What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-11 compared with 2024-04-01 · 346 added, 329 removed, 718 unchanged (48% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Stockholders and Board of Directors

Backblaze, Inc.

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We have audited the accompanying consolidated balance sheets of Backblaze, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Th ese consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

28 unchanged sentences

42,949 45,600

Operating lease right-of-use assets 9,980 6,881

Operating lease right-of-use assets, net 15,873 9,980

Capitalized internal-use software, net

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Stockholders’ Equity

Preferred stock, 0.0001 par value;

10,000,000 shares authorized as of December 31, 2024 and 2023;

zero shares issued and outstanding as of December 31, 2024 and 2023.

Class A common stock, $ 0.0001 par value;

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Class B common stock, 0.0001 par value;

295,986 and 37,000,000 shares authorized as of December 31, 2023 and 2022;

zero and 17,195,404 shares issued and outstanding as of December 31, 2023 and 2022, respectively.

295,986 shares authorized as of December 31, 2024 and 2023;

zero shares issued and outstanding as of December 31, 2024 and 2023

Additional paid-in capital

6 unchanged sentences

$ 168,558 $ 131,687

See accompanying notes, which are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

BACKBLAZE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

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Investment income 1,422 1,984

Interest expense ( 3,792 ) ( 4,289 )

Interest expense, net ( 3,658 ) ( 3,792 )

Loss before provision for income taxes

( 48,525 ) ( 59,713 )

Income tax benefit — ( 39 )

Income tax provision 6 —

Net loss and comprehensive loss

$ ( 48,531 ) $ ( 59,713 )

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43,543,023 36,011,446

(1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of shares of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation.

(1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation.

No additional shares of Class B common stock will be issued following such conversion.

See Note 13 for further details.

See accompanying notes, which are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

BACKBLAZE, INC.

1 unchanged sentence

(in thousands, except share data)

Class A and Class B Common Stock (1)

Class A Common Stock (1)

Shares Amount

2 unchanged sentences

Net loss — — — ( 59,713 ) ( 59,713 )

Issuance of Class A and Class B common stock upon exercise of stock options 2,112,819 1 4,407 — 4,408

Issuance of Class A common stock under 2021 Plan, net of taxes withheld 321,720 — ( 130 ) — ( 130 )

Issuance of Class A common stock upon exercise of stock options 2,446,846 — 4,613 — 4,613

Issuance of Class A common stock under 2021 Plan 2,327,073 — — — —

Issuance of Class A common stock related to the 2021 Employee Stock Purchase Plan ("ESPP") 695,046 — 2,339 — 2,339

Issuance of restricted stock units related to the 2022 Bonus Plan (See Note 14) 287,908 — 1,848 — 1,848

Stock-based compensation — — 27,103 — 27,103

2 unchanged sentences

Net loss — — — ( 48,531 ) ( 48,531 )

Issuance of Class A common stock upon exercise of stock options 2,446,846 — 4,613 — 4,613

Issuance of Class A common stock under 2021 Plan 2,327,073 — — — —

Issuance of Class A common stock related to ESPP 695,046 — 2,339 — 2,339

Issuance of shares of common stock upon public offering, net of underwriting discounts and commissions and other offering costs 7,187,500 1 36,980 — 36,981

Issuance of common stock upon exercise of stock options 2,526,902 — 7,537 — 7,537

Issuance of common stock under 2021 Plan 3,434,104 — — — —

Issuance of common stock related to ESPP 780,206 — 2,768 — 2,768

Issuance of restricted stock units related to the 2023 Bonus Plan (See Note 14) 296,448 — 3,507 — 3,507

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See Note 13 for further details.

See accompanying notes, which are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

BACKBLAZE INC.

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$ ( 48,531 ) $ ( 59,713 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net accretion of discount on investment securities and net realized investment gains

2 unchanged sentences

28,328 24,912

Impairment loss on right-of-use assets 898 —

Stock-based compensation

1 unchanged sentence

Impairment of capitalized internal-use software — 232

(Gain) loss on disposal of assets ( 292 ) 37

Gain on disposal of property and equipment ( 154 ) ( 292 )

Other, net 345 —

Changes in operating assets and liabilities:

9 unchanged sentences

Operating lease liabilities ( 2,588 ) ( 2,464 )

Other long-term liabilities

Net cash used in operating activities ( 7,350 ) ( 13,781 )

Net cash provided by (used in) operating activities 12,505 ( 7,350 )

CASH FLOWS FROM INVESTING ACTIVITIES

5 unchanged sentences

( 12,471 ) ( 14,716 )

Net cash provided by (used in) investing activities 21,657 ( 73,854 )

Net cash (used in) provided by investing activities ( 6,131 ) 21,657

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on finance lease and lease financing obligations ( 19,503 ) ( 19,510 )

Payments of deferred offering costs — ( 658 )

Proceeds from issuance of common stock upon public offering, net of underwriting discounts and commission and other offering costs 37,434 —

Payments of offering costs ( 383 ) —

Proceeds from debt facility 554 4,273

3 unchanged sentences

Proceeds from lease financing obligations — 4,450

Employee payroll taxes paid related to net settlement of equity awards — ( 130 )

Proceeds from exercises of stock options 7,477 4,708

Proceeds from ESPP 2,768 2,339

Net cash used in financing activities ( 8,842 ) ( 6,212 )

Net increase (decrease) in cash, restricted cash and restricted cash, non-current 5,465 ( 93,847 )

Cash, restricted cash, current and restricted cash, non-current at beginning of period 11,165 105,012

Cash, restricted cash, current and restricted cash, non-current at end of period $ 16,630 $ 11,165

Net cash provided by (used in) financing activities 22,772 ( 8,842 )

Net increase in cash 29,146 5,465

Cash and cash equivalents and restricted cash, at beginning of period 16,630 11,165

Cash and cash equivalents, at end of period $ 45,776 $ 16,630

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents

$ 45,776 $ 12,502

Restricted cash, non-current $ — $ 4,128

Total cash and cash equivalents and restricted cash, non-current $ 45,776 $ 16,630

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Stock-based compensation included in capitalized internal-use software

$ 4,960 $ 2,674

Stock-based compensation included in property and equipment and capitalized internal-use software $ 3,991 $ 4,960

Accrued bonus settled in restricted stock units $ 3,507 $ 1,848

Accrued bonus classified as stock-based compensation $ 3,034 $ 1,852

Financed insurance premiums included in accrued expenses and other current liabilities $ — $ 1,545

Bonus plan expense classified as stock-based compensation $ 2,248 $ 3,034

Equipment acquired through finance lease and lease financing obligations $ 17,105 $ 13,094

Accruals related to purchases of property and equipment

Lease liabilities arising from right-of-use assets upon adoption of ASC 842 $ — $ 5,220

Assets obtained in exchange for operating lease obligations $ 9,206 $ 5,448

Receivable recorded due to stock option exercises pending settlement $ 18 $ 156

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents

$ 12,502 $ 6,690

Restricted cash – included in prepaid expenses and other current assets $ — $ 169

Restricted cash, non-current $ 4,128 $ 4,306

Total cash, cash equivalents, restricted cash, current and restricted cash, non-current $ 16,630 $ 11,165

See accompanying notes, which are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

BACKBLAZE INC.

6 unchanged sentences

Backblaze was incorporated in the state of Delaware on April 20, 2007 and is headquartered in San Mateo, California.

Follow-On Offering

On November 20, 2024, the Company issued and sold an aggregate of 6,250,000 shares of the Company’s Class A common stock, par value $ 0.0001 per share (the “Common Stock”) at a public offering price of $ 5.60 per share (the “Follow-On Offering”).

The Company also granted the underwriters an option to purchase up to an additional 937,500 shares of Common Stock at the same per-share price of $ 5.60 per share.

The underwriters exercised their option to purchase the additional shares.

The Company received net proceeds of $ 37.4 million from the Follow-On Offering, after deducting the underwriting discounts and commissions and other offering expenses.

Offering costs of $ 0.5 million, which consisted of direct incremental legal, accounting, and consulting fees were incurred by the Company in connection with the Follow-On Offering.

These costs were offset against the proceeds from the Follow-On Offering.

Basis of Presentation and Summary of Significant Accounting Policies

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All intercompany balances and transactions have been eliminated in consolidation.

The Company’s fiscal year ends on December 31.

Emerging Growth Company

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Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes.

Such estimates and assumptions include the costs to be capitalized as internal-use software, which include determining whether projects will result in new or additional functionality, the useful lives of other long-lived assets, impairment considerations for long-lived assets, the incremental borrowing rate for lease agreements, lease and non-lease component allocation, estim ates related to variable consideration, valuation of the Company’s Employee Stock Purchase Plan (“ESPP”) expense, and accounting for taxes, including estimates for deferred tax assets, valuation

allowance, and uncertain tax positions.

accompanying notes.

Such estimates and assumptions include the costs to be capitalized as internal-use software, which include determining whether projects will result in new or additional functionality, the useful lives of other long-lived assets, impairment considerations for long-lived assets, the incremental borrowing rate for lease agreements, lease and non-lease component allocation, estim ates related to variable consideration, valuation of the Company’s Employee Stock Purchase Plan (“ESPP”) expense, and accounting for income taxes, including estimates for deferred tax assets, valuation allowance, and uncertain tax positions.

The Company bases its estimates on historical experience and on assumptions that management considers reasonable.

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The functional currency of the Company and its subsidiaries is USD.

Transaction gains and losses that arise from exchange rate fluctuations on monetary transactions denominated in a currency other than the functional currency are included in general and administrative on the consolidated statements of operations when realized.

Concentrations and Risks and Uncertainties

The Company believes that its existing cash, cash equivalents and short-term investments together with cash provided by operations, will be sufficient to support its working capital and capital expenditure requirements for at least the next 12 months.

However, to achieve its continued growth and objectives, the Company will need to obtain additional sources of financing which may include entering into lease agreements, sale-leaseback arrangements, credit facilities, and other debt financing arrangements for the purpose of acquiring infrastructure equipment and to fund its operations.

In the event that the Company requires additional financing, it may not be able to raise such financing on terms acceptable to us or at all.

If the Company is unable to obtain additional sources of financing, raise additional capital or generate cash flows necessary to expand its operations and invest in continued innovation, it may not be able to compete successfully, which would harm its business, results of operations and financial condition.

Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents, accounts receivable, short-term investments, and unbilled accounts receivable.

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For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amount recorded on the consolidated balance sheets.

In addition, the Company uses City National Bank, a subsidiary of Royal Bank of Canada (“RBC”), for its banking needs.

While the Company and its bank has not been directly affected by the failures of certain banks, the banking industry overall has experienced disruption and uncertainty, which could put additional pressures on the Company’s bank and other banks, and may negatively impact the availability and costs for various banking and investment offerings.

The Company does not have separate collateral requirements to support financial instruments subject to credit risk.

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Vendors may have limited sources of equipment and supplies, which may expose the Company to potential supply and service disruptions that could harm the Company’s business.

The following table presents concentrations related to the Company’s cash disbursements, accounts payable transactions, and accounts receivable transactions.

For the Years Ended December 31

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Total accounts payable balance represented by vendors listed above 14 % 30 %

Accounts Receivable Concentration

Number of customers

Total accounts receivable balance represented by customers listed above

The Company derives substantially all of its revenue from the services operating on its Backblaze Storage Cloud platform:

1 unchanged sentence

The potential for severe impact to the Company’s business could result if the Company was unable to operate its platform or serve customers through its platform, for an extended period of time.

No customer accounted for more than 10% of the Company’s revenues during the years ended December 31, 2024 and 2023.

Restructuring

Restructuring costs are comprised of severance costs related to workforce reductions.

Restructuring charges are comprised of severance costs related to workforce reductions and facilities costs related to the Company’s partial exit from leased space at its corporate headquarters.

The Company recognizes restructuring charges when the liability is incurred.

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The Company derives its revenue primarily from fees earned from customers accessing these offerings through its platform.

These fees are paid monthly in arrears for its consumption-based arrangements related to its B2 Cloud Storage offering, or charged upfront for subscription-based arrangements related to its Computer Backup and B2 Cloud Storage offerings.

The Company provides services to its customers under Computer Backup subscription-based arrangements of one month , one-year , and two-years , which automatically renew at the end of the respective term.

These fees are primarily paid monthly in arrears for its consumption-based, or capacity based, arrangements related to its B2 Cloud Storage offering, or charged upfront for subscription-based arrangements related to its Computer Backup and B2 Cloud Storage offerings.

The Company provides services to its customers under Computer Backup subscription-based arrangements o f one month , one-year , and two-years , which automatically renew at the end of the respective term.

The Company generally provides services to its customers under its B2 Cloud Storage subscription-based offering arrangements of one-year to five-years .

The Company also recognizes revenue from products offered to its customers for the ability to securely restore data using a USB drive (“USB Restore”) and for migrating large data sets to its platform using its proprietary Fireball device.

The Company also recognizes revenue fro m products offered to its customers for the ability to securely restore data using a USB drive (“USB Restore”) and for migrating large data sets to its platform using its proprietary Fireball device.

The Company refers to these products as its “Physical Media revenue”.

Physical Media revenue was less than 1 % of the Company’s revenue for the years ended December 31, 2023 and 2022.

Physical Media revenue was less than 1 % of the Company’s revenue for each of the years ended December 31, 2024 and 2023.

The Company’s monthly subscription arrangements do not provide customers with refund rights.

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Identify the contract with a customer.

The Company considers the terms and conditions of the contracts and its customary business practices in identifying its contracts under ASC 606.

The Company considers the terms and conditions of the contracts and its customary business practices in identifying its contracts under Accounting Standards Codification (“ASC”) 606.

The Company determines it has a contract with a customer when:

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• it can identify each party’s rights regarding the services to be transferred and the payment terms for the services;

• it has determined the customer to have the ability and intent to pay, and

• it has determined the customer to have the ability and intent to pay;

• the contract has commercial substance;

The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors;

however, as approximately 92 % and 96 % of the Company ’s revenue was generated from customers paying via credit card during the years ended December 31, 2023 and 2022, respectively, the risk of non-payment is low and historical write-offs having been immaterial.

• it is probable the Company will collect substantially all of the consideration in the contract.

The Company applies judgm ent in determining the customer’s ability and intent to pay, which is based on a variety of factors;

however, as a substantial portion of the Company ’s revenue was generated from customers paying via credit card during the years ended December 31, 2024 and 2023, respectively, the risk of non-payment is low and historical write-offs having been immaterial.

Identify the performance obligations in the contract.

Performance obligations promised in a contract are identified based on the services and products that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract.

The Company’s contracts typically contain a single distinct performance obligation

representing one of its Backblaze Storage Cloud platform offerings, which includes either B2 Cloud Storage or Computer Backup services and related customer support.

The Company’s contracts typically contain a single distinct performance obligation representing one of its Backblaze Storage Cloud platform offerings, which includes either B2 Cloud Storage or Computer Backup services and related customer support.

Customers also have the option to purchase a USB device for USB Restore and rental of its Fireball device at the standalone selling price (“SSP”).

Determine the transaction price.

The transaction price is determined based on the consideration the Company expects to receive in exchange for transferring services to the customer.

The transaction price is determined based on the consideration the Company expects to receive in exchange for transferring services and products to the customer.

Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur.

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Contracts that contain multiple distinct performance obligations require an allocation of the transaction price to each performance obligation based on a relative SSP.

The Company determines SSP for performance obligations based on the price it sells a good or service separately.

The Company determines SSP for performance obligations based on the price it sells a service or product separately.

Recognize revenue when or as the Company satisfies a performance obligation.

Revenue is recognized based on the output method when control of the services is transferred to the customer and in an amount that reflects the consideration the Company expects to receive in exchange for those services.

Performance obligations are satisfied over time when the customer simultaneously receives and consumes the benefits as the entity performs.

Performance obligations are satisfied over time when the customer simultaneously receives and consumes the benefits as the Company performs.

Revenue is generally recognized over the common measure of progress (i.e., time-based or consumption-based) for the entire performance obligation.

Revenue from subscription-based arrangements is recognized on a straight-line basis over the contractual term beginning on the date that the service commences, as customers are entitled to the same benefits throughout the contractual term.

Fees from consumption-based arrangements are recognized as services are delivered based on the amount of daily storage consumed.

Fees from consumption-based arrangements are generally recognized as services are delivered based on the amount of daily storage consumed.

Revenue for USB Restore is recognized as USB devices are delivered to customers, and recognition of the Company’s Fireball device rental is time-based.

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Separately, under its consumption-based arrangements, the Company does not charge customers until at least 10 gigabytes of data have been stored.

The Company applied the opti onal exemption of not disclosing the transaction price allocated to the remaining performance obligations for its consumption-based contracts and contracts with original duration of one year or less.

The non-current deferred revenue balance of $ 5.1 million on the Company’s consolidated balance sheet as of December 31, 2024 will be recognized starting in 2026 and going forward.

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For revenue generated from arrangements that involve third-parties, the Company evaluates whether it is the principal or the agent based on maintaining control over the services being provided and maintaining the relationship with the end-customer.

Substantially all of the Company’s revenue is reported on a gross basis, as the Company is the principal.

The Company’s revenue is reported on a gross basis, as the Company is the principal.

Cost of Revenue

Cost of revenue includes costs directly associated with the delivery of services and products, which consists of expenses for providing Backblaze’s platform to its customers.

These expenses include rent and utilities for operating in co-location facilities, network and bandwidth costs, shipping and handling for Physical Media revenue, depreciation of the Company’s equipment and capital lease assets in co-location facilities and other infrastructure expenses incurred in connection with its customers’ use of its services.

The Company periodically receives discounts from third-party vendors that are recorded as a reduction to cost of revenue on its consolidated statements of operations.

These expenses include rent and utilities for operating in co-location facilities, personnel costs, network and bandwidth costs, shipping and handling for Physical Media revenue, depreciation of the Company’s equipment and capital lease assets in co-location facilities and other infrastructure expenses incurred in connection with its customers’ use of its services.

The Company periodically receives discounts from third-party vendors that are recorded as a reduction to cost of revenue on its consolidated statements of operations and comprehensive loss.

Personnel-related costs associated with customer support and maintaining service availability include salaries, benefits, bonuses and stock-based compensation.

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Advertising Costs

Advertising costs are expensed as incurred and are included in sales and marketing expenses in the consolidated statements of operations.

These costs were approximate ly $ 3.6 million and $ 5.7 million for the years ended December 31, 2023 and 2022, respectively.

Advertising costs are expensed as incurred and are included in sales and marketing expenses in the consolidated statements of operations and comprehensive loss.

These costs were $ 4.2 million and $ 3.6 million for the years ended December 31, 2024 and 2023, respectively.

The Company accounts for income taxes using the asset and liability method.

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Where interpretation of the tax law may be uncertain, the Company recognizes, measures and discloses income tax uncertainties.

The Company accounts for interest expense and penalties related to unrecognized tax benefits as income tax expense in its consolidated statements of operations.

The Company accounts for interest expense and penalties related to unrecognized tax benefits as income tax expense in its consolidated statements of operations and comprehensive loss.

The Company is subject to periodic audits by the Internal Revenue Service and other taxing authorities, which may challenge tax positions taken by the Company.

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The Company recognizes compensation cost for its awards on a straight-line basis over the requisite service period, which is generally a vesting period of one to four years , except for the awards granted under the Company’s 2022 Bonus Plan (see Note 14).

Share-based compensation includes restricted stock units (“RSUs”), stock option grants and stock purchase rights under the ESPP.

Stock-based compensation includes restricted stock units (“RSUs”), stock option grants and stock purchase rights under the Employee Stock Purchase Plan (“ESPP”).

The Company uses the Black-Scholes option pricing model to measure the fair value of its stock options and the stock purchase rights under the ESPP.

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Cash equivalents are primarily recorded at cost, which approximates fair value due to their short maturities.

The classification of the Company’s cash and cash equivalents is Level 1 within the valuation hierarchy.

Restricted Cash

A s of December 31, 2022, the Compa ny had $ 169 thousand in restricted cash related to the letter of credit established according to requirements under a lease agreement, reported as a component of other current assets on the consolidated balance sheets.

As of December 31, 2023, this balance is no longer restricted as the lease agreement and associated letter of credit have been completed.

Additionally, the Company had $ 4.1 million and $ 4.3 million in restricted cash as of December 31, 2023 and 2022 , respectively, related to the line of credit agreement with City National Bank.

The Company had restricted cash of $ 4.1 million related to the line of credit agreement with City National Bank as of December 31, 2023 .

The Company did no t have a restricted cash balance as of December 31, 2024.

See Note 12 for further details.

Investments, net

The Company holds all investments on a held-to-maturity basis, and they are reported at amortized cost with realized gains or losses reported in earnings.

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The Company uses a roll-rate method to determine the estimated credit losses using factors including historical global average default rates and expected recovery rates on similar credit quality, bond maturity and duration, along with historical experience, current conditions, and forecasts of future economic conditions, if available.

The Company monitors the credit profile of its held-to-maturity securities on a quarterly basis, using third party data to assess their credit ratings as well as any adverse conditions specifically related to the security.

The allowance for credit losses is less than $ 1 thousand for the year ended December 31, 2023.

The Company monitors the credit profile of its held-to-maturity securities on a periodic basis, using third party data to assess their credit ratings as well as any adverse conditions specifically related to the security.

The allowance for credit losses was a nominal amount for the years ended December 31, 2024 an d 2023.

The Company’s short-term investments include investment grade commercial paper with original maturities of 365 days or less at the date of purchase.

Short-term investments are recorded at amortized cost on the consolidated balance sheets.

Short-term investments are recorded at amortized cost on the consolidated balance sheet.

Fair Value of Financial Instruments

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Accounts receivable are recorded net of an allowance when the Company has an unconditional right to payment.

The Company adopted the current expected credit loss model ("CECL") as prescribed by Accounting Standards Update 2016-13 on January 1, 2023.

Under CECL, accounts receivable are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection.

The allowance is estimated based on the Company’s assessment of its ability to collect on customer accounts receivable and are $ 8 thousand and $ 13 thousand as of December 31, 2023 and 2022, respectively.

The provision totaled $ 30 thousand and zero for the years ending December 31, 2023 and 2022, respectively.

Direct write-offs totaled $ 35 thousand and zero for the years ending December 31, 2023 and 2022, respectively.

Recoveries totaled zero and $ 22 thousand for the years ending December 31, 2023 and 2022, respectively.

Under the current expected credit losses model, accounts receivable are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection.

The allowance is estimated based on the Company’s assessment of its ability to collect on customer accounts receivable.

The allowance wa s a nominal amount as of December 31, 2024 and 2023.

The provision, direct write-offs, and recoveries were also nominal for the years ended December 31, 2024 and 2023.

The Company regularly reviews the allowance by considering certain factors such as historical experience, credit quality, age of accounts receivable balances and other known conditions that may affect a customer’s ability to pay.

The Company records changes in the estimate to the allowance for expected credit losses through provision for expected credit losses when a determination is made that the balance is uncollectible and collection of the receivable is no longer being actively pursued.

Unbilled Accounts Receivable

Unbilled accounts receivable represents revenue recognized on contracts for which billings have not yet been presented to customers due to consumption-based usage that is billed monthly in arrears.

Substantially all of the Company’s unbilled

accounts receivable is charged via a credit card upon billing.

Unbilled accounts receivable represents recognized and unbilled revenue for consumption-based contracts that is billed monthly in arrears.

Substantially all of the Company’s unbilled accounts receivable is charged via a credit card upon billing.

Unbilled accounts receivable is included in prepaid expenses and other current assets on the consolidated balance sheets.

The balance of unbilled accounts receivable as of December 31, 2024 and 2023 is presented in Note 6.

Deferred Offering Costs

Deferred offering costs, which consist of direct incremental legal, accounting and consulting fees relating to the Company’s IPO, are capitalized in other assets on the consolidated balance sheets.

The deferred offering costs were offset against IPO proceeds upon the consummation of the IPO.

Deferred Contract Costs

Commissions paid to affiliates for new customers or customer renewals are considered incremental and recoverable costs of obtaining a contract with a customer.

These costs are recorded when earned and are amortized over the expected benefit period using the straight-line method.

As renewal commission is commensurate with a commission in an initial sale, such amounts are capitalized and amortized over the stated contract term.

Capitalized commission amounts expected to be recognized within one year of the balance sheet date are recorded as prepaid expenses and other current assets, and the remaining portion is recorded as other assets, on the Company’s consolidated balance sheets.

Expenses for commissions are included in sales and marketing expenses in the consolidated statements of operations.

Sales commissions and related taxes and benefits earned by our sales force as well as sales commission earned by marketing affiliates are considered incremental and recoverable costs of obtaining a contract with a customer.

Sales commissions for new contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have estimated to be five years .

We determined the period of benefit by taking into consideration the duration of our customer contracts, our customer retention rate and the technology development life cycle.

Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related contractual renewal period.

Amortization expense is included in sales and marketing expenses on the consolidated statements of operations and comprehensive loss.

Property and Equipment, Net

Property and equipment, both owned and under capital leases, are stated at cost, less accumulated depreciation, which is computed on a straight-line basis over the asset’s estimated useful life.

Leasehold improvements are depreciated over the shorter of the useful life of the asset or expected lease term.

Leasehold improvements are amortized over the shorter of the useful life of the asset or expected lease term.

Improvements that increase functionality of the asset are capitalized and depreciated over the asset’s remaining useful life.

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The Company determines the useful lives of identifiable project assets after considering the specific facts and circumstances related to each project.

The amortization of costs related to the platform applications is included in cost of revenue in the consolidated statements of operations.

The amortization of costs related to the platform applications is included in cost of revenue in the consolidated statements of operations and comprehensive loss.

Significant judgments related to the capitalization of software costs include determining whether it is probable that projects will result in new or additional functionality.

Impairment of Long-lived Assets

Long-lived assets with finite lives include property and equipment, capitalized internal-use software, and certain implementation costs incurred for cloud computing arrangements.

Long-lived assets with finite lives include property and equipment, capitalized internal-use software, certain implementation costs incurred for cloud computing arrangements, and right-of-use assets.

The Company evaluates these long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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Accounting Pronouncements Recently Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires a financial asset measured at an amortized cost basis be presented at the net amount expected to be collected.

For accounts receivables, unbilled receivables, loans, and other financial instruments, the Company is required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable.

The Company adopted the guidance effective January 1, 2023 using the modified retrospective transition method with comparative periods continuing to be reported using the previous applicable guidance and determined that it did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted.

The Company is currently evaluating the impact of the adoption of this standard.

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure .” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance.

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It is required to be adopted retrospectively for all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its disclosures.

Deferred Contract Costs

The following table presents the Company’s amortization of deferred contract costs (in thousands):

For the Years Ended

Amortization of deferred contract costs

Deferred contract costs

Deferred Revenue

The following table presents information regarding the Company’s deferred revenue (in thousands):

Deferred revenue

$ 30,049 $ 25,523

For the Years Ended December 31,

Total revenue recognized, included in each deferred revenue balance at the beginning of each respective period

$ 22,983 $ 21,764

The Company’s deferred revenue as stated on the consolidated balance sheets presented approximates its contract liability balance as of December 31, 2023 and 2022.

The Company’s total deferred revenue balance as of December 31, 2023 , approximates the aggregate amount of the transaction price allocated to remaining performance obligations (“RPOs”) as of that date.

As of December 31, 2023 , the Company’s RPOs were $ 33.1 million.

This amount includes deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied, as well as future committed revenue for periods within current contracts with customers.

As of December 31, 2023, the Company expects to recognize $ 27.6 million or approximately 84 % of its RPOs over the next 12 months, and substantially all of its RPOs over the next 24 months.

We adopted the provisions of ASU 2023-07 in the fourth quarter of 2025, which resulted in additional disclosures in the notes to our consolidated financial statements.

See Note 17, Segment Reporting.

The adoption of this standard did not have an impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “ Income Statement (Subtopic 220-40) - Reporting Comprehensive Income - Expense Disaggregation Disclosures.

” The ASU requires disclosure of specified information about certain costs and expenses, including (i) certain amounts already required to be disclosed in the same disclosure as the other disaggregation requirements, (ii) a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (iii) the total amount of selling expenses and an entity’s definition of such

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 on either a prospective or retrospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of the adoption of this standard.

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740) - Improvements to Income Tax Disclosures ” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted.

The Company is currently evaluating the impact of the adoption of this standard.

Disaggregation of Total Revenue

The following table presents the Company’s revenue disaggregated by product (in thousands):

The following table presents the Company’s revenue disaggregated by solution (in thousands):

For the Years Ended

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$ 127,628 $ 102,019

Deferred Revenue

The following table presents information regarding the Company’s deferred revenue (in thousands):

Deferred revenue

$ 35,554 $ 30,049

For the Years Ended December 31

Total revenue recognized, included in each deferred revenue balance at the beginning of each respective period

$ 26,076 $ 22,983

The Company’s deferred revenue as stated on the consolidated balance sheets presented approximates its contract liability balance as of December 31, 2024 and 2023.

The Company’s total deferred revenue balance as of December 31, 2024 , approximates the aggregate amount of the transaction price allocated to remaining performance obligations (“RPOs”) as of that date.

As of December 31, 2024 , the Company’s RPOs were $ 41.3 million.

As of December 31, 2024, the Company expects to recogn ize $ 34.3 million or approximately 83 % of its RPOs over the next 12 months, and substantially all of its RPOs over the next 24 months.

Deferred Contract Costs

The following table presents the Company’s amortization of deferred contract costs (in thousands):

Deferred contract costs for affiliates

Deferred contract costs for sales commissions

For the Years Ended December 31

Amortization of deferred contract costs related to affiliates

$ 1,142 $ 978

Amortization of deferred contract costs related to sales commissions

Fair Values and Gross Unrealized Gains and Losses on Investments

The following table summarizes adjusted cost, gross unrealized losses, and fair value by significant investment category.

The Company’s commercial paper investments with original maturities greater than 90 days are classified as held-to-maturity and commercial paper investments with original maturities of 90 days or less are classified as cash equivalents on its consolidated balance sheets as of December 31, 2023 and 2022 .

The following table summarizes adjusted cost, gross unrealized gains and losses, and fair value by significant investment category.

equivalents on its consolidated balance sheets as of December 31, 2024 and 2023 .

See additional information on our investments in Note 5.—Fair Value Measurements .

Amortized Cost Gross Unrealized Fair Value Net Carrying Value

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(In Thousands)

Cash equivalents

Commercial paper $ 9,139 $ — $ ( 2 ) $ 9,137 $ 9,139

Total cash equivalents $ 4,976 $ 10 $ — $ 4,986 $ 4,976

Commercial paper $ 16,799 $ — $ ( 10 ) $ 16,789 $ 16,799

Total investments $ 16,799 $ — $ ( 10 ) $ 16,789 $ 16,799

Amortized Cost Gross Unrealized Fair Value Net Carrying Value

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(In Thousands)

Cash equivalents

Commercial paper $ 4,976 $ 10 $ — $ 4,986 $ 4,976

Total investments $ 58,733 $ — $ ( 144 ) $ 58,589 $ 58,733

Commercial paper $ 16,799 $ — $ ( 10 ) $ 16,789 $ 16,799

Scheduled Maturities

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Aging of Unrealized Losses

For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:

Less than 12 Months Total

# of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses

For those securities in an unrealized loss position, the length of time the securities were in such a position is presented in the table below.

Less than 12 Months

# of Securities Fair Value Unrealized Losses

As of December 31, 2024

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Commercial paper 3 $ 9,137 $ ( 2 )

Total 4 $ 16,789 $ ( 10 ) 4 $ 16,789 $ ( 10 )

Less than 12 Months Total

# of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses

Less than 12 Months

# of Securities Fair Value Unrealized Losses

As of December 31, 2023

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Commercial paper 4 $ 16,789 $ ( 10 )

Total 11 $ 58,589 $ ( 144 ) 11 $ 58,589 $ ( 144 )

Fair Value Measurements

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Commercial paper $ 9,137 $ 16,789

There were no transfers between levels of the fair value hierarchy for the year ended December 31, 2023 and 2022.

There were no transfers between levels of the fair value hierarchy for the years ended December 31, 2024 and 2023.

The Company held no assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2024 and 2023.

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Receivable from payment processor 1,347 1,276

Financed prepaid insurance 1,001 1,545

Other 1,534 1,448

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$ 42,949 $ 45,600

Depreciation expense was $ 21.3 million and $ 18.0 million for the years ended December 31, 2023 and 2022, respectively.

(1) Construction-in-process relates to assets that have not yet been placed in service related to hard drives not yet deployed.

Deprec iation expense was $ 21.3 million and $ 21.3 million for the years ended December 31, 2024 and 2023, respectively.

For the Company’s equipment under finance leases and collateralized financing obligations, accumulated depreciation was $ 29.3 million and $ 31.6 million as of December 31, 2024 and 2023, respectively.

The carrying value of the Company’s equipment under finance lease agreements and collateralized financing obligations was $ 35.7 million and $ 37.1 million as of December 31, 2024 and 2023, respectively.

During the years ended December 31, 2023 and 2022, the Company recorded a gain of $ 0.4 million and a loss of $ 0.1 million , respectively, as a result of disposing of certain hard drives.

During the years ended December 31, 2024 and 2023, the Company recorded gains of $ 0.2 million and $ 0.4 million, respectively, as a result of disposing of certain hard drives.

These disposals occurred in the ordinary course of business, as the Company continuously evaluates its requirements for operating its data centers.

The loss and gains are recorded as general and administrative expenses in the Company’s consolidated statements of operations.

The Company had long-lived assets, comprising of property and equipment, net and operating lease right-of-use assets consisting of the following (in thousands):

The gains are recorded as general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss.

The following table presents property and equipment, net and operating lease right-of-use assets by geographic region (in thousands):

United States $ 47,930 $ 50,746

Canada 3,309 —

The Netherlands 7,583 4,834

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Amortization expense of capitalized internal-use software was $ 7.0 million and $ 3.6 million for the years ended December 31, 2024 and 2023, respectively.

Amortization of developed software and software purchased for internal use are included in cost of revenue and general and administrative expense, respectively, in the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2022.

As of December 31, 2024, future amortization expense is expected to be as follows (in thousands):

Year Ending December 31,

2025 $ 10,318

The Company evaluates capitalized internal-use software for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

During the year ended December 31, 2023, the Company recorded an impairment expense of $ 0.2 million, related to an in-house operating system initiative that was determined to no longer provide future economic benefits during 2023.

The impairment expense is recorded as research and development expense in the Company’s consolidated statement of operations.

The impairment expense is recorded as research and development expense in the Company’s consolidated statements of operations and comprehensive loss.

No impairment expense was recorded during the year ended December 31, 2024.

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Financed insurance premiums (see Note 12) — 893

Other 486 629

Accrued expenses and other current liabilities $ 7,584 $ 8,460

Commitments and Contingencies

(1) Certain reclassifications to previously reported financial information have been made to conform to our current period presentation.

As of December 31, 2024 , the Company reclassified certain current liabilities from accounts payable to accrued expenses and other current liabilities.

The prior period amount of $ 0.3 million as of December 31, 2023 has been reclassified to conform with current presentation.

Finance Leases and Lease Financing Obligations

The Company enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations.

The terms of t hese agreements primarily range from three -to- four years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price.

The term of t hese agreements primarily range from two -to- four years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price.

Contingent rental payments are generally not included in the Company’s finance lease agreements.

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As of December 31, 2024, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 1.9 years and the weighted average discount rate for finance leases was 11.9 %.

As of December 31, 2022, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 2 years and the weighted average discount rate for finance leases was 10.2 %.

The following table presents information regarding assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements (in millions):

December 31, 2023, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 1.7 years and the weighted average discount rate for finance leases was 11.0 %.

The following table presents information regarding assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements (in thousands):

For the Years Ended December 31,

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Cash paid on interest on finance lease and lease financing obligations $ 3,119 $ 3,236

Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its consolidated statements of operations.

Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2023 , the Company entered into two sale-leaseback arrangements with vendors to provide an aggregate of $ 4.5 million in cash proceeds for previously purchased hard drives and related equipment.

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The assets continue to be depreciated over their useful lives, and payments are allocated between interest expense and repayment of the financing liability.

The Company did not enter into any new sale-leaseback arrangements during the year ended December 31, 2022.

The Company did no t enter into any sale-leaseback arrangements during the year ended December 31, 2024.

The future minimum commitments for these finance leases and lease financing obligations as of December 31, 2024 were as follows (in thousands):

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2027 5,227 — 5,227

Thereafter — — —

Total future minimum lease and financing commitments 30,258 2,921 33,179

Less imputed interest ( 3,500 ) ( 210 ) ( 3,710 )

Total liability $ 25,861 $ 5,941 $ 31,802

Total finance lease and lease financing obligation $ 26,758 $ 2,711 $ 29,469

Commitments and Contingencies

Operating Leases

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Th e Company's leases have original lease periods expiring between 2025 and 2031 .

The Company does not have a material amount of short-term leases as of December 31, 2023 .

In July 2023, the Company entered into an operating lease agreement for purposes of consolidating and moving out of two offices into one office, resulting in the recognition of $ 5.3 million of operating right-of-use assets and $ 5.2 million of operating lease liabilities, current and non-current, on its consolidated balance sheets.

The Company had no short-term leases as of December 31, 2024 and short-term lease costs of $ 0.7 million during the year ended December 31, 2023.

A s of December 31, 2024, the weighted average remaining lease term for operating leases was approximately 4.4 years and the weighted average discount rate for operating leases was approximately 7.2 %.

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Total $ 16,870

Non-lease components included in the Company’s co-location lease agreements are related to non-tangible utilities and services used in its data center operations.

The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these co-location lease agreements, such as, the price of utilities as compared to its tangible data center footprint within each co-location facility.

Non-lease components included in the Company’s colocation lease agreements are related to non-tangible utilities and services used in its data center operations, which are not recorded on the Company’s consolidated balance sheets.

The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these colocation lease agreements, such as, the price of utilities as compared to its tangible data center footprint within each colocation facility.

The future minimum commitments for the Company’s non-cancellable contractual obligations as of December 31, 2024 for non-lease components were as follows (in thousands):

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Total future minimum commitments $ 19,731

The following table presents information regarding the Company’s operating leases (in millions).

The following table presents information regarding the Company’s operating leases (in thousands).

Total operating lease cost does not include costs related to services.

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Total operating lease cost $ 12,493 $ 10,641

Total operating lease cost of $ 10.6 million for the year ended December 31, 2023 includes $ 1.8 million of variable lease costs and $ 0.7 million of short-term lease costs.

Total operating lease cost o f $ 12.5 million for the year ended December 31, 2024 includes $ 4.1 million of variable lease costs.

The Company did not incur short-term lease costs during the year ended December 31, 2024 .

Total operating lease cost of $ 10.6 million for the year ended December 31, 2023 includes $ 1.8 million of variable lease costs and $ 0.7 million of short-term lease costs.

Other Contractual Commitments

Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations.

As of December 31, 2023, the Company had non-cancelable purchase commitments of $ 1.2 million and $ 0.6 million payable during the years ending December 31, 2024 and 2025, respectively.

Other non-cancellable commitments relate mainly to service agreements to support the Company’s operations.

As of December 31, 2024, the Company had non-cancelable purchase commitmen ts of $ 1.0 million and $ 0.4 million payable during the years ending December 31, 2025 and 2026.

During 2024, the Company made payments of $ 0.2 million to a related party, Meaningful Works, for marketing services per terms of an agreement.

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The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business.

While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings are likely to have a material adverse effect on its financial position, results of operations or cash flows.

While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that there are not any current legal proceedings that are likely to have a material adverse effect on its financial position, results of operations or cash flows.

However, the results of legal proceedings are inherently unpredictable and litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

On July 15, 2022, the Company received a demand letter from the investors that participated in the Simple Agreement for Future Equity (“SAFE”) agreement in August 2021 related to a contractual dispute in connection with the SAFE transaction.

The investors sought a refund of their original investment of $ 10.0 million .

In February 2023, the Company settled with the SAFE holders for a full release of all claims related to the SAFE transaction for a one-time payment in the amount of $ 1.5 million in aggregate.

The $ 1.5 million settlement is included as a general and administrative expense in the Company’s consolidated statements of operations during the year ended December 31, 2022.

One of the SAFE holders, TMT Investments PLC (“TMT”), a beneficial holder of more than 5% of the Company’s capital stock, was a party to the settlement and received a pro-rata payment of $ 0.3 million as part of the SAFE settlement.

Accrued VAT Liability

The Company has calculated a liability for uncollected and unpaid VAT, which is generally assessed by various taxing authorities on services the Company provides to its customers.

The Company accrues an amount that it considers probable to be collected and can be reasonably estimated.

Based on the Company’s analysis, its total accrual for VAT tax payable was $ 1.3 million and $ 1.2 million as of December 31, 2023 and 2022, respectively.

Indemnification

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It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

No losses have been recorded in the consolidated statements of operations in connection with the indemnification provisions.

Credit Facility

During April 2022 , the Company entered into a second amendment to its revolving credit agreement (as amended, the “RCA”) with City National Bank (“Lender”).

Under this amendment, the amounts available to be borrowed was increased to $ 30.0 million from $ 9.5 million.

During January 2023, the Company entered into a third amendment to the RCA.

Under this amendment, advances on the line of credit will bear monthly interest at a variable rate equal to, at the Company’s discretion, (a) the average Secured Overnight Financing Rate (“SOFR”) plus 2.00 %, or (b) the base rate.

The base rate under the RCA is a rate equal to the greater of (i) 3.00 % or (ii) the prime rate most recently announced by the Lender.

There were no other material changes to the RCA as a result of the amendment.

In December 2023, the Company entered into a fourth amendment related to the RCA.

No losses have been recorded in the consolidated statements of operations and comprehensive loss in connection with the indemnification provisions.

Debt Facility

In December 2023 , the Company entered into a fourth amendment related to the revolving credit agreement (as amended, the “RCA”) with City National Bank (“Lender”).

Under this amendment, the maximum borrowing available was reduced from $ 30.0 million to $ 20.0 million.

Furthermore, advances on the line of credit will bear monthly interest at a variable rate equal to, at the Company’s discretion, (a) the average SOFR plus 2.75 %, or (b) the base rate described above.

The RCA has an unused line fee equal to 0.3 % of the difference between the maximum balance available under the RCA and the average daily balance outstanding during the quarter, payable within ten days of the last day of each quarter.

The RCA provides for an annual commitment fee equal to 0.5 % on the amount available to be borrowed, payable annually on December 29th.

The Company incurred annual commitment fees on the unused balance of the RCA of $ 0.1 million for the year ended December 31, 2023.

In connection with the RCA, the Company incurred an additional $ 5 thousand of additional debt issuance costs which, together with the $ 0.1 million of commitment fees and $ 0.1 million of the then unamortized debt issuance costs, will be amortized over the remaining term of the facility.

As of December 31, 2023, the C ompany had an outstanding balance of $ 4.1 million and the total amount available to the Company to be borrowed was $ 15.9 million.

The outstanding balance of $ 4.1 million as of December 31, 2023 was collateralized by cash held by the Company.

As such, the Company held $ 4.1 million in cash that it deemed to be restricted and is included in restricted cash, non-current on the Company’s consolidated balance sheets as of December 31, 2023.

With prior written notice to the Lender, the Company has the right, at any time prior to the maturity date in December 2025, to terminate the RCA.

In the event of such termination, the aggregate principal of the then outstanding amounts, including any accrued interest to date, shall be repaid and the restrictions on the associated collateralized cash would be released.

As of December 31, 2023, the interest rate associated with the outstanding balance under the RCA was 8.1 %, which is a per annum rate.

Interest payments on outstanding borrowing are due on the last day of each monthly interest period and payments for the commitment fee are due at the end of each calendar quarter.

Total interest expense and amortization of debt issuance costs related to the RCA was $ 0.6 million and $ 0.2 million for the years ended December 31, 2023 and 2022, respectively.

Advances under the RCA are due in full in December 2025.

As the RCA is a multi-year revolving credit agreement, the Company classifies the facility as long-term debt on its consolidated balance sheets as it has the intent and ability to maintain the facility outstanding for longer than 12 months.

The Company classifies the facility as a debt facility, non-current on its consolidated balance sheets as of December 31, 2023.

Insurance Premium Financing Agreements

In November 2022, the Company entered into an additional insurance policy with annual premiums totaling $ 2.1 million.

The Company executed an additional finance agreement with AFCO Premium Credit LLC over a term of twelve months , with an annual interest rate and weighted average interest rate for the periods presented of 4.5 %, that finances the payment of the total premiums owed.

The finance agreement required a $ 0.5 million down payment, with the remaining $ 1.5 million plus interest paid over three quarterly installments.

These quarterly payments started on February 10, 2023.

As of December 31, 2023, the balance of this finance agreement was fully paid.

Total interest expense related to this agreement was less than $ 0.1 million for both the years ended December 31, 2023 and 2022, respectively.

Furthermore, advances on the line of credit will bear monthly interest at a variable rate equal to, at the Company’s discretion, (a) the average Secured Overnight Financing Rate (“SOFR”) plus 2.75 %, or (b) the base rate.

The base rate under the RCA is a rate equal to the greater of (i) 3.00 % or (ii) the prime rate most recently announced by the Lender.

The RCA had an unused line fee equal to 0.3 % of the difference between the maximum balance available under the RCA and the average daily balance outstanding during the quarter, payable within ten days of the last day of each quarter.

The RCA provided for an annual commitment fee equal to 0.5 % on the amount available to be borrowed, payable annually on December 29th.

On December 10, 2024, the Company voluntarily terminated the RCA with the Lender.

At the time of termination, no amounts were outstanding under the RCA, as the Company had fully paid down the revolving credit amount following the closing of the Follow-On Offering in November 2024.

The Company recognized $ 0.1 million related to the acceleration of the remaining unamortized debt issuance costs incurred in connection with securing and amending the RCA.

The Company classified the facility as a debt facility, non-current on its consolidated balance sheets as of December 31, 2023.

Prior to its termination, the outstanding balance of the RCA was collateralized by cash held by the Company.

As such, the Company held cash that it deemed to be restricted, which was included in restricted cash, non-current on the Company’s consolidated balance sheets as of December 31, 2023.

Total interest expense and amortization of debt issuance costs related to the RCA were $ 0.7 million and $ 0.6 million for the years ended December 31, 2024 and 2023, respectively.

Insurance Premium Financing Agreement

In November 2023, the Company entered into an insurance policy with annual premiums totaling $ 1.2 million .

The Company has executed a finance agreement with AFCO Premium Credit LLC over a term of twelve months , with an annual interest rate and weighted average interest rate for the year ended December 31, 2023 of 7.0 %, that finances the payment of the total premiums owed.

The agreement requires a $ 0.3 million down payment, with the remaining $ 0.9 million plus interest paid over three quarterly installments.

These quarterly payments start February 10, 2024.

As of December 31, 2023, the unpaid balance is $ 0.9 million , reported as a component of accrued expenses and other current liabilities on the consolidated balance sheets.

Total interest expense related to this agreement was less than $ 0.1 million for the year ended December 31, 2023.

The Company executed a finance agreement with AFCO Premium Credit LLC over a term of twelve months , with an annual interest rate and weighted average interest rate for the year ended December 31, 2023 of 7.0 %, that finances the payment of the total premiums owed.

The finance agreement required a $ 0.3 million down payment, with the remaining $ 0.9 million plus interest paid over three quarterly installments.

As of December 31, 2024, the balance was paid in full.

Total interest expense related to this agreement was a nominal amount for the year ended December 31, 2024.

Stockholders’ Equity

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No additional shares of Class B common stock will be issued following the Conversion.

In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the

State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion.

As of December 31, 2023, the Company’s sole outstanding class of common stock was its Class A common stock.

In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion.

The Company had reserved shares of common stock for future issuance as follows:

December 31, 2023

2011 Equity Incentive Plan

December 31, 2024 December 31, 2023

2011 Equity Incentive Plan ("2011 Plan")

Options outstanding 5,264,351 7,988,657

Shares available for future grants —

2021 Equity Incentive Plan

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Shares available for future purchases 965,766 962,960

2024 Inducement Plan

Shares available for future grants 2,000 —

18,631,997 22,927,115

Stock-Based Compensation

Equity Incentive Plans

2011 Equity Incentive Plan.

In 2011, the Company’s Board of Directors approved the adoption of the 2011 Stock Plan (the “2011 Plan”).

The 2011 Plan provides for the grant of stock-based awards to employees, non-employee directors, and other service providers of the Company.

The 2011 Plan expired in September 2021.

2021 Equity Incentive Plan.

In October 2021, the Company’s Board of Directors and stockholders adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and it was approved by stockholders in October 2021.

The 2021 Plan replaced the 2011 Plan.

However, awards outstanding under the 2011 Plan will continue to be governed by their existing terms.

The 2021 Plan has the features described below.

Share Reserve .

As of December 31, 2023, the number of shares of common stock available for issuance under the 2021 Plan equaled the sum of 14,662,500 shares, plus up to approximately 13,719,000 shares subject to awards granted under the 2011 Plan that expire, forfeit or are repurchased following the effective date of the 2021 Plan.

In addition, the 2021 Plan includes an evergreen provision from which the number of shares reserved for issuance under the 2021 Plan will be increased automatically on the first business day of each of the Company’s fiscal years and ending on January 1, 2031, by a number equal to the lowest of (i) 4,784,100 shares, (ii) 5 % of the shares of Class A common stock outstanding on the last business day of the prior fiscal year;

or (iii) the number of shares determined by the Board of Directors.

Pursuant to this evergreen provision, the Company increased the number of shares reserved under the 2021 Plan by 809,916 and 411,399 shares of Class A common stock during the years ended December 31, 2023 and 2022, respectively.

In July 2023, the Company increased the number of shares reserved under the 2021 Plan by 8,292,158 shares of Class A common stock pursuant to the amendment and restatement of the 2021 Plan adopted by the Company’s board of directors and approved by the stockholders.

In general, to the extent that any awards under the 2021 Plan are forfeited, terminate, expire or lapse without the issuance of shares, or if the Company reacquires the shares subject to awards granted under our 2021 Plan, those shares will again become available for issuance under our 2021 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to any award.

In 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) under which the Company may grant options, stock appreciation rights, RSUs, restricted stock awards, other equity-based awards and incentive bonuses to employees, officers, non-employee directors and other service providers of the Company and its affiliates.

The number of shares available for issuance under the 2021 Plan is increased on January 1 of each year beginning in 2022 and ending with a final increase in 2031 in an amount equal to the lesser of:

(i) 4,784,100 shares, (ii) 5 % of the total number of shares of Class A common stock outstanding on the preceding December 31, or (ii) a smaller number of shares determined by the Company’s Board of Directors.

As of December 31, 2024 , the 2021 Plan provides for future grants and/or issuances of up to 6,933,867 shares of our common stock.

Equity-based awards under our employee compensation plans are made with newly issued shares reserved for this purpose.

In 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”).

The number of shares available for issuance under the 2021 ESPP is increased on January 1 of each year beginning in 2022 and ending with a

final increase in 2041 in an amount equal to the lesser of:

(i) 1,913,630 shares, (ii) 2 % of the total number of shares of Class A common stock outstanding on the preceding December 31, or (ii) a smaller number of shares determined by the Company’s Board of Directors.

As of December 31, 2024 , the 2021 Plan provides for future grants and/or issuances of up to 965,766 shares of our common stock.

On August 2, 2024, the Company adopted the 2024 New Employee Equity Incentive Plan (the “Inducement Plan”), pursuant to which the Company reserved 414,740 shares of its Class A common stock to be used exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company.

The Inducement Plan was adopted by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) without stockholder approval.

Restricted Stock Units

Restricted stock units (“RSUs”) granted under the 2021 Plan generally vest based on continued service up to a four-year period for employees, and over a one-year period for non-employee directors.

RSUs granted under the 2021 Plan generally vest based on continued service up to a four-year period for employees, and over a one-year period for non-employee directors.

RSU activity for the year ended December 31, 2024 was as follows:

Shares Weighted-average grant date fair value per share

Unvested balance as of December 31, 2022

Shares unvested as of December 31, 2023

5,256,833 $ 5.63

2 unchanged sentences

Forfeited ( 662,982 ) $ 6.09

Unvested balance as of December 31, 2023

Shares unvested and expected to vest as of December 31, 2024

4,764,133 $ 6.18

The weighted-average grant-date fair value of 4,163,608 RSUs granted during the year ended December 31, 2022 was $ 6.87 .

The fair value as of the respective vesting dates of RSUs was $ 14.2 million and $ 1.9 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024, total unrecognized compensation cost related to RSUs was $ 25.7 million, which will be recognized over a weighted-average period of 1.93 years.

In February and March 2025, the Company’s Compensation Committee approved the issuance of RSUs totaling approximately 2.8 million.

These RSUs have service-based vesting periods that are satisfied over three years .

The Company expects to recognize $ 19.6 million in stock-based compensation on a straight-line basis over the vesting period of these awards.

During March 2022, the Compensation Committee approved a new bonus structure (“Bonus Plan”) for its employees.

The Bonus Plan is contingent upon the achievement of annual corporate performance targets.

In each respective calendar year, the Company accrues for the Bonus Plan.

The actual payout amount is determined by the Compensation Committee based on the actual achievement with respect to the annual performance targets and paid in the subsequent year in the variable number of RSUs equal to the payout amount.

These RSUs are issued under the 2021 Plan and are subject to performance and service condition vesting requirements, beginning from the grant date to the payout date.

Participants must remain employed with the Company through the date of payout to maintain eligibility under the Bonus Plan.

Pursuant to the Bonus Plan, during February 2023 the Compensation Committee approved the issuance of approximately 288,000 RSUs that immediately vested based on actual performance against the performance targets for 2022.

During February 2023, the Company’s Board of Directors approved 2023 corporate performance targets under its Bonus Plan for its employees.

During February 2024, the Company’s Board of Directors approved annual corporate performance targets under its Bonus Plan for 2024 for its employees.

As of December 31, 2024, the accrued balance was $ 1.8 million, reported as a component of accrued expenses and other current liabilities on the consolidated balance sheets.

Pursuant to the Bonus Plan, during

February 2025 and February 2024, the Company’s Compensation Committee approved the issuance of 301,571 RSUs and approximately 296,000 RSUs, respectively, that immediately vested.

The Company recognized $ 2.2 million and $ 3.0 million in stock-based compensation during the years ended December 31, 2024 and 2023, respectively based on progress made towards these performance targets.

During the years ended December 31, 2024 and 2023 , the Company capitalized $ 0.3 million and $ 0.5 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software.

Stock Options

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Stock options granted under the equity plans generally vest based on continued service over four years and expire ten years from the date of grant.

The following table summarizes the Black-Scholes option pricing model weighted-average assumptions used in estimating the fair value of stock options granted to employees during the year ended December 31, 2022.

No stock options were granted during the year ended December 31, 2023.

For the Year Ended December 31,

Expected term (in years) 6

Expected volatility 49.0 %

Risk-free interest rate 1.20 %

Expected dividend yield — %

Expected term.

For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method, which is essentially the weighted average of the vesting period and contractual term, as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term.

Expected volatility.

The Company performed an analysis using the average volatility of a peer group of representative public companies with sufficient trading history over the expected term to develop an expected volatility assumption.

Risk-free interest rate.

Based upon quoted market yields for the United States Treasury debt securities for a term consistent with the expected life of the awards in effect at the time of grant.

Expected dividend yield.

Because the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero .

A summary of equity award activity under the Company’s equity plans and related information is as follows (in thousands, except share, price and year data):

available for

grant Outstanding

Equity Awards Weighted-

A summary of stock option award activity under the Company’s equity plans and related information is as follows (in thousands, except share, price and year data):

Outstanding stock options

Price Weighted-

2 unchanged sentences

9,307,142 $ 6.41 5.57 $ 31,250

Shares authorized 9,102,074

Options granted — —

1 unchanged sentence

Options cancelled ( 401,487 ) 14.08

RSU award activity ( 4,155,753 ) —

Balance as of December 31, 2024

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6,013,202 $ 6.77 4.84 $ 12,112

The weighted-average grant-date fair value of options granted was $ 6.26 during the year ended December 31, 2022.

Vested and expected to vest

6,378,753 $ 7.28 4.95 $ 12,136

The intrinsic value of options exercised was $ 13.9 million and $ 8.8 million for the years ended December 31, 2024 and 2023, respectively.

Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s underlying common stock at the time of exercise.

The aggregate grant-date fair value of options vested was $ 8.5 million and $ 13.0 million for the years ended December 31, 2023 and 2022, respectively.

In October 2021, the Company’s Board of Directors adopted the ESPP, which became effective on the date of the IPO.

The ESPP initially reserved and authorized the issuance of up to a total of 956,800 shares of Class A common stock to participating employees.

Pursuant to its evergreen provision, the Company increased the number of shares reserved under the ESPP by 667,874 and 607,696 for the years ended December 31, 2023 and 2022, respectively.

The initial offering period commenced in November 2021 and the first purchase date occurred in May 2022.

As of December 31, 2024, total unrecognized compensation cost related to stock options was $ 2.8 million , which will be recognized over a weighted-average period of 0.60 years .

The initial offering period under the ESPP commenced in November 2021 and the first purchase date occurred in May 2022.

Under the Company’s ESPP, eligible employees may authorize payroll deductions of up to 50 % of their eligible compensation, subject to IRS limitations, during prescribed offering periods to purchase shares of the Company’s Class A common stock at a price per share equal to 85 % of the lesser of (1) the stock price at the employee’s first participation in the offering period or (2) the fair market value of the Company’s common stock on the purchase date.

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The ESPP shall terminate automatically 20 years after its effective date, unless the ESPP is extended by the Board of Directors and the extension is approved within 12 months by a vote of the stockholders of the Company.

695,046 and 574,364 shares of Class A common stock have been purchased under the ESPP during the years ended December 31, 2023 and 2022, respectively.

The fair value of the purchase rights under the ESPP was estima ted using the Black-Scholes option pricing model with a similar methodology for determining inputs as the Company’s stock options, as described above.

During the years ended December 31, 2024 and 2023, 780,206 and 695,046 shares of Class A common stock were purchased under the ESPP.

The fair value of the purchase rights under the ESPP was estima ted using the Black-Scholes option pricing model.

The Company recorded stock-based compensation expense under this plan of $ 1.6 million and $ 4.2 million f or the years ended December 31, 2024 and 2023, respectively, of which $ 0.5 million and $ 0.8 million was capitalized for the development of capitalized internal-use software.

As of December 31, 2023 , the total unrecognized stock-based compensation expense related to the ESPP was $ 1.1 million and is expected to be recognized over a weighted average period of 1 year.

As of December 31, 2023 , $ 0.4 million had been withheld on behalf of employees for future purchases.

As of December 31, 2024 , the total unrecognized stock-based compensation expense related to the ESPP was $ 3.3 million, which is expected to be recognized over a weighted average period of 1.09 years.

The following table summarizes the Black-Scholes option pricing model weighted-average assumptions used in estimating the fair value of the stock purchase rights granted to employees under the ESPP for the years ended December 31, 2024 and 2023:

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Expected dividend yield — % — %

Stock-Based Compensation Expense

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

Total Stock-Based Compensation Expense

Stock-based compensation expense included in the consolidated statements of operations and comprehensive loss consists of all RSUs, including those related to the Bonus Plan, options, and ESPP awards.

Total stock-based compensation expense was as follows (in thousands):

For the Years Ended December 31,

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$ 28,628 $ 25,177

During the years ended December 31, 2023 and 2022 , the Company capitalized $ 5.0 million and $ 2.7 million, respectively, of stock-based compensation for the development of capitalized internal-use software.

As of December 31, 2023, total unrecognized compensation cost related to stock options and RSUs not yet vested was $ 10.5 million and $ 27.4 million, respectively, which will be recognized over a weighted-average period of 1.3 and 2.1 years for stock options and RSUs, respectively.

During March 2022, the Company’s Compensation Committee of the Board of Directors approved a new bonus structure (“Bonus Plan”) for its employees.

The Bonus Plan is contingent upon the achievement of annual corporate performance targets.

In each respective calendar year, the Company accrues for the Bonus Plan.

The actual payout amount is determined by the Company’s Compensation Committee based on the actual achievement with respect to the annual performance targets and is paid in the subsequent year in the variable number of RSUs equal to the payout amount.

These RSUs are subject to performance and service condition vesting requirements, beginning from the grant date to the payout date.

Participants must remain employed with the Company through the date of payout to maintain eligibility under the Bonus Plan.

Pursuant to the Bonus Plan, during February 2023 the Company’s Compensation Committee approved the issuance of approximately 288,000 RSUs that immediately vested based on actual performance against the performance targets for 2022.

The Company recognized $ 1.9 million in stock-based compensation during the year ended December 31, 2022, of which the Company capitalized $ 0.3 million of stock-based compensation expense under this plan for the development of internal-use software.

During February 2023, the Company’s Board of Directors approved annual corporate performance targets under its Bonus Plan for 2023 for its employees.

If these performance targets are met during 2023, employees will be paid out under the Bonus Plan in RSUs in 2024.

As a result, the Company recognized $ 3.0 million in stock-based compensation during the year ended December 31, 2023 based on progress made towards these performance targets.

These RSUs are subject to performance and service condition vesting requirements, beginning from the grant date to the payout date.

During the year ended December 31, 2023, the Company capitalized $ 0.5 million of stock-based compensation expense under this plan for the development of internal-use software.

As of December 31, 2023, the accrued bonus balance is $ 3.0 million , reported as a component of accrued expenses and other current liabilities on the consolidated balance sheets.

Pursuant to the Bonus Plan, during February 2024, the Company’s Compensation Committee approved the issuance of approximately 296,000 RSUs that immediately vested.

(1) Stock-based compensation expense includes restructuring charges of $ 2.5 million and $ 0.1 million , incurred during the years ended December 31, 2024 and 2023.

Of the $ 2.5 million in stock-based compensation restructuring charges incurred during the year ended December 31, 2024, $ 0.3 million related to cost of revenue , $ 0.9 million related to research and development costs, $ 1.2 million , related to sales and marketing costs, and $ 0.1 million related to general and administrative costs.

Of the $ 0.1 million in stock-based compensation restructuring charges occurred during 2023.

$ 0.1 million related to sales and marketing costs.

During the years ended December 31, 2024 and 2023 , the Company capitalized $ 4.0 million and $ 5.0 million, respectively, of stock-based compensation for the development of capitalized internal-use software and property and equipment.

Additionally, during the year ended December 31, 2024 , the Compensation Committee approved amendments to outstanding vested stock options held by certain former employees in connection with their voluntary separation from the Company to extend the option expiration and also accelerate the vesting of RSU’s.

As a result of the modifications, the Company recognized $ 1.1 million of expense, of which $ 0.8 million is recorded in sales and marketing, and $ 0.3 million is recorded in general and administrative expense on the Company’s consolidated statements of operations and comprehensive loss.

The Company also incurred stock-based compensation costs of $ 2.5 million in connection with restructuring activities that occurred during the year ended December 31, 2024.

See Note 16 for additional information.

Net Loss per Share Attributable to Common Stockholders

The Company computes net loss per share for periods prior to the Conversion using the two-class method required for multiple classes of common stock and participating securities.

Prior to the Conversion, shares of Class A and Class B were the only outstanding equity in the Company.

The rights of the holders of the Class A common stock and Class B common stock were identical, except with respect to voting, transfer, and conversion.

Accordingly, the Class A common stock and Class B common stock shared equally in the Company’s net losses.

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

The diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents during the period.

For purposes of this calculation, the Company’s stock options, share purchase rights pursuant to the Company’s ESPP, and unvested restricted stock are considered to be potential common stock equivalents, but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

As discussed above in Note 12, on July 6, 2023, all of the Company’s then-outstanding shares of Class B common stock, par value $ 0.0001 per share, were automatically converted into the same number of shares of Class A common stock, par value $ 0.0001 per share, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation.

For purposes of this calculation, the Company’s stock options, share purchase rights pursuant to the Company’s ESPP, shares issuable under the Bonus Plan, and unvested restricted stock are considered to be potential common stock equivalents, but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Prior to the Conversion, as defined below, of Class A and Class B common stock were the only outstanding equity in the Company.

The rights of the holders of the Class A common stock and Class B common stock were identical, except with respect to voting, transfer, and conversion.

Accordingly, the Class A common stock and Class B common stock shared equally in the Company’s net losses.

On July 6, 2023, all of the Company’s then-outstanding shares of Class B common stock, par value $ 0.0001 per share, were automatically converted into the same number of shares of Class A common stock, par value $ 0.0001 per share, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation (the “Conversion”).

No additional shares of Class B common stock will be issued following the conversion.

As the liquidation and dividend rights were identical, the Company’s undistributed earnings or losses were allocated on a proportionate basis among the holders of Class A and Class B common stock.

As a result, the net loss per share attributed to common stockholders was, therefore, the same for both Class A and Class B common stock on an individual or combined basis.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):

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(in thousands, except share and per share amounts)

Class A Class B Class A Class B

Net loss attributable to common stockholders

Net loss and comprehensive loss attributable to common stockholders

$ ( 48,531 ) $ ( 59,713 )

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Shares issuable pursuant to the ESPP 191,271 101,430

Bonus Plan 152,636 106,147

Total 7,782,960 14,771,552

Restructuring

In January 2023, the Company initiated measures to reduce headcount to pursue greater cost efficiency and align strategic initiatives.

Restructuring Plans

In November 2024, management approved a restructuring plan intended to improve the Company’s cost structure and operating efficiency (the “2024 Restructuring Plan”).

The 2024 Restructuring Plan included a reduction in headcount of approximately 12 % of the Company’s workforce.

During this period, approximately 12 % of the Company’s workforce terminated employment involuntarily.

In addition, as part of the 2024 Restructuring Plan, the Company reduced its footprint at its corporate headquarters.

The 2024 Restructuring Plan was substantially completed by December 31, 2024.

During the year ended December 31, 2024, the Company recognized restructuring charges of $ 4.9 million, primarily for employee severance and benefits in connection with the workforce reduction, which amounted to $ 3.9 million.

The Company also recorded an impairment charge of $ 0.9 million on its right-of-use asset related to the lease of the Company’s corporate headquarters and $ 0.1 million of professional services fees related to the execution of the Company’s 2024

Restructuring Plan, both of which are recorded as a component of general and administrative in the consolidated statements of operations and comprehensive loss.

The impairment charge of $ 0.9 million related to the Company’s corporate headquarters was the result of a partial exit from the office space for which the Company has an operating lease.

The Company intends to sublease the vacated space in connection with the partial exit from the facility, and as a result, the Company determined that the right-of-use asset associated with the lease may exceed its fair value.

The Company performed an assessment of the right-of-use asset and determined that the carrying value of the asset was impaired based on the application of a discounted cash flow model to a valuation appraisal of the facility obtained from a third party.

The majority of the employee severance and benefits costs incurred in connection with the 2024 Restructuring Plan were related to noncash stock-based compensation.

The Company accelerated certain of the RSUs awarded to employees impacted by the 2024 Restructuring Plan and also extended certain of the employees’ options to satisfy the settlement of termination benefits to impacted employees.

The severance and benefits costs related to the noncash stock-based compensation amounted to $ 2.5 million, of which $ 2.1 million related to the acceleration of RSUs and $ 0.4 million related to the extension of options.

These charges were recorded as components of various line items in the consolidated statements of operations and comprehensive loss.

The following table presents the stock-based compensation costs as reported in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and December 31, 2023 (in thousands):

For the Years Ended

Stock-based Compensation

Cost of revenue $ 291 $ —

Research and development 885 —

Sales and marketing 1,225 80

General and administrative 123 45

$ 2,524 $ 125

In January 2023, the Company initiated measures to reduce headcount to pursue greater cost efficiency and align strategic initiatives (the “2023 Restructuring Plan”).

These measures were substantially completed by June 30, 2023, and the total cost was $ 3.6 million.

During this period, approximately 1 % and 4 % of the Company’s workforce terminated employment, which were voluntary and involuntary terminations, respectively.

During this period, approximately 1 % of the Company’s workforce terminated employment voluntarily and 4 % terminated employment involuntarily.

As a result, the Company incurred employee termination expenses and other associated costs.

A summary of the restructuring charges as reported on the consolidated statement of operations for the year ended December 31, 2023, of which $ 0.7 million were related to involuntary terminations, is as follows (in thousands):

Severance and other Personnel Costs For the Year Ended December 31, 2023

A summary of the restructuring charges related to the 2024 Restructuring Plan and the 2023 Restructuring Plan as reported in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023 are presented in the table below.

Of the total charges incurred during the year ended December 31, 2023, $ 0.7 million were related to involuntary terminations.

All costs during the year ended December 31, 2024 were related to involuntary terminations.

For the Years Ended

Total Restructuring Charges (in thousands)

Cost of revenue $ 460 $ —

Research and development 1,278 2,311

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General and administrative (1)

The following table is a summary of the charges in the severance and other personnel liabilities, included within accrued expenses and other current liabilities on the consolidated balance sheet, related to the workforce reduction (in thousands):

$ 4,861 $ 3,616

(1) General and administrative includes $ 0.9 million related to the impairment of the right-of-use asset related to the lease of the Company’s corporate headquarters.

The following table presents a summary of the liabilities related to the 2024 Restructuring Plan that are included within accrued expenses and other current liabilities on the consolidated balance sheet (in thousands):

Balance as of January 1, 2024

Charges incurred

Noncash stock-based compensation

Cash payments during the period ( 1,049 )

Balance as of December 31, 2024

(1) Charges incurred exclude right-of-use asset impairment of $ 0.9 million.

The following table presents a summary of the liabilities related to the 2023 Restructuring Plan that were included within accrued expenses and other current liabilities on the consolidated balance sheet, (in thousands):

Balance as of January 1, 2023 $ —

Severance and other personnel costs 3,616

1 unchanged sentence

Balance as of December 31, 2023

Segment Reporting

The Company operates in one reportable segment, which derives revenue from the services operating on its storage platform.

The Company’s CODM, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis.

The CODM does not assess the performance of our products and solutions on measures of profit or loss, or asset-based metrics.

Measure of Segment Profit or Loss

The key measure of segment profit or loss utilized by the CODM to assess performance of and allocate resources to the Company’s operating segment is consolidated net income (loss) and adjusted earnings before interest, taxes, depreciation and amortization.

Net income (loss) is used in monitoring budget versus actual results.

This measure is presented on the consolidated statements of operations and comprehensive loss.

Significant segment expenses included in net income (loss) include cost of revenue, research and development, sales and marketing, general and administrative expense, investment income, interest expense, net, and income tax provision, which are presented on the consolidated statements of operations and comprehensive loss.

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.

See Note 3 and Note 7 for additional disclosures of disaggregated revenue and geographical information.

In addition to the significant segment expenses noted above, significant segment expenses reviewed by the CODM for the years ended December 31, 2024 and 2023 are presented in the following table (in thousands):

For the Years Ended

21,329 21,286

Stock-based compensation

28,628 25,177

$ 56,956 $ 50,089

The following table presents the components of net loss before income taxes (in thousands):

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$ ( 48,525 ) $ ( 59,713 )

The provision for income taxes included in the consolidated statement of operations is comprised of the following (in thousands):

The provision for income taxes included in the consolidated statements of operations and comprehensive loss is comprised of the following (in thousands):

For the Years Ended

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R&D credit carryforwards

13,829 10,502

Stock-based compensation

Research and experimental expenditures under IRC Section 174 19,382 14,063

Lease liability

Lease liabilities

Disallowed interest expense 3,438 2,767

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76,236 56,097

56,097 32,531

Valuation allowance

( 62,492 ) ( 44,606 )

Total deferred tax asset

Deferred tax liability:

Total deferred tax assets

13,744 11,491

Right of use asset

Deferred tax liabilities:

Property and equipment, net

( 1,024 ) ( 1,967 )

Right of use assets, net

( 3,936 ) ( 2,496 )

Capitalized internal-use software

( 8,784 ) ( 7,028 )

Total deferred tax liability

Total deferred tax liabilities

$ ( 13,744 ) $ ( 11,491 )

Net deferred tax liability

Net deferred tax liabilities

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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deferred tax assets have been fully offset by a valuation allowance.

The valuation allowance increased b y $ 17.6 million a nd $ 14.3 million during the years ended December 31, 2023 and 2022, respectively.

The val uation allowance increased by $ 17.9 million and $ 17.6 million during the years ended December 31, 2024 and 2023, respectively.

Effective for tax years beginning after December 31, 2021, taxpayers are required to capitalize any expenses incurred that are considered incidental to research and experimentation (R&E) activities under IRC Section 174.

While taxpayers historically had the option of deducting these expenses under IRC Section 174, the December 2017 Tax Cuts and Jobs Act mandates capitalization and amortization of R&E expenses for tax years beginning after December 31, 2021.

Expenses incurred in connection with R&E activities in the US must be amortized over a 5-year period if incurred, and R&E expenses incurred outside the US must be amortized over a 15-year period.

R&E activities are broader in scope than qualified research activities that are considered under IRC Section 41 (relating to the research tax credit).

For the year ended December 31, 2024, the Company performed an analysis based on available guidance and determined that it will not impact (increase) taxable income.

The Company will continue to monitor this issue for future developments and its impact on taxable income.

As of December 31, 2024, the Company had federal and state NOL carryforwards of $ 123.3 million and $ 95.6 million, respectively.

The federal NOL carryforwards consisted of $ 16.0 million generated before January 1, 2018, which will begin to expire in 2027 but are able to offset 100% of taxable income and $ 107.3 million generated after December 31, 2017 that will carryforward indefinitely but will be subject to 80% taxable income limitation beginning in tax years after December 31, 2022 as provided by the CARES Act.

State net operating loss carryforwards in the amount of $ 79.2 million begin expiring in 2029 and approximately $ 16.4 million have an indefinite life.

The Company has federal research and development (“R&D”) credit carryforwards of $ 11.7 million which will begin to expire in 2032 and California R&D credit carryforwards of $ 5.5 million which do not expire.

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The annual limitations may result in the expiration of net operating losses and credits before utilization in the future.

At this time, we have not finalized a Section 382 analysis through December 31, 2023 to assess whether such an ownership change has occurred that could impact these federal and state net operating losses.

On August 16, 2022, the Inflation Reduction Act was enacted in the U.S.

and introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”) and an excise tax of 1% of stock

repurchases, effective January 1, 2023.

The various provisions of the Inflation Reduction Act do not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2023 .

and introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”) and an excise tax of 1% of stock repurchases, effective January 1, 2023.

The various provisions of the Inflation Reduction Act do not have a material impact on the Company’s consolidated financial statements for the years ended December 31, 2024 and 2023 .

Uncertain Income Tax Positions

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If recognized, none of the unrecognized tax benefits would affect the effective tax rate.

The Company’s policy is to account for interest and penalties as income tax expense.

As of December 31, 2024, the Company had no interest related to unrecognized tax benefits.

7 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 8. Financial Statements and Supplementary Data