What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-01 compared with 2020-02-21 · 84 added, 100 removed, 134 unchanged (58% of the section changed)

3 unchanged sentences

Prior to that date, there was no public trading market for our Class A common stock.

As of January 31, 2020, we had 33 holders of record of our Class A and Class B common stock.

As of February 19, 2021, we had 24 holders of record of our Class A and Class B common stock.

The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

15 unchanged sentences

Use of Proceeds from Public Offering of Common Stock

In November 2017 and in connection with our initial public offering (“IPO”), we sold 4,000,000 shares of our Class A common stock at a public offering price of $20.00 per share, including shares sold in connection with the exercise of the underwriters’ option to purchase additional shares.

The offer and sale of all the shares in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No.

333-220945), which was declared effective by the SEC on November 9, 2017.

We received proceeds of $74.4 million, after deducting underwriting discounts and commissions of $5.6 million.

In addition, we incurred expenses of approximately $5.4 million;

thus, the net offering proceeds, after deducting underwriting discounts and offering expenses, were approximately $69.0 million.

Upon the IPO and in accordance with David Morken’s employment agreement, the Chief Executive Officer received a cash bonus of $750,000.

No other payments were made to our directors or officers or their associates, holders of 10% or more of any class of our equity securities or any affiliates, other than payments in the ordinary course of business to officers for salaries.

There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on November 13, 2017 pursuant to Rule 424(b) under the Securities Act.

The underwriters of our initial public offering were Morgan Stanley, KeyBanc Capital Markets, Baird, Canaccord Genuity and JMP Securities.

In March 2019 and in connection with our follow-on public offering, we sold 2,875,000 shares of our Class A common stock, at a public offering price of $54.25 per share, including shares sold in connection with the

exercise of the underwriters’ option to purchase additional shares.

The offer and sale of all the shares in our follow-on public offering were registered under the Securities Act pursuant to a registration statement on Form S-3 (File No.

333-228939), which was declared effective by the SEC on March 8, 2019.

We received proceeds of $147.4 million, after deducting underwriting discounts and commissions of $8.6 million.

In addition, we incurred expenses of approximately $0.8 million;

thus, the net offering proceeds, after deducting underwriting discounts and offering expenses, were approximately $146.6 million.

There has been no material change in the planned use of proceeds from our follow-on public offering as described in our final prospectus filed with the SEC on March 8, 2019 pursuant to Rule 424(b) under the Securities Act.

The underwriters of our follow-on public offering were Morgan Stanley, J.P.

Morgan, KeyBanc Capital Markets, Baird, Canaccord Genuity and JMP Securities.

On October 12, 2020, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) by and among us, Voicebox S.à r.l., a private limited liability company ( société à responsibilité limitée ) incorporated under the laws of Luxembourg (“Voicebox”), Itay Rosenfeld, Stefaan Konings, Dirk Hermans, Gaetan Brichet and Stichting Administratiekantoor Voice, a foundation ( stichting ) incorporated under the laws of the Netherlands (“Stichting” and, together with Voicebox, Itay Rosenfeld, Stefaan Konings, Dirk Hermans and Gaetan Brichet, the “Selling Stockholders”) pursuant to which, among other things, we acquired all of the A Ordinary Shares, B Ordinary Shares and C Ordinary Shares of Voice Topco.

Voice Topco directly or indirectly holds all of the issued and outstanding shares of Voxbone S.A., which (with its subsidiaries) is the operating subsidiary of Voice Topco.

Our board of directors unanimously approved the Share Purchase Agreement on October 5, 2020.

Pursuant to the Share Purchase Agreement, we acquired from the Selling Stockholders, all of the A Ordinary Shares, B Ordinary Shares and C Ordinary Shares of Voice Topco (the “Share Purchase”) in a transaction valued at €446 million.

As consideration for the Share Purchase, we (i) paid the Selling Stockholders approximately $413 million (or approximately €355 million based on prevailing exchange rates at the close of business on October 30, 2020) at the closing of the Share Purchase (the “Closing”) and (ii) issued to the Selling Stockholders at the Closing shares of our Class A common stock, with an aggregate value of approximately €91 million (or approximately $106 million) based on prevailing exchange rates at the close of business on October 30, 2020.

Selected Financial Data

The consolidated statements of operations data for the years ended December 31, 2018, 2019 and 2020 and the consolidated balance sheets as of December 31, 2019 and 2020, are derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The selected consolidated statements of operations data for the years ended December 31, 2015 and 2016 and the consolidated balance sheets data as of December 31, 2015, 2016 and 2017 are derived from audited consolidated financial statements not included in this Annual Report on Form 10-K.

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

18 unchanged sentences

Operating income (loss) 6,752 (17,693) (13,505)

Other (expense) income:

Interest (expense) income, net (589) (908) (1,728) 301 2,446

Other income, net — — — — 23

Total other (expense) income (589) (908) (1,728) 301 2,469

Income (loss) from continuing operations before income taxes 7,373 14,336 12,889 7,053 (15,224)

Income tax (provision) benefit (2) (3) (4) (408) 11,094 (6,918) 10,870 17,718

Income from continuing operations 6,965 25,430 5,971 17,923 2,494

Loss from discontinued operations, net of income taxes (13,665) (3,072) — — —

Net (loss) income $ (6,700) $ 22,358 $ 5,971 $ 17,923 $ 2,494

Other income (expense):

Interest income (expense), net 301 2,446 (13,672)

Other income (expense), net — 23 (1,795)

Total other income (expense) 301 2,469 (15,467)

Income (loss) before income taxes 7,053 (15,224) (28,972)

Income tax benefit (provision) (2) 10,870 17,718 (15,005)

Net income (loss) $ 17,923 $ 2,494 $ (43,977)

Other comprehensive (loss) income

2 unchanged sentences

Total other comprehensive (loss) income (1) 42 27,900

Total comprehensive (loss) income $ (6,700) $ 22,358 $ 5,971 $ 17,922 $ 2,536

Total comprehensive income (loss) $ 17,922 $ 2,536 $ (16,077)

Earnings per share:

Income from continuing operations $ 6,965 $ 25,430 $ 5,971 $ 17,923 $ 2,494

net income allocated to participating securities 931 3,355 644 — —

Income from continuing operations attributable to common stockholders $ 6,034 $ 22,075 $ 5,327 $ 17,923 $ 2,494

Income from continuing operations per share

Basic $ 0.52 $ 1.89 $ 0.42 $ 0.96 $ 0.11

Diluted $ 0.48 $ 1.72 $ 0.37 $ 0.85 $ 0.10

Net (loss) income $ (6,700) $ 22,358 $ 5,971 $ 17,923 $ 2,494

(loss) income allocated to participating securities (896) 2,950 644 — —

Net (loss) income attributable to common stockholders $ (5,804) $ 19,408 $ 5,327 $ 17,923 $ 2,494

Net (loss) income per share:

Net income (loss) per share:

Basic $ 0.96 $ 0.11 $ (1.83)

6 unchanged sentences

(2) Includes 13,484 of excess tax benefits associated with the exercise of stock options and vesting of restricted stock units in the year ended December 31, 2019.

(3) The Company recognized a tax benefit of $14,138 due to the release of the deferred tax asset valuation allowance subsequent to the spin-off of Republic Wireless for the year ended December 31, 2016.

(4) On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law.

As a result of this change in tax law, the Company recorded a remeasurement of its deferred tax assets, which resulted in additional income tax expense of $2,073.

Year ended December 31,

9 unchanged sentences

Consolidated Balance Sheets Data:

2015 2016 2017 2018 2019

(In thousands)

2 unchanged sentences

Total assets 341,416 890,608

Long-term debt and capital lease obligations, net of current portion — 37,738 — — —

Series A redeemable convertible preferred stock 21,818 21,818 — — —

Total stockholders’ (deficit) equity (19,074) (22,374) 76,711 108,770 270,090

Convertible senior notes — 282,196

Total stockholders’ equity 270,090 429,923

Non-GAAP Financial Measures

We use Non-GAAP gross profit, Non-GAAP gross margin, Adjusted EBITDA, Non-GAAP net (loss) income and free cash flow for financial and operational decision making and to evaluate period-to-period differences in our performance.

Non-GAAP gross profit, Non-GAAP gross margin, Adjusted EBITDA, Non-GAAP net (loss) income and free cash flow are non-GAAP financial measures, which we believe are useful for investors in evaluating our overall financial performance.

We use Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP net income (loss), Adjusted EBITDA and free cash flow for financial and operational decision making and to evaluate period-to-period differences in our performance.

Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP net income (loss), Adjusted EBITDA and free cash flow are non-GAAP financial measures, which we believe are useful for investors in evaluating our overall financial performance.

We believe these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key performance indicators used by management in its financial and operational decision making.

4 unchanged sentences

• depreciation and amortization;

• amortization of acquired intangible assets related to acquisitions;

• stock-based compensation.

We add back depreciation and amortization, and stock-based compensation, because they are non-cash items.

We add back depreciation and amortization, amortization of acquired intangible assets related to acquisitions, and stock-based compensation, because they are non-cash items.

We eliminate the impact of these non-cash items because we do not consider them indicative of our core operating performance.

Their exclusion facilitates comparisons of our operating performance on a period-to-period basis.

Therefore, we believe showing gross margin, as Non-GAAP to remove the impact of these non-cash expenses, such as depreciation and amortization and stock-based compensation, is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance.

We believe showing gross margin, as Non-GAAP to remove the impact of these non-cash expenses, such as depreciation and amortization and stock-based compensation, is helpful to investors in assessing our gross profit and gross margin performance in a way that is similar to how management assesses our performance.

We calculate Non-GAAP gross margin by dividing Non-GAAP gross profit by revenue, expressed as a percentage of revenue.

6 unchanged sentences

Consolidated Gross Profit $ 95,968 $ 107,635 $ 157,861

Consolidated Gross Profit Margin % 47 % 46 % 46 %

Depreciation 4,490 6,583 9,536

Amortization of acquired intangible assets — — 1,445

Stock-based compensation 114 211 208

5 unchanged sentences

CPaaS Gross Profit $ 70,119 $ 87,601 $ 137,384

CPaaS Gross Profit Margin % 43 % 44 % 46 %

Depreciation 4,490 6,583 9,536

Amortization of acquired intangible assets — — 1,445

Stock-based compensation 114 211 208

2 unchanged sentences

There are no Non-GAAP adjustments to gross profit for the Other segment .

Adjusted EBITDA

We define Adjusted EBITDA as net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain income statement items including, but not limited to:

• income tax provision (benefit);

• interest expense (income), net;

• depreciation and amortization expense;

• stock-based compensation expense;

• impairment of intangible assets, if any;

• loss (gain) on disposal of property and equipment, if any.

Adjusted EBITDA is a key measure u sed by management to understand and evaluate our core operating performance and trends, to generate future operating plans and to make strategic decisions regarding the allocation of capital.

In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis.

Year ended December 31,

2015 2016 2017 2018 2019

(In thousands)

Income from continuing operations $ 6,965 $ 25,430 $ 5,971 $ 17,923 $ 2,494

Income tax provision (benefit) (1) 408 (11,094) 6,918 (10,870) (17,718)

Interest expense (income), net 589 908 1,728 (301) (2,446)

Depreciation 6,167 5,251 4,873 5,270 9,018

Amortization 908 891 839 554 520

Stock-based compensation 3,493 1,370 1,803 3,339 6,626

Impairment of intangible asset — 695 — — —

Loss on disposal of property and equipment 382 19 91 191 456

Adjusted EBITDA $ 18,912 $ 23,470 $ 22,223 $ 16,106 $ (1,050)

________________________

(1) Includes excess tax benefits associated with the exercise of stock options and vesting of restricted stock units of $11,887 and $13,484 for the years ended December 31, 2018 and 2019, respectively.

Non-GAAP Net (Loss) Income

We define Non-GAAP net (loss) income as net income or loss adjusted for certain items affecting period-to-period comparability.

Non-GAAP net (loss) income excludes:

Non-GAAP Net Income (Loss)

We define Non-GAAP net income (loss) as net income or loss adjusted for certain items affecting period-to-period comparability.

Non-GAAP net income (loss) excludes:

• stock-based compensation;

• amortization of acquired intangible assets related to the acquisition of Dash Carrier Services, LLC;

• amortization of acquired intangible assets related to acquisitions;

• amortization of debt discount and issuance costs for convertible debt;

• acquisition related expenses;

• impairment charges of intangibles assets , if any ;

1 unchanged sentence

• estimated tax impact of above adjustments;

• income tax benefit resulting from excess tax benefits associated with the exercise of stock options and vesting of restricted stock units;

• benefit resulting from the release of the valuation allowance on our deferred tax assets.

• income tax benefit resulting from excess tax benefits associated with the exercise of stock options, vesting of restricted stock units and equity compensation;

• expense resulting from recording the valuation allowance on our deferred tax assets.

We calculate Non-GAAP basic and diluted shares by adding the weighted average of outstanding Series A redeemable convertible preferred stock, if any, to the weighted average number of outstanding basic and diluted shares, respectively.

We believe Non-GAAP net (loss) income is a meaningful measure because by removing certain non-cash and other expenses we are able to evaluate our operating results in a manner we believe is more indicative of the current period’s performance.

We believe the use of Non-GAAP net (loss) income may be helpful to investors because it provides consistency and comparability with past financial performance, facilitates period-to-period comparisons of results of operations and assists in comparisons with other companies, many of which may use similar non-GAAP financial information to supplement their GAAP results.

The tax-effect of Non-GAAP adjustments is determined using a blended rate of statutory tax rates in the jurisdictions where the Company has tax filings.

When the Company has a valuation allowance recorded and no tax benefits will be recognized, the rate is considered to be zero.

We believe Non-GAAP net income (loss) is a meaningful measure because by removing certain non-cash and other expenses we are able to evaluate our operating results in a manner we believe is more indicative of the current period’s performance.

We believe the use of Non-GAAP net income (loss) may be helpful to investors because it provides consistency and comparability with past financial performance, facilitates period-to-period comparisons of results of operations and assists in comparisons with other companies, many of which may use similar Non-GAAP financial information to supplement their GAAP results.

Year ended December 31,

1 unchanged sentence

(In thousands)

Net (loss) income $ (6,700) $ 22,358 $ 5,971 $ 17,923 $ 2,494

Net income (loss) $ 17,923 $ 2,494 $ (43,977)

Stock-based compensation 3,339 6,626 9,881

Amortization related to acquisitions 520 520 520 520 520

Impairment of intangible asset — 695 — — —

Amortization of acquired intangibles 520 520 3,666

Amortization of debt discount and issuance costs for convertible debt — — 15,565

Acquisition-related expenses — — 14,458

Loss on disposal of property and equipment 191 456 334

Estimated tax effects of adjustments (1) (1,038) (1,914) (758)

Release of valuation allowance (2) (14,138) — — —

Valuation allowance (2) — — 15,024

Income tax benefit of equity compensation (11,887) (13,484) —

Remeasurement of deferred tax assets associated with tax rate change (3) — — 2,073 — —

Non-GAAP net (loss) income $ (2,305) $ 9,830 $ 9,537 $ 9,048 $ (5,302)

Non-GAAP net (loss) income per Non-GAAP share

Non-GAAP net income (loss) $ 9,048 $ (5,302) $ 14,193

Net income (loss) per share

Basic $ 0.96 $ 0.11 $ (1.83)

Diluted $ 0.85 $ 0.10 $ (1.83)

Non-GAAP weighted average number of shares outstanding

Non-GAAP net income (loss) per Non-GAAP share

Basic $ 0.49 $ (0.23) $ 0.59

Series A redeemable convertible preferred stock outstanding 1,775,000 1,775,000 1,522,123 — —

Non-GAAP basic shares 13,272,727 13,453,568 14,112,344 18,573,067 22,640,461

Diluted $ 0.43 $ (0.23) $ 0.55

Series A redeemable convertible preferred stock outstanding 1,775,000 1,775,000 1,522,123 — —

Non-GAAP weighted average number of shares outstanding

Non-GAAP basic shares 18,573,067 22,640,461 24,092,574

Warrants to purchase common stock 7,726 — —

Convertible debt conversion — — 1,022,941

Stock options issued and outstanding 2,375,424 — 443,738

Nonvested RSUs outstanding 184,165 — 352,854

Non-GAAP diluted shares 21,140,382 22,640,461 25,912,107

________________________

(1) The Company had a full valuation allowance against its deferred tax assets for the year ended December 31, 2015.

(2) The Company recognized a tax benefit of $14,138 due to the release of the deferred tax asset valuation allowance subsequent to the spin-off of Republic Wireless for the year ended December 31, 2016.

(3) On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law.

As a result of this change in tax law, the Company recorded a remeasurement of its deferred tax asset, which resulted in additional income tax expense of $2,073.

(1) The Non-GAAP tax-effect is determined using a blended rate of statutory tax rates in the jurisdictions where the Company has tax filings.

When the Company has a valuation allowance recorded and no tax benefits will be recognized, the rate in that jurisdiction is considered to be zero.

The rate was 28.6%, 25.2%, 1.8% for the years ended December 31, 2018, 2019 and 2020, respectively.

(2) The Company recognized a tax expense of $0 and $15,024 to record a valuation allowance on U.S.

deferred tax assets in the years ended December 31, 2019 and 2020, respectively.

Adjusted EBITDA

We define Adjusted EBITDA as net income or losses from continuing operations, adjusted to reflect the addition or elimination of certain income statement items including, but not limited to:

• income tax provision (benefit);

• interest (income) expense, net;

• depreciation and amortization expense;

• acquisition related expenses;

• stock-based compensation expense;

• impairment of intangible assets, if any;

• loss (gain) on disposal of property and equipment, if any.

In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis.

Year ended December 31,

2018 2019 2020

(In thousands)

Net income (loss) $ 17,923 $ 2,494 $ (43,977)

Income tax (benefit) provision (1) (2) (10,870) (17,718) 15,005

Interest (income) expense, net (301) (2,446) 13,672

Depreciation 5,270 9,018 13,137

Amortization 554 520 3,666

Acquisition-related expenses — — 14,458

Stock-based compensation 3,339 6,626 9,881

Loss on disposal of property and equipment 191 456 334

Adjusted EBITDA $ 16,106 $ (1,050) $ 26,176

________________________

(1) Includes excess tax benefits associated with the exercise of stock options and vesting of restricted stock units of $11,887, $13,484, and $0 in the years ended December 31, 2018, 2019 and 2020, respectively.

(2) Includes $0, $0, and $15,024 of tax expense to record a valuation allowance on U.S.

deferred tax assets in the years December 31, 2018, 2019 and 2020, respectively .

Free Cash Flow

13 unchanged sentences

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity