 0.6 million and $ 1.8 million for the three and nine months ended September 30, 2021, respectively.

Property and equipment, net includes the following amounts at September 30, 2022 and December 31, 2021:

(in thousands) Useful Life September 30, 2022 December 31, 2021

Software 2 to 5 years

14 unchanged sentences

Other services includes professional services and custom development.

The following table disaggregates the Company's revenue by major source for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30,

Six months ended June 30,

The following table disaggregates the Company's revenue by major source for the three and nine months ended September 30, 2022 and 2021:

Three months ended September 30,

Nine months ended September 30,

(in thousands) 2022 2021 2022 2021

3 unchanged sentences

Total revenues $ 53,412 $ 39,761 $ 148,732 $ 109,724

The Company recognized approximately $ 9.3 million of revenue during the six months ended June 30, 2022 which was recognized from deferred revenues in the accompanying condensed consolidated balance sheets as of the beginning of the reporting period.

For those contracts that were wholly or partially unsatisfied as of June 30, 2022, minimum contracted subscription revenues to be recognized in future periods total approximately $ 696.0 million.

The Company recognized approximately $ 12.5 million of revenue during the nine months ended September 30, 2022 which was recognized from deferred revenues in the accompanying condensed consolidated balance sheets as of the beginning of the reporting period.

For those contracts that were wholly or partially unsatisfied as of September 30, 2022, minimum contracted subscription revenues to be recognized in future periods total approximately $ 755.2 million.

The Company expects to recognize approximately 47.1 % of this amount as subscription services are transferred to customers over the next 24 months, an additional 32.0 % in the next 25 to 48 months, and the balance thereafter.

1 unchanged sentence

Deferred Cost Recognition

The Company capitalized $ 1.0 million and $ 1.7 million in deferred commissions costs during the three and six months ended June 30, 2022, respectively, and $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2021, respectively, and recognized amortization of $ 0.7 million and $ 1.4 million during the three and six months ended June 30, 2022, respectively, and $ 0.5 million and $ 1.0 million for the three and six months ended June 30, 2021, respectively.

The Company capitalized $ 2.3 million and $ 4.0 million in deferred commissions costs during the three and nine months ended September 30, 2022, respectively, and $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2021, respectively, and recognized amortization of $ 0.7 million and $ 2.1 million during the three and nine months ended September 30, 2022, respectively, and $ 0.6 million and $ 1.6 million for the three and nine months ended September 30, 2021, respectively.

Amortization expense is included in sales and marketing expenses in the accompanying statements of operations.

Deferred commissions are considered costs to obtain a contract and are included in deferred implementation costs in the accompanying condensed consolidated balance sheets in the amount of $ 11.1 million and $ 10.8 million as of June 30, 2022 and December 31, 2021, respectively.

The Company capitalized implementation costs of $ 1.6 million and $ 2.9 million during the three and six months ended June 30, 2022, respectively, and $ 1.3 million and $ 2.7 million during the three and six months ended June 30, 2021, respectively, and recognized amortization of $ 1.1 million and $ 1.9 million during the three and six months ended June 30, 2022, respectively, and $ 0.7 million and $ 1.2 million for the three and six months ended June 30, 2021, respectively.

Deferred commissions are considered costs to obtain a contract and are included in deferred implementation costs in the accompanying condensed consolidated balance sheets in the amount of $ 12.7 million and $ 10.8 million as of September 30, 2022 and December 31, 2021, respectively.

The Company capitalized implementation costs of $ 1.9 million and $ 4.8 million during the three and nine months ended September 30, 2022, respectively, and $ 1.3 million and $ 4.0 million during the three and nine months ended September 30, 2021, respectively, and recognized amortization of $ 1.0 million and $ 2.9 million during the three and nine months ended September 30, 2022, respectively, and $ 0.7 million and $ 1.9 million for the three and nine months ended September 30, 2021, respectively.

Amortization expense is included in cost of revenues in the accompanying condensed consolidated statements of operations.

These deferred costs are considered costs to fulfill client contracts and are included in deferred implementation costs in the accompanying condensed consolidated balance sheets in the amount of $ 14.5 million and $ 13.5 million as of June 30, 2022 and December 31, 2021, respectively.

These deferred costs are considered costs to fulfill client contracts and are included in deferred implementation costs in the accompanying condensed consolidated balance sheets in the amount of $ 15.4 million and $ 13.5 million as of September 30, 2022 and December 31, 2021, respectively.

The Company periodically reviews the carrying amount of deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit.

No impairment loss was recognized in relation to these capitalized costs for the three and six months ended June 30, 2022 and 2021.

No impairment loss was recognized in relation to these capitalized costs for the three and nine months ended September 30, 2022 and 2021.

Accounts Receivable

Accounts receivable includes the following amounts at June 30, 2022 and December 31, 2021:

June 30, December 31,

Accounts receivable includes the following amounts at September 30, 2022 and December 31, 2021:

September 30, December 31,

(in thousands) 2022 2021

7 unchanged sentences

Accrued Liabilities

Accrued liabilities consisted of the following at June 30, 2022 and December 31, 2021:

June 30, December 31,

Accrued liabilities consisted of the following at September 30, 2022 and December 31, 2021:

September 30, December 31,

(in thousands) 2022 2021

18 unchanged sentences

A term loan of $ 85.0 million (the “Amended Term Loan”) was borrowed on the closing date of the Amended Credit Agreement.

The additional proceeds received from the Amended Term Loan were used to replenish cash used to fund the acquisition of Segmint Inc., which closed on April 25, 2022.

The additional proceeds received from the Amended Term Loan were used to replenish cash used to fund the acquisition of Segmint, which closed on April 25, 2022.

• Accordion Feature:

12 unchanged sentences

The Amended Credit Agreement also contains customary events of default, which if they occur, could result in the termination of commitments under the Amended Credit Agreement, the declaration that all outstanding loans are immediately due and payable in whole or in part, and the requirement to maintain cash collateral deposits in respect of outstanding letters of credit.

The Company was in compliance with all covenants as of June 30, 2022.

In April 2022, the Company applied extinguishment accounting for the debt arrangements related to the Original Credit Agreement upon entering into the Amended Credit Agreement resulting in a loss on extinguishment of debt of $ 0.1 million that is included in the condensed consolidated statements of operations.

The Company was in compliance with all covenants as of September 30, 2022.

Long-term Debt

The following table summarizes long-term debt obligations as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

The following table summarizes long-term debt obligations as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Term Debt $ 85,000 $ 24,688

3 unchanged sentences

Long-term portion $ 82,415 $ 23,053

Maturities of long-term debt outstanding as of June 30, 2022, are summarized as follows (in thousands):

Maturities of long-term debt outstanding as of September 30, 2022, are summarized as follows (in thousands):

Total $ 85,000

2 unchanged sentences

Stock-based compensation expense was included in the condensed consolidated statements of operations as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands) 2022 2021 2022 2021

4 unchanged sentences

Total stock-based compensation expenses $ 11,914 $ 3,351 $ 32,956 $ 7,793

The Company recorded $ 0.2 million and $ 0.2 million of income tax expense for the three and six months ended June 30, 2022, respectively, resulting in an effective tax rate of ( 0.8 )% and ( 0.7 )%, respectively, compared to no income tax expense for the three and six months ended June 30, 2021.

The decrease in the effective tax rate for the three and six months ended June 30, 2022 as compared to the same period in 2021, is primarily due to state income taxes and deferred taxes related to the tax amortization of acquired goodwill.

The Company recorded an income tax benefit of $ 0.2 million and an income tax expense of $ 0.1 million for the three and nine months ended September 30, 2022, respectively, resulting in an effective tax rate of 0.8 % and ( 0.2 )%, respectively, compared to no income tax expense for the three and nine months ended September 30, 2021.

The difference in the effective tax rate for the three and nine months ended September 30, 2022 as compared to the same periods in 2021 is primarily due to state income taxes and deferred taxes related to the tax amortization of acquired goodwill.

This was partially offset by a $ 0.3 million deferred tax benefit attributable to the partial release of the Company’s pre-existing valuation allowance related to the Segmint business combination, recorded in the three months ended September 30, 2022.

The Company’s effective tax rate differs from the statutory tax rate primarily due to the impact of the full valuation allowance against its deferred tax assets.

During the three and nine months ended September 30, 2022, the acquisition of Segmint resulted in the recognition of a net deferred tax liability of $ 0.3 million.

See Note 3 for further information.

Prior to the business combination, the Company had a full valuation allowance on its net deferred tax assets.

The net deferred tax liability generated from the business combination is considered an additional source of income to support the realizability of the Company’s pre-existing deferred tax assets.

As a result, we released a portion of the pre-existing valuation allowance against the deferred tax assets and recorded a provisional deferred tax benefit of $ 0.3 million for the three and nine months ended September 30, 2022.

The Company recognizes deferred tax assets and liabilities based on the estimated future tax effects of temporary differences between the financial statement basis and tax basis of assets and liabilities given the provisions of enacted tax law.

17 unchanged sentences

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period.

The following tables summarize the Company’s financial assets measured at fair value as of June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation:

The following tables summarize the Company’s financial assets measured at fair value as of September 30, 2022 and December 31, 2021 and indicate the fair value hierarchy of the valuation:

Fair Value at Reporting Date Using

(In thousands) June 30, 2022 Level 1 Level 2 Level 3

(In thousands) September 30, 2022 Level 1 Level 2 Level 3

Cash equivalents:

30 unchanged sentences

Total fair value adjustments reported in earnings (Acquisition-related expenses, net) ( 2,700 )

Balance at June 30, 2022

Balance at September 30, 2022

Earnings Per Share

Net loss attributable to common stockholders used in computing basic and diluted earnings per share (“EPS”) has been calculated as the net loss less Series B cumulative dividends and other adjustments to redeemable convertible preferred stock of $ 0 for both the three and six months ended June 30, 2022 and $ 0 and $ 0.3 million for the three and six months ended June 30, 2021, respectively.

Net loss attributable to common stockholders used in computing basic and diluted earnings per share (“EPS”) has been calculated as the net loss less Series B cumulative dividends and other adjustments to redeemable convertible preferred stock of $ 0 for both the three and nine months ended September 30, 2022 and $ 0 and $ 0.3 million for the three and nine months ended September 30, 2021, respectively.

The holders of the Company’s redeemable convertible preferred stock did not have a contractual obligation to share in the Company’s losses;

1 unchanged sentence

Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

Because the Company has reported a net loss for the three and six months ended June 30, 2022 and 2021, the number of shares used to calculate diluted net loss per share attributable to common stockholders is the same as the number of shares used to calculate basic net loss per share attributable to common stockholders for the period presented because the potentially dilutive shares would have been antidilutive if included in the calculation.

The computation of basic and diluted EPS is as follows for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30,

Six months ended June 30,

Because the Company has reported a net loss for the three and nine months ended September 30, 2022 and 2021, the number of shares used to calculate diluted net loss per share attributable to common stockholders is the same as the number of shares used to calculate basic net loss per share attributable to common stockholders for the period presented because the potentially dilutive shares would have been antidilutive if included in the calculation.

The computation of basic and diluted EPS is as follows for the three and nine months ended September 30, 2022 and 2021:

Three months ended September 30,

Nine months ended September 30,

(In thousands, except shares and per share amounts) 2022 2021 2022 2021

5 unchanged sentences

Loss per common share - basic and diluted $ ( 0.22 ) $ ( 0.13 ) $ ( 0.59 ) $ ( 0.60 )

For the three and six months ended June 30, 2022 and 2021, the following potential shares of common stock were excluded from diluted EPS as the Company had a net loss in each period presented:

As of June 30,

For the three and nine months ended September 30, 2022 and 2021, the following potential shares of common stock were excluded from diluted EPS as the Company had a net loss in each period presented:

As of September 30,

Stock options 6,675,385 10,015,930

Warrants — 212,408

RSUs 7,041,744 467,351

4 unchanged sentences

The Company leases office space under non-cancelable operating leases for its corporate headquarters in Plano, Texas pursuant to a 10-year lease agreement under which the Company leases approximately 125,000 square feet of office space with an initial term that expires on August 31, 2028, with the option to extend the lease for either two additional terms of five years each or one additional term of ten years .

Rent expense under operating leases was $ 1.0 million and $ 2.1 million for the three and six months ended June 30, 2022, respectively, and $ 1.2 million and $ 2.3 million for the three and six months ended June 30, 2021, respectively.

Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2022 were as follows (in thousands):

Rent expense under operating leases was $ 1.1 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively, and $ 1.2 million and $ 3.5 million for the three and nine months ended September 30, 2021, respectively.

Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at September 30, 2022 were as follows (in thousands):

Operating Leases

2022 (remaining six months) $ 1,864

2022 (remaining three months) $ 936

Thereafter 6,736

2 unchanged sentences

Deferred rent and tenant allowances are amortized and applied against rental expense over the lease term on a straight-line basis.

As of June 30, 2022 and December 31, 2021, the Company had deferred rent and tenant allowance balances as follows:

(in thousands) June 30, 2022 December 31, 2021

As of September 30, 2022 and December 31, 2021, the Company had deferred rent and tenant allowance balances as follows:

(in thousands) September 30, 2022 December 31, 2021

Deferred rent and tenant allowance $ 5,370 $ 5,895

13 unchanged sentences

As part of the Company’s business planning cycle, the Company performs an annual goodwill impairment test in the fourth quarter of the fiscal year.

There were no indications of impairment of goodwill noted for the three months ended June 30, 2022.

There were no indications of impairment of goodwill noted for the three months ended September 30, 2022.

In April 2022, the Company recorded $ 99.3 million to goodwill related to the acquisition of Segmint under the preliminary purchase price allocation.

Goodwill had a carrying value of $ 147.4 million and $ 48.1 million as of June 30, 2022 and December 31, 2021, respectively.

Total intangibles, net, consisted of the following as of June 30, 2022 and December 31, 2021:

As of June 30, 2022

In September 2022, the Company adjusted goodwill related to the acquisition of Segmint to $ 97.9 million.

See Note 3 for further information.

Goodwill had a carrying value of $ 146.0 million and $ 48.1 million as of September 30, 2022 and December 31, 2021, respectively.

Total intangibles, net, consisted of the following as of September 30, 2022 and December 31, 2021:

As of September 30, 2022

(In thousands) Carrying Value Accumulated Amortization Net Carrying Value

15 unchanged sentences

Total intangible assets $ 12,445 $ ( 1,281 ) $ 11,164

Amortization expense recognized on intangible assets was $ 1.2 million and $ 1.6 million for the three and six months ended June 30, 2022, respectively.

Amortization expense recognized on intangible assets was $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2021, respectively.

Amortization expense recognized on intangible assets was $ 1.7 million and $ 3.4 million for the three and nine months ended September 30, 2022, respectively.

Amortization expense recognized on intangible assets was $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2021, respectively.

The following table shows the estimated annual amortization expense of the definite-lived intangible assets for the next five years and thereafter (in thousands):

2022 (remaining six months) $ 3,323

2022 (remaining three months) $ 1,697

Thereafter 15,656

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-Q

Item 1. Financial Statements