What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-11-02 · 133 added, 180 removed, 252 unchanged (55% of the section changed)

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Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies.

These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions.

These statements often include words such as “anticipates,” “expects,” “suggests,” “plans,” “believes,” “intends,” “estimates,” “targets,” “projects,” “seeks,” “should,” “can,” “could,” “would,” “may,” “will,” “forecasts” “strategy,” “future,” “likely” or the negative of these terms or other similar expressions.

We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time.

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• retaining our management team and key employees and recruiting and retaining new employees;

• managing the increased complexity of our solutions and a higher volume of implementations;

• providing client support;

• managing the increased complexity of our clients’ integration and functionality requirements;

• shifts in the number of account holders and registered users of our solutions, their use of our solutions and our clients’ implementation and client support needs;

• acquiring or investing in other companies or pursuing business partnerships;

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• cybersecurity breaches or other compromises of our security measures or those of third parties upon which we rely;

• increased privacy concerns, laws, regulations and standards and our processing and use of the personal information of end users;

• privacy and data security concerns, laws, regulations and standards and our processing and use of the PI of end users;

• intense competition in the markets we serve;

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• protecting our intellectual property rights and defending ourselves against claims that we are misappropriating the intellectual property rights of others;

• using open-source software in our solutions;

• using open-source software in our solutions or risks resulting in the disclosure our proprietary source code to our clients;

• complying with license or technology agreements with third parties and our ability to enter into additional license or technology agreements on reasonable terms;

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• future sales of shares of our common stock, our lack of an intention to pay dividends and significant influence of our principal stockholders;

• anti-takeover provisions in our charter documents and Delaware law.

• anti-takeover and exclusive forum provisions in our governing documents.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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In addition, in September 2021, we acquired MK Decisioning Systems, LLC (“MK”), a technology platform for digital account opening, credit card and loan origination solutions.

In April 2022, we acquired Segmint Inc.

(“Segmint”), a leading cloud-based financial data analytics and transaction data cleansing provider.

In April 2022, we acquired Segmint, a leading cloud-based financial data analytics and transaction data cleansing provider.

Our domain expertise in retail and business banking has enabled us to develop a suite of products tailored to address key challenges faced by FIs.

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• User experience:

Personalized and seamless digital experience across user interaction points, including mobile, chat and SMS, establishing durable connections between FIs and their customers.

Personalized and seamless digital experience across user interaction points, including desktop, mobile, chat and SMS, establishing durable connections between FIs and their customers.

• Integrations :

Scalability and extensibility driven by more than 290 real-time integrations to back-office systems and third-party fintech solutions as of September 30, 2023 , including core systems, payment cards, mortgages, bill pay, electronic documents, money movement, personal financial management and account opening.

Scalability and extensibility driven by more than 300 real-time integrations to back-office systems and third-party fintech solutions as of March 31, 2024 , including core systems, payment cards, mortgages, bill pay, electronic documents, money movement, personal financial management and account opening.

• Deep data capabilities :

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The Alkami Digital Banking Platform offers an end-to-end set of software products.

Our typical relationship with an FI begins with a set of core functional components, which can extend over time to include a rounded suite of products across account opening, card experience, client service, extensibility, financial wellness, security and fraud protection, marketing and analytics and money movement.

Our typical relationship with an FI begins with a set of core functional components, which can extend over time to include a rounded suite of products across account opening, marketing, data insights, card experience, money movement, customer service, commercial banking, financial wellness, security and fraud protection and extensibility.

We primarily go to market through an internal sales force.

Given the long-term nature of our Alkami Digital Banking Platform contracts, a typical sales cycle can range from approximately three to 12 months, with the subsequent implementation timeframe generally ranging from six to 12 months depending on the depth of integration.

We derive our Alkami Digital Banking Platform revenues almost entirely from multi-year contracts that are based on an average contract life of approximately 70 months as of September 30, 2023.

We predominantly employ a per-registered-user pricing model, with incremental fees above certain contractual minimum commitments for each licensed solution.

Our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer penetration, incentivizing our clients to internally market and promote digital engagement.

We derive our Alkami Digital Banking Platform revenues almost entirely from multi-year contracts that are based on an average contract life of approximately 70 months as of March 31, 2024.

We predominantly employ a per-registered-user pricing model, with incremental fees above certain contractual client minimum commitments for each licensed solution.

In these cases, our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer penetration, incentivizing our clients to internally market and promote digital engagement.

To support our growth and capitalize on our market opportunity, we have increased our operating expenses across all aspects of our business.

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Similarly, we continue to expand our sales and marketing organization focusing on new client wins, cross-selling opportunities and client renewals.

For the three months ended September 30, 2023 and 2022, our total revenues were $67.7 million and $53.4 million, respectively, representing a 26.8% increase period-over-period.

For the nine months ended September 30, 2023 and 2022, our total revenues were $193.5 million and $148.7 million, respectively, representing an increase of 30.1% period-over-period.

SaaS subscription revenues, as further described below, represented 95.7% and 94.8% of total revenues for the three and nine months ended September 30, 2023, respectively, and 94.9% and 95.0% of total revenues for the three and nine months ended September 30, 2022, respectively.

We incurred net losses of $15.5 million and $50.2 million for the three and nine months ended September 30, 2023, respectively, and net losses of $20.0 million and $53.7 million for the three and nine months ended September 30, 2022, respectively, largely on the basis of significant continued investment in sales, marketing, product development and post-sales client activities.

Recent Developments

Banking and Regulatory Environment Developments.

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver.

On March 12, 2023, the U.S.

Department of the Treasury, Federal Reserve Board, and FDIC released a joint statement announcing that the FDIC would complete its resolution of SVB in a manner that fully protected all depositors at SVB and that depositors would have access to all their money starting March 13, 2023.

On March 26, 2023, the FDIC announced that First-Citizens Bank & Trust Company would assume all SVB’s deposits and loans as of March 27, 2023.

In light of the foregoing, we do not believe that we have exposure to loss as a result of SVB’s receivership.

Additionally, our overall liquidity and financing has not been impacted.

During the periods presented, we have not experienced any losses on our deposits of cash, cash equivalents or marketable securities.

Amendment to Office Lease.

On September 5, 2023, the Company entered into a Sixth Amendment to the Amended and Restated Office Lease which, among other things, reduces the leased space in Plano, Texas from approximately 125,468 square feet to 83,939 square feet, effective December 31, 2023, and also extends the term for the remaining reduced leased space to August 31, 2033.

For the three months ended March 31, 2024 and 2023, our total revenues were $76.1 million and $60.0 million, respectively, representing a growth rate of 26.9% period-over-period.

SaaS subscription revenues, as further described below, represented 95.9% of total revenues for both the three months ended March 31, 2024 and 2023.

We incurred net losses of $11.4 million and $17.0 million for the three months ended March 31, 2024 and 2023, respectively, largely on the basis of significant continued investment in sales, marketing, product development and post-sales client activities.

Factors Affecting our Operating Results

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A key part of our strategy is to grow our FI client base.

As of September 30, 2023, we served 229 FIs through the Alkami Digital Banking Platform and over 600 clients when including unique clients only subscribing to one or a combination of ACH Alert, MK or Segmint products.

As of March 31, 2024, we served 244 FIs through the Alkami Digital Banking Platform and over 650 clients when including unique clients only subscribing to one or a combination of ACH Alert, MK or Segmint products.

Each of our digital banking client wins is a competitive takeaway, and as such, our historical ability to grow our client base has been a function of product depth, technological excellence and a sales and marketing function able to match our solutions with the strategic objectives of our clients.

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Once we onboard a client, our ability to help drive incremental client customer digital adoption translates to additional revenues with very limited additional spend.

Our FI clients are incentivized to market and encourage digital account sign-up based on identifiable improvement in customer engagement as well as discounts received based on certain levels of customer penetration.

Our FI clients are incentivized to market and encourage digital account sign-up based on identifiable improvement in customer engagement as well as

discounts received based on certain levels of customer penetration.

We expect to continue to support digital adoption by client customers through continued investments in new products and platform enhancements.

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The depth of our product suite is a function of technology and platform partnerships.

Our platform model with more than 290 integrations as of September 30, 2023 enables us to deliver thousands of configurations aligned with the digital platform strategies adopted by our clients.

Our platform model with 300 integrations as of March 31, 2024 enables us to deliver thousands of configurations aligned with the digital platform strategies adopted by our clients.

We expect our future success in winning new clients to be partially driven by our ability to continue to develop and deliver new, innovative products to FI clients in a timely manner.

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In addition to extending existing relationships, renewals provide an opportunity to grow minimum contract value, as over the course of a contract term our clients often grow, or their needs evolve.

Client renewals are also an important lever in driving our long-term gross margin targets.

We had six and 11 client renewals for the three and nine months ended September 30, 2023, respectively.

Client renewals are also an important lever in driving our long-term gross margin targets, as we generally achieve approximately 70% gross margin upon renewal.

We had 6 client renewals for the three months ended March 31, 2024.

We expect client renewals to continue to play a key role in our future success.

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Our single code base, built on a multi-tenant infrastructure and combined with continuous software delivery enables us to bring new, innovative products to market quickly and positions us with what we believe is market-leading breadth in terms of product offerings and feature sets.

We remain committed to investing in our platform, notably through our research and development spend, which was 32.1% and 32.7% of our revenues for the three and nine months ended September 30, 2023, respectively.

We remain committed to investing in our platform, notably through our research and development spend, which was 30.0% and 34.3% of our revenues for the three months ended March 31, 2024 and 2023, respectively.

Our future success will depend on our continued leadership in innovation.

Components of Results of Operations

Our client relationships are predominantly based on multi-year contracts for the Alkami Digital Banking Platform that have had an average contract life of 70 months as of September 30, 2023.

Our client relationships are predominantly based on multi-year contracts for the Alkami Digital Banking Platform that have had an average contract life of approximately 70 months as of March 31, 2024.

We derive the majority of our revenues from SaaS subscription services charged for the use of our digital banking solution.

For each client, we invoice monthly a contractual minimum fee for each licensed solution.

In addition, we invoice monthly an additional subscription fee for the number of registered users using each solution and the number of bill-pay and certain other transactions those registered users conduct through our digital banking platform in excess of their contractual minimum commitments.

Subscription services are recognized over time on a ratable basis over the client agreement term beginning on the date our solution is made available to our client.

The promised consideration may include fixed or variable amounts.

For our clients with enterprise license contracts, they are invoiced on an agreed upon monthly rate throughout the contract term which may include fixed monthly or annual rate escalations.

Fixed dollar or percentage escalations that are not based on registered users are considered part of the fixed transaction price and recognized on a straight line basis over the SaaS subscription period evenly.

The majority of our client contracts are based on registered users, which we invoice monthly a contractual minimum fee for each licensed solution.

Our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer penetration, incentivizing our clients to internally market our products and promote digital engagement.

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We recognize revenues at the point in time the services are transferred to the client.

The following disaggregates our revenues for the three and nine months ended September 30, 2023 and 2022 by major source:

Three months ended September 30,

Nine months ended September 30,

2023 2022 2023 2022

The following disaggregates our revenues for the three months ended March 31, 2024 and 2023 by major source:

Three months ended March 31,

(in thousands) 2024 2023

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Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses, stock-based compensation, travel and related costs for employees supporting our SaaS subscription, implementation and other services.

This includes the costs of our implementation, client support and client success teams, development personnel responsible for maintaining and releasing updates to our platform, as well as third-party cloud-based hosting services.

This includes the costs of our implementation, client support and development personnel responsible for maintaining and releasing updates to our platform, as well as third-party cloud-based hosting services.

Cost of revenues also includes the direct costs of bill-pay services and other third-party intellectual property included in our solutions, the amortization of acquired technology and depreciation.

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Other costs not directly recoverable from future revenues are expensed in the period incurred.

We intend to continue to increase our investments in our implementation, client support and client success teams and technology infrastructure to serve our clients and support our growth.

We intend to continue to increase our investments in our implementation, client support teams and technology infrastructure to serve our clients and support our growth.

We expect cost of revenues to continue to grow in absolute dollars as we grow our business, but to vary as a percentage of revenues from period to period as a function of the utilization of implementation and support personnel and the extent to which we recognize fees from bill-pay services and other third-party functionality integrated into our solutions.

Our gross margin for the three and nine months ended September 30, 2023 was 54.0% and 53.8%, respectively, and 51.6% and 53.6% for the three and nine months ended September 30, 2022, respectively.

The major components of cost of revenues represented the following percentages of revenues for the three months ended September 30, 2023:

third-party hosting services (7.8%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.4%), our implementation team (9.1%), our client success team (3.5%), our development team responsible for maintaining and releasing updates to our platform (3.4%), amortization (2.5%), stock-based compensation (2.2%), and depreciation (0.1%).

The major components of cost of revenues represented the following percentages of revenues for the three months ended September 30, 2022:

third-party hosting services (7.7%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (16.7%), our implementation team (10.6%), our client success team (4.4%), our development team responsible for maintaining and releasing updates to our platform (3.7%), stock-based compensation (2.3%), amortization (2.9%), and depreciation (0.1%).

The major components of cost of revenues represented the following percentages of revenues for the nine months ended September 30, 2023:

third-party hosting services (7.7%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.4%), our implementation team (9.5%), our client success team (3.5%), our development team responsible for maintaining and releasing updates to our platform (3.3%), amortization (2.5%), stock-based compensation (2.1%), and depreciation (0.1%).

The major components of cost of revenues represented the following percentages of revenues for the nine months ended September 30, 2022:

third-party hosting services (7.7%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (16.0%), our implementation team (10.2%), our client success team (4.6%), our development team responsible for maintaining and releasing updates to our platform (3.6%), stock-based compensation (2.2%), amortization (1.9%), and depreciation (0.1%).

Our gross margin for the three months ended March 31, 2024 and 2023 was 57.8% and 53.6%, respectively.

The major components of cost of revenues represented the following percentages of revenues for the three months ended March 31, 2024:

third-party hosting services (6.4%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (18.5%), our implementation and client support teams (9.5%), our development team responsible for maintaining and releasing updates to our platform (3.9%), amortization (2.3%), and stock-based compensation (1.6%).

The major components of cost of revenues represented the following percentages of revenues for the three months ended March 31, 2023:

third-party hosting services (7.6%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.5%), our implementation and client support teams (13.5%), our development team responsible for maintaining and releasing updates to our platform (3.2%), amortization (2.6%), stock-based compensation (1.9%), and depreciation (0.1%).

Operating Expenses

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Sales and Marketing.

Sales and marketing expenses consist primarily of personnel-related costs of our sales, marketing, and a portion of account management employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation.

Sales and marketing expenses consist primarily of personnel-related costs of our sales, marketing and our client success employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation.

Sales and marketing expenses also include travel and related costs, outside consulting fees and marketing programs, including lead generation, costs of our annual client conference, advertising, trade shows and other event expenses.

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We expect that general and administrative expenses will continue to increase as we scale our business and as we incur costs associated with being a publicly traded company, including legal, audit, business insurance and consulting fees.

Acquisition-Related Expenses, net.

Acquisition-related expenses, net, include the accrual of deferred compensation due to the former owner of ACH Alert, in addition to acquisition-related expenses associated with the acquisitions of MK and Segmint, primarily related to legal, consulting, and professional fees.

In addition, these expenses are inclusive of any (gain) loss on revaluation of contingent consideration.

Acquisition-Related Expenses.

Acquisition-related expenses are primarily related to legal, consulting and professional fees.

Amortization of Acquired Intangibles.

Amortization of acquired intangibles represents the amortization of intangibles recorded in connection with our business acquisitions, which are amortized on a straight-line basis over the estimated useful lives of the related assets.

Amortization of acquired intangibles represents the amortization of intangible assets recorded in connection with our business acquisitions, which are amortized on a straight-line basis over the estimated useful lives of the related assets.

Non-operating Income (Expense)

Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our revolving line of credit, amortization of deferred debt costs, unrealized (gains) losses on marketable securities, and changes in fair value of warrants and tranche rights.

Provision (benefit) for income taxes

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the valuation allowance against our deferred tax assets.

As a result of our valuation allowance, provision (benefit) for income taxes consists primarily of state income taxes and deferred taxes related to the tax amortization of acquired goodwill.

Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our revolving line of credit, amortization of deferred debt costs, unrealized gains or losses on marketable securities, realized gains on sales of marketable securities, and changes in fair value of warrants and tranche rights.

Provision for Income Taxes

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the valuation allowance against our deferred tax assets and state tax expense.

As a result of our valuation allowance, provision for income taxes consists primarily of state income taxes and deferred taxes related to the tax amortization of acquired goodwill.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this filing.

The following table presents our selected condensed consolidated statements of operations data for the three and nine months ended September 30, 2023 and 2022.

Three months ended September 30,

Nine months ended September 30,

($ in thousands, except share and per share amounts) 2023 2022 2023 2022

The following table presents our selected consolidated statements of operations data for the three months ended March 31, 2024 and 2023.

Three months ended March 31,

(in thousands) 2024 2023

Revenues $ 76,127 $ 59,996

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General and administrative 19,315 17,111

Acquisition-related expenses, net — 737 220 155

Acquisition-related expenses 60 186

Amortization of acquired intangibles 359 360

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Interest expense (73) (1,757)

Gain (loss) on financial instruments 201 (59) 421 (446)

Gain on financial instruments 112 210

Loss before income taxes

(11,244) (16,767)

Provision (benefit) for income taxes 39 (163) 323 80

Provision for income taxes 189 196

$ (11,433) $ (16,963)

(1) Includes amortization of acquired technology of $1.3 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, and $4.0 million and $2.6 million for the nine months ended September 30, 2023 and 2022, respectively.

(1) Includes amortization of acquired technology of $1.3 million for both the three months ended March 31, 2024 and 2023.

(2) Includes stock-based compensation expenses as follows:

Three months ended September 30,

Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

(in thousands) 2024 2023

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The following table presents our reconciliation of GAAP net loss to adjusted EBITDA for the periods indicated.

Three months ended September 30,

Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

(in thousands) 2024 2023

Net loss $ (11,433) $ (16,963)

Provision (benefit) for income taxes 39 (163) 323 80

(Gain) loss on financial instruments (201) 59 (421) 446

Provision for income taxes 189 196

Gain on financial instruments (112) (210)

Interest (income) expense, net (1,009) 31

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Stock-based compensation expense 13,552 11,244

Acquisition-related expenses, net (1)

— 737 220 155

Acquisition-related expenses 60 186

Adjusted EBITDA (1)

$ 3,809 $ (2,930)

(1) Acquisition-related expenses, net, for the nine months ended September 30, 2023 includes expenses associated with the acquisition of Segmint, primarily related to legal, consulting, and professional fees.

Acquisition-related expenses, net, for the three and nine months ended September 30, 2022 includes the accrual of deferred compensation due to the former owner of ACH Alert, in addition to expenses associated with the acquisitions of MK and Segmint, primarily related to legal, consulting, and professional fees.

During the nine months ended September 30, 2022, these expenses were offset by the $2.7 million gain on contingent consideration related to the purchase of MK.

(1) Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity.

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Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity.

We define adjusted EBITDA as net loss before provision (benefit) for income taxes;

(gain) loss on financial instruments;

interest expense, net;

We define adjusted EBITDA as net loss before provision for income taxes;

gain on financial instruments;

interest (income) expense, net;

depreciation and amortization;

stock-based compensation expense;

and acquisition-related expenses, net.

and acquisition-related expenses.

We believe adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.

Adjusted EBITDA was $0.8 million and $(4.6) million for the three and nine months ended September 30, 2023, respectively, and $(4.6) million and $(13.6) million for the three and nine months ended September 30, 2022, respectively.

Adjusted EBITDA was $3.8 million and $(2.9) million for the three months ended March 31, 2024 and 2023, respectively.

Annual Recurring Revenue (ARR).

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We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients.

ARR was $275.0 million as of September 30, 2023 and $213.6 million as of September 30, 2022, an increase of $61.3 million, or 28.7%.

ARR was $302.7 million as of March 31, 2024 and $240.1 million as of March 31, 2023, an increase of $62.6 million, or 26.1%.

Registered Users.

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We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time.

We had 16.9 million registered users as of September 30, 2023 and 13.7 million as of September 30, 2022, an increase of 3.2 million, or 23.1%.

We had 18.1 million registered users as of March 31, 2024 and 15.1 million as of March 31, 2023, an increase of 3.0 million, or 19.8%.

Revenue per Registered User (RPU).

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We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time.

RPU was $16.28 as of September 30, 2023 and $15.57 as of September 30, 2022, an increase of $0.71, or 4.6%.

Comparison of Three and Nine Months ended September 30, 2023 and 2022

Three months ended September 30,

Change Nine months ended September 30,

2023 2022 $ % 2023 2022 $ %

RPU was $16.71 as of March 31, 2024 and $15.88 as of March 31, 2023, an increase of $0.83, or 5.2%.

Comparison of Three Months ended March 31, 2024 and 2023

Three months ended March 31,

($ in thousands) 2024 2023 $ %

Revenues $ 76,127 $ 59,996 $ 16,131 26.9 %

September 30,

Annual Recurring Revenue (ARR) $ 302,659 $ 240,050 $ 62,609 26.1 %

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Revenue per Registered User (RPU) $ 16.71 $ 15.88 $ 0.83 5.2 %

Revenues increased $14.3 million, or 26.8%, and $44.7 million, or 30.1% for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

The increase of $14.3 million in revenues for the three months ended September 30, 2023 was primarily due to registered user growth from new and existing clients, and RPU growth.

The increase of $44.7 million in revenues for the nine months ended September 30, 2023 was primarily due to registered user growth of 3.2 million, or 23.1%, driven by the implementation of 39 new financial institutions supporting 1.7 million digital users and increased digital user adoption from our existing clients of 1.4 million users.

In addition, increased revenues were due to RPU growth of 4.6%.

RPU growth was primarily driven by cross-sell activity to existing clients, higher average RPU of new clients implemented in the last 12 months on our digital banking platform compared to aggregate RPU and the acquisition of Segmint completed on April 25, 2022, which contributed $5.4 million to the increase over the prior period.

The average RPU of users from new clients implemented on our digital platform in the last 12 months of $16.92 as of September 30, 2023, is 4% higher than the aggregate RPU as of September 30, 2023.

Revenues increased $16.1 million, or 26.9% for the three months ended March 31, 2024, compared to the same period in 2023.

The increase of $16.1 million in revenues for the three months ended March 31, 2024 was primarily due to registered user growth of 3.0 million when compared to March 31, 2023, comprised of 1.5 million in registered user growth from existing clients and 1.5 million in registered users from new clients implemented through our digital banking platform (contractual minimums).

In addition, increased revenues were due to RPU growth of 5.2% when compared to March 31, 2023.

RPU growth was primarily driven by cross-sell activity to existing clients and higher average RPU of new clients implemented on our digital banking platform compared to aggregate RPU.

The average RPU of users from new clients implemented on our digital platform in the last 12 months of $19.33 as of March 31, 2024, is 15.7% higher than the aggregate RPU as of March 31, 2024.

Cost of Revenues and Gross Margin

Three months ended September 30,

Change Nine months ended September 30,

2023 2022 $ % 2023 2022 $ %

Three months ended March 31,

($ in thousands) 2024 2023 $ %

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Cost of Revenues

Cost of revenues increased $5.3 million, or 20.5%, and $20.2 million, or 29.3%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022, generating a gross margin of 54.0% and 53.8% for the three and nine months ended September 30, 2023, respectively, compared to a gross margin of 51.6% and 53.6% for the same periods in 2022, respectively.

The increase in cost of revenues for the three months ended September 30, 2023 was primarily driven by a $1.2 million increase in personnel-related costs (which includes stock-based compensation of $0.3 million), resulting from headcount increases supporting our growth in site reliability engineering, client implementation and client success, as well as $2.9 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform, a $1.1 million increase in hosting costs, and $0.1 million in higher miscellaneous other costs.

The increase in cost of revenues for the nine months ended September 30, 2023 was primarily driven by a $5.0 million increase in personnel-related costs (which includes stock-based compensation of $0.9 million) resulting from headcount increases supporting our growth in the following teams:

site reliability engineering, client implementation and client success, as well as $9.9 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform, a $3.5 million increase in hosting costs incurred from an increase in revenues derived from existing and new client growth, $1.4 million of amortization of intangibles, primarily related to the acquisition of Segmint in April 2022, and $0.4 million in higher miscellaneous other costs.

Cost of revenues increased $4.2 million, or 15.2%, for the three months ended March 31, 2024 compared to the same period in 2023.

Our revenue growth outpaced our cost of revenues growth, leading to an improved gross margin of 57.8% for the three months ended March 31, 2024, compared to a gross margin of 53.6% for the same period in 2023.

The increase in cost of revenues for the three months ended March 31, 2024 was primarily driven by $3.5 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform, a $0.3 million increase in hosting costs and $0.4 million in higher various other costs.

Operating Expenses

Three months ended September 30,

Change Nine months ended September 30,

Three months ended March 31,

2024 2023 $ %

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General and administrative 19,315 17,111 2,204 12.9 %

Acquisition-related expenses, net — 737 (737) (100.0) % 220 155 65 41.9 %

Acquisition-related expenses 60 186 (126) (67.7) %

Amortization of acquired intangibles 359 360 (1) (0.3) %

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Research and Development

Research and development expenses increased $3.5 million, or 19.4%, and $14.2 million, or 29.0%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

For the three months ended September 30, 2023, the increase was primarily due to a $3.4 million increase in personnel-related costs (which includes stock-based compensation of $1.1 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation.

In addition, we incurred $0.4 higher costs for hosting and $0.2 higher costs for consulting.

These increases are partially offset by an increase of $0.7 million in capitalized development costs.

For the nine months ended September 30, 2023, the increase was primarily due to a $14.6 million increase in personnel-related costs (which includes stock-based compensation of $4.4 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation, and $1.5 million higher hosting costs.

These expenses were partially offset by an increase of $1.0 million in capitalized development costs and a decrease of $1.0 million in consulting costs.

Research and development expenses increased $2.3 million, or 11.1%, for the three months ended March 31, 2024, compared to the same period in 2023.

For the three months ended March 31, 2024, the increase was primarily due to a $1.2 million higher costs for consulting and an $0.8 million increase in personnel-related costs (which includes stock-based compensation of $0.2 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation.

In addition, we incurred $0.1 million higher costs for hosting and $0.2 million of higher various other costs.

Sales and Marketing

Sales and marketing expenses increased $2.2 million, or 22.8%, and $8.9 million, or 31.9%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

For the three months ended September 30, 2023, the increase was primarily due to a $2.4 million increase in personnel-related costs (which includes stock-based compensation of $0.8 million), resulting from headcount growth in our sales and marketing teams.

In addition, we incurred $0.1 million in higher travel costs for the sales team.

These expenses are partially offset by $0.4 million of lower consulting costs.

For the nine months ended September 30, 2023, the increase was primarily due to a $7.8 million increase in personnel-related costs (which includes stock-based compensation of $2.5 million), resulting from headcount growth in our sales and marketing teams.

In addition, we incurred $0.7 million in higher costs related to industry conferences and trade shows, including enhanced client experiences at our in-person client conference, Co:lab, and $0.4 million in higher travel costs for the sales team.

These expenses are partially offset by $0.2 million lower consulting costs.

Sales and marketing expenses increased $3.0 million, or 27.3% for the three months ended March 31, 2024, compared to the same periods in 2023.

For the three months ended March 31, 2024, the increase was primarily due to a $1.8 million increase in personnel-related costs (which includes stock-based compensation of $0.4 million), resulting from headcount growth in our sales and marketing teams.

In addition, we incurred $0.6 million of higher costs for consulting, $0.4 million of higher travel costs for the sales team, and $0.2 million of higher various other costs.

General and Administrative

General and administrative expenses decreased by less than $0.1 million, or 0.3%, and $0.5 million, or 0.9%, for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

For the three months ended September 30, 2023, the decrease was primarily due to a gain on lease modification of $0.4 million, $0.2 million of lower insurance costs, $0.1 million reduction in stock-based compensation, and $0.1 million of lower miscellaneous other costs, partially offset by an increase of $0.8 million in personnel-related costs (exclusive of stock-based compensation).

During 2022, we incurred higher stock-based compensation driven by the modification of a former executive’s stock options and RSUs.

For the nine months ended September 30, 2023, the decrease was primarily due to a $2.7 million reduction in stock-based compensation, gain on lease modification of $0.4 million, $0.3 million of lower insurance costs, $0.1 million of lower audit and consulting fees, and $0.4 million of lower miscellaneous other costs, partially offset by an increase of $2.8 million in personnel-related costs (exclusive of stock-based compensation) and higher software costs of $0.6 million.

During 2022, we incurred higher stock-based compensation driven by the modification of a former executive’s stock options and RSUs.

Acquisition-Related Expenses, Net

Acquisition-related expenses, net, decreased $0.7 million and increased $0.1 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

For the three months ended September 30, 2023, we incurred no acquisition-related expenses.

For the three months ended September 30, 2022, we recorded $0.7 million of expenses related to legal, consulting, professional fees, and deferred compensation related to acquisitions.

For the nine months ended September 30, 2023, we incurred $0.2 million of acquisition-related expenses related to legal, consulting, and professional fees for the acquisition of Segmint.

For the nine months ended September 30, 2022, we recorded $2.9 million of expenses related to legal, consulting, professional fees, and deferred compensation related to acquisitions, partially offset by a $2.7 million gain on contingent consideration related to the acquisition of MK.

General and administrative expenses increased by $2.2 million, or 12.9% for the three months ended March 31, 2024, compared to the same periods in 2023.

For the three months ended March 31, 2024, the increase was primarily due to a $1.6 million increase in stock-based compensation, $0.7 million of higher audit and consulting costs, $0.3 million of higher software costs and $0.2 million of higher various other costs, partially offset by a decrease of $0.2 million in personnel-related costs (exclusive of stock-based compensation), $0.2 million of lower facilities costs and $0.2 million of lower insurance costs.

Acquisition-Related Expenses

Acquisition-related expenses, decreased $0.1 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the three months ended March 31, 2024, we incurred $0.1 million of acquisition-related expenses.

For the three months ended March 31, 2023, we incurred $0.2 million of acquisition-related expenses related to legal, consulting and professional fees for the acquisition of Segmint.

Amortization of Acquired Intangibles

Amortization of acquired intangibles decreased by less than $0.1 million and increased by $0.3 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022, primarily due the acquisition of Segmint in April 2022.

Amortization of acquired intangibles was $0.4 million for both the three months ended March 31, 2024 and 2023.

Non-Operating Income (Expense), Net

Non-operating income increased $0.7 million and $2.1 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

For the three months ended September 30, 2023, the increase was primarily due to an increase in net interest income of $0.5 million, as well as a $0.3 million change in unrealized gain on financial instruments related to marketable securities.

For the nine months ended September 30, 2023, the increase was primarily due to an increase in net interest income of $1.3 million, as well as a $0.9 million change in unrealized gain on financial instruments related to marketable securities.

Provision (Benefit) for Income Taxes

The Company recorded income tax expense of less than $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively.

This resulted in an effective tax rate of (0.3)% and (0.6)%, respectively.

As compared to an income tax benefit of $0.2 million and income tax expense of $0.1 million for the three and nine months ended September 30, 2022, respectively.

This resulted in an effective tax rate of 0.8% and (0.2)%, respectively.

Our effective tax rate for the three and nine months ended September 30, 2023 and September 30, 2022 differs from the statutory tax rate primarily due to the impact of the valuation allowance against its deferred tax assets and state tax expense.

Non-operating income increased $0.9 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the three months ended March 31, 2024, the increase was primarily due to an increase in net interest income of $1.0 million, partially offset by a decrease of $0.1 million in gain on financial instruments related to marketable securities.

Provision for Income Taxes

The Company recorded income tax expense of $0.2 million for both the three months ended March 31, 2024 and 2023, resulting in an effective tax rate of (1.7)% and (1.2)%, respectively.

Our effective tax rate for the three months ended March 31, 2024 and March 31, 2023 differs from the statutory tax rate primarily due to the impact of the valuation allowance against its deferred tax assets and state tax expense.

Liquidity and Capital Resources

As of September 30, 2023, we had $178.2 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $422.7 million.

As of March 31, 2024, we had $87.3 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $446.8 million.

Our net losses have been driven by our investments in developing our digital banking platform, expanding our sales, marketing and implementation organizations and scaling our administrative functions to support our rapid growth.

We have financed our operations primarily through the net proceeds we have received from the sales of our redeemable convertible preferred stock and common stock, cash generated from the sale of SaaS subscription services and borrowings under our Amended Credit Agreement (as defined below).

We have financed our operations primarily through cash generated from the sale of SaaS subscription services.

Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support client usage and growth in our client base, increased research and development expenses to support the growth of our business and related infrastructure, increased general and administrative expenses associated with being a publicly traded company, investments in office facilities and other capital expenditure requirements and any potential future acquisitions or other strategic transactions.

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Any equity financing we may undertake could be dilutive to our existing stockholders, and any additional debt financing we may undertake could require debt service and financial and operational requirements that could adversely affect our business.

On March 26, 2023, it was announced that First-Citizens Bank & Trust Company would assume all SVB's deposits and loans as of March 27, 2023.

This resulted in no impact to the condensed consolidated financial statements or changes to the terms of the Amended Credit Agreement.

The following table summarizes our cash flows for the periods indicated:

Nine months ended September 30,

Three months ended March 31,

(in thousands) 2024 2023

Net cash used in operating activities $ (12,197) $ (24,220)

Net cash used in investing activities $ (16,358) $ (247,499)

Net cash (used in) provided by financing activities $ (4,801) $ 62,893

Net Cash Used in Operating Activities

During the nine months ended September 30, 2023, net cash used in operating activities was $12.2 million, which consisted of a net loss of $50.2 million, adjusted by non-cash charges of $43.1 million and net cash outflows from the change in net operating assets and liabilities of $5.1 million.

The non-cash charges were primarily comprised of depreciation and amortization expense of $7.8 million and stock-based compensation expense of $37.9 million, partially offset by accrued interest on marketable securities, net of $2.1 million and other changes in non-cash charges of $0.5 million.

The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $5.0 million increase in accounts receivable, a $2.6 million increase in prepaid expenses and other current assets, and a $4.0 million increase in deferred implementation costs, partially offset by an increase in accounts payable and accrued liabilities of $5.2 million and a $1.3 million increase in deferred revenues.

During the nine months ended September 30, 2022, net cash used in operating activities was $24.2 million, which consisted of a net loss of $53.7 million, adjusted by non-cash charges of $36.2 million and net cash outflows from the change in net operating assets and liabilities of $6.7 million.

The non-cash charges were primarily comprised of depreciation and amortization expense of $5.5 million, stock-based compensation expense of $33.0 million and net other changes in non-cash charges of $0.4 million, partially offset by a gain on revaluation of contingent consideration of $2.7 million.

The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $4.1 million increase in accounts receivable, a $2.8 million increase in prepaid expenses and other current assets, and a $3.3 million increase in deferred implementation costs, partially offset by a $3.5 million increase in accounts payable and accrued liabilities and a $0.1 million increase in deferred revenues.

Net Cash Used in Investing Activities

During the nine months ended September 30, 2023, net cash used in investing activities was $16.4 million, primarily consisting of $109.6 million for the purchase of marketable securities, $3.8 million related to capitalized software development costs, and capital expenditures related to updates for computer and other equipment of $0.8 million, partially offset by $97.9 million in proceeds from maturities and redemptions of marketable securities.

During the nine months ended September 30, 2022, net cash used in investing activities was $247.5 million, primarily consisting of $164.1 million for the purchase of marketable securities, $131.3 million related to our acquisition of Segmint, $2.8 million related to capitalized software development costs, and capital expenditures related to updates for computer and other equipment of $0.8 million, partially offset by $51.5 million in proceeds from maturities and redemptions of marketable securities.

Net Cash (Used in) Provided by Financing Activities

For the nine months ended September 30, 2023, net cash used in financing activities was $4.8 million, which was primarily due to payments for taxes related to net settlement of equity awards of $11.0 million, principal payments on debt of $2.1 million, payments of holdback funds for acquisitions of $1.0 million and debt issuance costs paid of $0.3 million, partially offset by proceeds of $7.3 million from the exercise of stock options to purchase 1.5 million shares of our common stock and proceeds from issuances under the Employee Stock Purchase Plan (“ESPP”) of $2.4 million.

For the nine months ended September 30, 2022, net cash provided by financing activities was $62.9 million, which was primarily due to proceeds of $85.0 million from issuance of long-term debt, $2.1 million from the exercise of stock options to purchase 0.9 million shares of our common stock, and proceeds from issuances under the ESPP of $1.8 million, partially offset by $24.7 million of principal payments on debt, payments for taxes related to net settlement of equity awards of $0.6 million, and debt issuance costs paid of $0.8 million.

Net cash provided by (used in) operating activities $ 951 $ (9,615)

Net cash provided by investing activities $ 6,808 $ 15,765

Net cash used in financing activities $ (4,507) $ (568)

Net Cash Provided by (Used in) Operating Activities

During the three months ended March 31, 2024, net cash provided by operating activities was $1.0 million, which consisted of a net loss of $11.4 million, adjusted by non-cash charges of $15.8 million and net cash outflows from the change in net operating assets and liabilities of $3.4 million.

The non-cash charges were primarily comprised of depreciation and amortization expense of $2.6 million and stock-based compensation expense of $13.6 million, partially offset by accrued interest on marketable securities, net of $0.3 million and a gain on financial instruments of $0.1 million.

The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $0.2 million increase in accounts receivable, a $1.6 million increase in prepaid expenses and other current assets, a decrease in accounts payable and accrued liabilities of $3.9 million and an increase in deferred costs of $1.3 million, partially offset by an increase of $3.7 million in deferred revenues.

During the three months ended March 31, 2023, net cash used in operating activities was $9.6 million, which consisted of a net loss of $17.0 million, adjusted by non-cash charges of $13.5 million and net cash outflows from the change in net operating assets and liabilities of $6.2 million.

The non-cash charges were primarily comprised of depreciation and amortization expense of $2.6 million and stock-based compensation expense of $11.4 million, partially offset by net other changes in non-cash charges of $0.5 million.

The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $2.2 million increase in accounts receivable, a $2.7 million increase in prepaid expenses and other current assets, a $1.3 million decrease in accounts payable and accrued liabilities and a $0.9 million increase in deferred costs, partially offset by a $0.8 million increase in deferred revenues.

Net Cash Provided by Investing Activities

During the three months ended March 31, 2024, net cash provided by investing activities was $6.8 million, primarily consisting of $15.6 million in proceeds from maturities and redemptions of marketable securities, partially offset by $7.1 million in purchases of marketable securities, $1.4 million related to capitalized software development costs and $0.3 million related to capital expenditures related to updates for computer and other equipment.

During the three months ended March 31, 2023, net cash provided by investing activities was $15.8 million, primarily consisting of $38.1 million in proceeds from maturities and redemption of marketable securities, partially offset by $21.0 million for the purchase of marketable securities, $1.1 million related to capitalized software development costs and capital expenditures related to updates for computer and other equipment of $0.2 million.

Net Cash Used in Financing Activities

For the three months ended March 31, 2024, net cash used in financing activities was $4.5 million, which was primarily due to payments for taxes related to net settlement of equity awards of $5.7 million, partially offset by proceeds of $1.2 million from the exercise of stock options to purchase 0.3 million shares of our common stock.

For the three months ended March 31, 2023, net cash used in financing activities was $0.6 million, which was primarily due to payments for taxes related to net settlement of equity awards of $2.0 million, partially offset by proceeds of $1.4 million from the exercise of stock options to purchase 0.5 million shares of our common stock.

Amended Credit Agreement

On June 27, 2023, the Company entered into a First Amendment (the “First Amendment”) to the Company’s Amended and Restated Credit Agreement dated as of April 29, 2022 (as amended by the First Amendment, the “Amended Credit Agreement”), with SVB, Comerica Bank, and Canadian Imperial Bank of Commerce.

On June 27, 2023, the Company entered into a First Amendment (the “First Amendment”) to the Company’s Amended and Restated Credit Agreement dated as of April 29, 2022 (as amended by the First Amendment, the “Amended Credit Agreement”), with Silicon Valley Bank (“SVB”), Comerica Bank and Canadian Imperial Bank of Commerce.

The First Amendment provided for Citibank, N.A.

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• Revolving Facility:

The Amended Credit Agreement provides $60.0 million in aggregate commitments for secured revolving loans (“Revolving Facility”), of which there were no outstanding borrowings as of September 30, 2023.

A term loan of $85.0 million (the “Term Loan”) was borrowed on April 29, 2022, the proceeds of which were used to replenish cash used to fund the acquisition of Segmint, which closed on April 25, 2022.

On December 29, 2023, the Company paid the remaining outstanding principal balance of its term loan of $82.9 million.

• Accordion Feature:

The Amended Credit Agreement also permits the Company, subject to certain conditions, to request additional revolving loan commitments in an aggregate principal amount of up to $50.0 million, of which there were no outstanding borrowings as of September 30, 2023.

Revolving Facility loans under the Amended Credit Agreement may be voluntarily prepaid and re-borrowed.

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Once repaid or prepaid, the Term Loan may not be re-borrowed.

Debt issuance costs paid for the execution of the Amended Credit Facility were $0.9 million, of which $0.1 million was included in prepaid expenses and other current assets and $0.2 million was included in other assets on the condensed consolidated balance sheets.

Debt issuance costs paid for the execution of the First Amendment were $0.3 million, of which $0.1 million was included in prepaid expenses and other current assets and $0.1 million was included in other assets on the condensed consolidated balance sheets.

The First Amendment added additional covenants that begin each fiscal quarter ending on or after April 29, 2025 (the “Financial Covenant Trigger Date”).

Before the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the Secured Overnight Financing Rate (“SOFR”) plus a margin of 3.00% to 3.50% per annum depending on the applicable recurring revenue leverage ratio.

Before the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the Secured Overnight Financing Rate (the “SOFR”) plus a margin of 3.00% to 3.50% per annum depending on the applicable recurring revenue leverage ratio.

After the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the SOFR plus a margin of 1.50%, 2.00%, 2.50% or 3.00% per annum depending on the applicable consolidated total leverage ratio.

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The First Amendment also added, applicable beginning June 30, 2023, a free cash flow covenant requiring, as calculated at the last day of such fiscal quarter for the period of 12 consecutive months then ending, free cash flow to be not less than $(75.0) million for the fiscal quarters ended June 30, 2023 and September 30, 2023, respectively, and $(50.0) million for the fiscal quarter ended December 31, 2023 and each fiscal quarter ending thereafter.

Total interest expense, including commitment fees and unused line fees, for the three and nine months ended September 30, 2023 was $1.9 million and $5.5 million, respectively, and $1.2 million and $2.3 million for the three and nine months ended September 30, 2022, respectively.

In conjunction with closing the Amended Credit Agreement in 2022 and the First Amendment in 2023, we incurred issuance costs of $0.8 million and $0.3 million, respectively, which were deferred and were scheduled to be amortized over the remaining term of the agreement.

Unamortized debt issuance costs totaled $0.8 million and $0.7 million as of September 30, 2023 and December 31, 2022, respectively.

Amortization expense was $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively, and $0.7 million and $0.9 million for the three and nine months ended September 30, 2022, respectively.

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 March 31, 2024.

On March 26, 2023, the FDIC announced that First-Citizens Bank & Trust Company would assume all of SVB’s deposits and loans as of March 27, 2023.

This resulted in no impact to the Company’s condensed consolidated financial statements or changes to the terms of the Amended Credit Agreement.

Total interest expense, including commitment fees and unused line fees, for the three months ended March 31, 2024 and 2023 was $0.1 million and $1.8 million, respectively.

In conjunction with closing the Amended Credit Agreement in 2022 and the First Amendment in 2023, we incurred issuance costs of $0.8 million and $0.3 million, which were deferred and were scheduled to be amortized over the remaining term of the agreement.

Unamortized debt issuance costs totaled $0.3 million as of both March 31, 2024 and December 31, 2023.

Amortization expense was less than $0.1 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

Contractual Obligations and Commitments

Other than with respect to the Amended Credit Agreement and the Sixth Amendment to the Amended and Restated Office Lease, there were no material changes to our contractual obligations and commitments as of September 30, 2023, compared to those discussed as of December 31, 2022 in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.

There were no material changes to our contractual obligations and commitments as of March 31, 2024, compared to those discussed as of December 31, 2023 in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

During the period presented, we did not have, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Significant Judgments and Estimates

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Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

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 2. Management’s Discussion and Analysis