What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-09 · 166 added, 134 removed, 577 unchanged (34% of the section changed)

40 unchanged sentences

(in thousands, except per share amounts)

For the three months ended March 31,

For the three months ended June 30,

For the six months ended June 30,

Cost of revenue (1)

3 unchanged sentences

General and administrative

Acquisition related expenses

Restructuring charges

Amortization of intangible assets

Acquisition related costs

Restructuring charges

Total operating expenses

2 unchanged sentences

Interest expense

Other income (expense)

Other expense

Loss before provision for income taxes

3 unchanged sentences

(1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows:

For the three months ended March 31,

For the three months ended June 30,

For the six months ended June 30,

Cost of revenue

7 unchanged sentences

(in thousands)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Other comprehensive income (loss):

6 unchanged sentences

(in thousands)

Three months ended March 31, 2024

For the three and six months ended June 30, 2024

Comprehensive

6 unchanged sentences

Balance at March 31, 2024

Three months ended March 31, 2023

Proceeds from exercise of stock options

Release of restricted stock units

Issuance of common stock as consideration for an acquisition

Stock-based compensation

Total other comprehensive loss

Balance at June 30, 2024

For the three and six months ended June 30, 2023

Comprehensive

6 unchanged sentences

Balance at March 31, 2023

Proceeds from exercise of stock options

Release of restricted stock units

Stock-based compensation

Total other comprehensive loss

Balance at June 30, 2023

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

3 unchanged sentences

(in thousands)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cash flows from operating activities

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

Depreciation and amortization

Depreciation and amortization expense

Amortization of discount on debt

8 unchanged sentences

Deferred revenue

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Cash paid for acquisition

Purchase of property and equipment

1 unchanged sentence

Purchase of marketable securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

1 unchanged sentence

Taxes paid related to net share settlement of stock options

Proceeds from financing obligation

Repayment of debt

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents and restricted cash

4 unchanged sentences

Cash paid for taxes

Noncash investing and financing activities:

Capital additions, accrued but not paid

Fair value of shares issued as consideration for acquisition

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

18 unchanged sentences

Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2023, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 29, 2024.

The results of operations for the three months ended March 31, 2024 , are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any other period.

The results of operations for the three and six months ended June 30, 2024 , are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any other period.

Basis of consolidation

41 unchanged sentences

For most subscription solutions arrangements, excluding enterprise subscription plans, the Company has determined the Company meets the variable consideration allocation exception and, therefore, recognizes fixed monthly fees or a pro-rata portion of quarterly or annual fees and any transaction fees as revenue in the month they are earned.

During the second quarter of fiscal 2023, the Company adopted a new pricing structure that provided a discount to the contractual price for customers who pay quarterly or annually.

During fiscal year 2023, the Company adopted a new pricing structure that provided a discount to the contractual price for customers who pay quarterly or annually.

Prior to this date, enterprise subscription plans included an upfront promotional period in order to incentivize the customer to enter into a subscription arrangement.

51 unchanged sentences

promotional billing periods, and partner and services revenue agreements that include substantive minimums.

Net contract assets were $ 12.7 million as of March 31, 2024 as compared to $ 11.9 million as of December 31, 2023.

Net contract assets were $ 11.5 million as of June 30, 2024 as compared to $ 11.9 million as of December 31, 2023.

The Company is exposed to credit losses primarily through sales of products and services to customers and partners.

The Company assesses the collectability of outstanding contract assets on an ongoing basis and maintain a reserve which is included in the allowance for credit losses for contract assets deemed uncollectible.

The Company analyzes the contract asset portfolio for significant risks by considering historical collection experience and forecasting future collectability to determine what will ultimately be collected from its customers and partners, delinquency level and customer type have been identified as the primary specific risk affecting the Company’s contract assets, and the estimate for losses is analyzed annually and adjusted as necessary.The Company has provisioned $ 1.3 million and $ 1.5 million for credit losses related to contract assets as of March 31, 2024 and December 31, 2023, respectively.

The Company has provisioned $ 1.1 million and $ 1.5 million for credit losses related to contract assets as of June 30, 2024 and December 31, 2023, respectively.

Deferred revenue

2 unchanged sentences

Amounts recognized from deferred revenue represent primarily revenue from the sale of subscription solutions, integration, and marketing services.

The Company recogni zed $ 15.9 million of previously deferred revenue during the three months ended March 31, 2024.

The Company experienced an increase in the deferred revenue balance as of March 31, 2024, compared to December 31, 2023, which was primarily driven by the Company's continued shift to annual billing cycles.

The Company recognized $ 6.6 million and $ 22.5 million of previously deferred revenue during the three and six months ended June 30, 2024.

Remaining performance obligation

As of March 31, 2024, the Company ha d $ 171.8 million of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods.

As of June 30, 2024 , the Company had $ 182.0 million of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods.

Remaining performance obligation is subject to future economic risks, including bankruptcies, regulatory changes and other market factors.

The Company expects to recognize approximately 60 p ercent of the remaining performance obligations as revenue in the following 12 month period, and the remaining balance in the periods thereafter.

The Company expects to recognize approximately 60 percent of the remaining performance obligations as revenue in the following 12 month period, and the remaining balance in the periods thereafter.

Remaining performance obligation consisted of the following:

(in thousands)

As of March 31, 2024

As of March 31, 2023

As of June 30, 2024

As of June 30, 2023

Cost of revenue

2 unchanged sentences

costs of maintaining and securing infrastructure and platform;

allocation of overhead costs and credit card processing;

allocation of overhead costs and credit card processing fees;

and amortization expense associated with capitalized internal-use software.

3 unchanged sentences

Payment terms range from due immediately to due within 90 day s.

The accounts receivable balance at March 31, 2024 and December 31, 2023 included unbilled receivables of $ 10.7 million, and $ 11.0 million, respectively.

The accounts receivable balance at June 30, 2024 and December 31, 2023 included unbilled receivables of $ 10.5 million, and $ 11.0 million, respectively.

The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for credit losses for accounts receivable deemed uncollectible.

10 unchanged sentences

Balance at March 31, 2024

Provision for expected credit losses

Write-offs charged against the allowance

Balance at June 30, 2024

Stock-based compensation

The Company issues stock options, restricted stock units (“RSUs”) and performance based restricted stock units (“PSUs”) to employees.

The Company values stock options using the Black-Scholes option-pricing model at the date of grant and recognizes the relates stock-based compensation expense on a straight-line basis over the service period, net of estimated forfeitures, which is typically four years .

The Company values stock options using the Black-Scholes option-pricing model at the date of grant and recognizes the related stock-based compensation expense on a straight-line basis over the service period, net of estimated forfeitures, which is typically four years .

The Company values RSUs at the closing market price on the date of grate.

RSUs typically vest in equal installments over a four-year period, subject to continued service, and compensation expense is recognized straight-line over the requisite service period.

RSUs typically vest in equal installments over a four-year period, subject to continued service, and compensation expense is recognized straight-line over the requisite service period, net of estimated forfeitures.

The Company grants PSUs which provide for shares of common stock to be earned based on the Company's total stockholder return compared to the Russell 2000 index, and referred to as market-based awards.

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The Company values these awards at the closing market price on the date of grant.

The vesting of Company performance-based awards is conditioned upon the achievement of certain targets and will vest in three annual tranches in a percentage of the target number of shares between 0 % to 200 %.

The Company recognizes stock-based compensation expense over the performance period, if it is probable that the performance condition will be achieved.

8 unchanged sentences

The following table disaggregates revenue by major source:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

1 unchanged sentence

Partner and services

Revenue by geographic region was as follows:

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Three months ended March 31,

Revenue by geographic region was as follows:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Americas – U.S.

Americas – United States

Americas – other (1)

(1) Americas-other revenue includes revenue from North and South America, other than the U.S.

Revenue by geographical region is determined based on the region of the Company’s contracting entity, which may be different than the region of the customer.

Revenue attributed to the United States was 76 percent and EMEA was 11 percent during the three months ended March 31, 2024 and 2023.

No single country, other than the United States, represented more than ten percent of total revenue during the three months ended March 31, 2024 and 2023.

Revenue by geographical region is determined based on the region of the customers’ bill-to address.

Revenue attributed to the United States was 76 percent and EMEA was 11 percent d uring the three and six months ended June 30, 2024 and 2023.

No single country, other than the United States, represented more than ten percent of total revenue during the three and six months ended June 30, 2024 and 2023.

Deferred commissions

3 unchanged sentences

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

The Company did no t recognize an impairment of deferred commissions during the three months ended March 31, 2024 and the year ended December 31, 2023.

Sales commissions of $ 2.1 million and $ 1.7 million were deferred for the three months ended March 31, 2024 and 2023, respectively;

deferred commission amortization expense wa s $ 2.3 million and $ 1.6 million for the three months ended March 31, 2024 and 2023 , respectively.

The Company did no t recognize an impairment of deferred commissions during the three and six months ended June 30, 2024 and the year ended December 31, 2023.

Sales commissions o f $ 2.8 million and $ 2.5 million were deferred for the three months ended June 30, 2024 and 2023 , respectively;

and $ 5.0 million and $ 4.2 million were deferred for the six months ended June 30, 2024 and 2023, respectively.

Deferred commission amortization expense wa s $ 2.4 million and $ 1.7 million for the three months ended June 30, 2024 and 2023 , respectively;

and $ 4.7 million an d $ 3.3 million for the six months ended June 30, 2024 and 2023 , respectively.

Fair value measurements

Financial instruments carried at fair value include cash and cash equivalents, restricted cash and marketable securities.

The fair value of our convertible senior notes is included below for disclosure purposes only.

For assets and liabilities measured at fair value, fair value is the price to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

7 unchanged sentences

• Level 3 – Inputs are unobservable that are significant to the fair value of the asset or liability and are developed based on the best information available in the circumstances, which might include the Company’s data.

The following table presents information about the Company’s cash equivalents, marketable securities and liabilities that were measured at fair value as of March 31, 2024 and December 31, 2023:

The following table presents information about the Company’s cash equivalents, marketable securities and liabilities that were measured at fair value as of June 30, 2024 and December 31, 2023:

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As of March 31, 2024

As of June 30, 2024

(in thousands)

12 unchanged sentences

Convertible senior notes due 2026

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition t o $ 36.3 million of cash, as of June 30, 2024 .

As of December 31, 2023

13 unchanged sentences

Convertible senior notes due 2026

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition t o $ 28.3 million, and $ 33.1 million of cash, as of March 31, 2024 and December 31, 2023 , respectively.

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition t o $ 33.1 million of cash, as of December 31, 2023 .

The contractual maturities of the investments classified as marketable securities were as follows:

(in thousands)

As of March 31, 2024

As of June 30, 2024

As of December 31, 2023

3 unchanged sentences

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The following tables summarize the gains, losses, and estimated fair value of cash equivalents, marketable securities and liabilities as of March 31, 2024 and December 31, 2023 :

As of March 31, 2024

The following tables summarize the gains, losses, and estimated fair value of cash equivalents, marketable securities and liabilities as of June 30, 2024 and December 31, 2023:

As of June 30, 2024

(in thousands)

30 unchanged sentences

(1) Of the total purchase consideration, $ 1.1 million of cash was held back by the Company for potential breaches of representation and warranties, as well as adjustments to working capital.

Subsequent to March 31, 2024, the Company dispersed working capital hold back o f $ 0.1 million .

During the six months ended June 30, 2024 , the Company dispersed $ 0.1 million related to the working capital hold back.

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The table below summarizes the estimated fair value of the assets acquired and liabilities assumed in the Makeswift acquisition, at acquisition date:

The table below summarizes the fair value of the assets acquired and liabilities assumed in the Makeswift acquisition, at acquisition date:

(in thousands)

8 unchanged sentences

Total purchase consideration

As of March 31, 2024, the purchase price allocation is not finalized as the Company has not yet filed the Makeswift tax return for the period ended October 31, 2023.

Once this return is filed in fiscal 2024, the Company will update the estimated fair value liabilities assumed in the acquisition.

(1) Measurement period adjustments of $ 0.2 million recorded during the three months ended June 30, 2024 is primarily attributable to tax liabilities with a corresponding net decrease to goodwill.

The measurement period adjustment was a result of the purchase price allocation finalization as the Company filed the Makeswift tax return for the period ended October 31, 2023 during the three months ended June 30, 2024 .

The fair value of identifiable intangible assets acquired at the date of the acquisitions is as follows:

9 unchanged sentences

The related compensation is recognized as post-combination expense over the 18 month service period on a straight-line basis.

The Company incurred $ 0.3 million of compensation costs during the three months ended March 31, 2024 .

The Company has $ 1.3 million of unvested amounts of cash retention payments recorded in prepaid expenses and other current assets and other assets on the condensed consolidated balance sheet as of March 31, 2024.

The Company incurre d $ 0.3 million and $ 0.7 million of compensation costs during the three and six months ended June 30, 2024, respectively.

The Company has $ 1.1 million of unvested amounts of cash retention payments recorded in prepaid expenses and other current assets and other assets on the condensed consolidated balance sheet as of June 30, 2024 .

Goodwill and intangible assets

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.

Goodwill amounts are not amortized but tested for impairment on an annual basis.

There was no impairment of goodwill as of March 31, 2024.

Goodwill amounts are not amortized but tested for impairment on an annual basis or more often when circumstances indicate that goodwill may not be recoverable.

There was no impairment of goodwill as of June 30, 2024.

Intangible assets are amortized on a straight-line basis over the useful life.

Intangible assets amortization was $ 2.5 million and $ 2.0 million for the three months ended March 31, 2024 and 2023, respectively.

Intangible assets consists of the following:

Intangible assets amortization was $ 2.5 million and $ 2.0 million for the three months ended June 30, 2024 and 2023 , respectively and was $ 4.9 million and $ 4.1 million for the six months ended June 30, 2024 and 2023 , respectively.

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March 31, 2024

Intangible assets consists of the following:

June 30, 2024

December 31, 2023

4 unchanged sentences

Net carrying amount

Weighted average remaining useful life as of March 31, 2024 (in years)

Weighted average remaining useful life as of June 30, 2024 (in years)

Developed technology

3 unchanged sentences

Total intangible assets

As of March 31, 2024, expected amortization expense for intangible assets was as follows:

As of June 30, 2024, expected amortization expense for intangible assets was as follows:

(in thousands)

March 31, 2024

Remaining nine months of 2024

June 30, 2024

Remaining six months of 2024

Commitments, contingencies, and leases

9 unchanged sentences

These commitments are non-cancellable and expire within one to three years .

The Company had unconditional purchase obligations as of March 31, 2024 as follows:

The Company had unconditional purchase obligations as of June 30, 2024 as follows:

(in thousands)

March 31, 2024

Remaining nine months of 2024

June 30, 2024

Remaining six months of 2024

2027 and thereafter

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The Company leases certain facilities under operating lease agreements that expire at various dates through 2028 .

1 unchanged sentence

Renewal options were not included in the right-of-use asset and lease liability calculation.

As of March 31, 2024 , there were no finance leases.

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Operating expense relating to leases was $ 0.8 million and $ 0.9 million for the three months ended March 31, 2024 and 2023, respectively.

As of June 30, 2024 , there were no finance leases.

Operating expense relating to leases was $ 0.8 million and $ 0.7 million for the three months ended June 30, 2024 and 2023 , respectively, and was $ 1.3 million and $ 1.5 million for the six months ended June 30, 2024 and 2023, respectively.

The future maturities of operating lease liabilities are as f ollows:

(in thousands)

As of March 31, 2024

Remaining nine months of 2024

As of June 30, 2024

Remaining six months of 2024

Total minimum lease payments

3 unchanged sentences

The Company recognizes employee severance costs when payments are probable and amounts are estimable or when notification occurs, depending on whether the severance costs paid are part of the Company’s general plan.

Facilities costs related to contracts without future benefit or contract termination are recognized at the earlier of the contract termination or the cease-use dates.

Other exit-related costs are recognized as incurred.

Facilities costs related to contracts or leases without future benefit are recognized at the earlier of the contract termination or the cease-use dates.

Additionally, restructuring charges include considerations of various capital alternatives which include asset impairments, professional services, and other costs relating to significant items that are nonrecurring or unusual are recognized as incurred.

In September 2023, the Company commenced a restructuring plan (the “2023 Restructure”) which includes a reduction of the Company’s workforce that is intended to advance the Company’s ongoing commitment to profitable growth.

The actions associated with the employee restructuring under the 2023 Restructure are expected to be complete by the end of the Company’s fiscal 2024, subject to employee jurisdictions.

The Company recorded approximately $ 5.5 million in expenses in connection with the 2023 Restructure in fiscal 2023, which consists of charges related to severance payments, employee benefits, and professional service and legal fees.

These charges were recorded within the operating expenses on the accompanying consolidated statement of operations.

The Company does not expect any more material charges under this plan.

The following table summarizes the activities related to the 2023 Restructure as of March 31, 2024:

The 2023 Restructuring plan has substantially been completed as of June 30, 2024.

For the three months ended June 30, 2024, the Company incurred approximately $ 2.6 million of restructuring charges primarily related to its capital structure and various alternatives associated with inbound inquiries and interest in the Company.

These charges include such items as professional services and other related costs.

The following table summarizes the activities related to restructuring charges as of June 30, 2024:

(in thousands)

Workforce reduction

Liability, as of December 31, 2023

Liability, as of March 31, 2024

Additional charges

Liability, as of June 30, 2024

Other liabilities

The following table summarizes the components of other current liabilities:

As of March 31,

As of June 30,

As of December 31,

5 unchanged sentences

Other current liabilities

2021 Convertible Senior Notes

In September 2021, the Company issued $ 345.0 million aggregate principal amount of 0.25 percent convertible senior notes due 2026 (the “Notes”).

The Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the

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Securities Act of 1933, as amended (the “Securities Act”).

The net proceeds from the sales of the Notes was approximately $ 335.0 million after deducting offering and issuance costs related to the Notes and before the 2021 Capped Call transactions, as described below.

The Notes are the Company’s senior, unsecured obligations and accrue interest at a rate of 0.25 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year , beginning on April 1, 2022.

The Notes will mature on October 1, 2026 , unless earlier converted, redeemed or repurchased by us.

2026 Convertible Senior Notes

In September 2021, the Company issued $ 345.0 million aggregate principal amount of 0.25 percent convertible senior notes due 2026 (t he “2026 Convertible Notes”).

The 2026 Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The net proceeds from the sales of the 2026 Convertible Notes was approximately $ 335.0 million after deducting offering and issuance costs related to the 2026 Convertible Notes and before the 2021 Capped Call transactions, as described below.

The 2026 Convertible Notes are the Company’s senior, unsecured obligations and accrue interest at a rate of 0.25 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year , beginning on April 1, 2022.

The 2026 Convertible Notes will mature on October 1, 2026 , unless earlier converted, redeemed or repurchased by us.

Before July 1, 2026, noteholders will have the right to convert their Notes only under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2021, if the Last Reported Sale Price (as defined in the indenture for the Notes) per share of Common Stock (as defined in the indenture for the Notes) exceeds one hundred and thirty percent ( 130 percent) of the Conversion Price (as defined in the indenture for the Notes) for each of at least twenty ( 20 ) Trading Days (as defined in the indenture for the notes) (whether or not consecutive) during the thirty ( 30 ) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;

(2) during the five (5) consecutive Business Days (as defined in the indenture for the Notes) immediately after any ten (10) consecutive Trading Day period (such ten (10) consecutive Trading Day period, the “Measurement Period”) if the Trading Price per $ 1,000 principal amount of Notes for each Trading Day of the Measurement Period was less than ninety-eight percent ( 98 percent) of the product of the Last Reported Sale Price per share of Common Stock on such Trading Day and the Conversion Rate (as defined in the indenture for the Notes) on such Trading Day;

(3) if the Company calls any or all of the Notes for redemption, such Notes called for redemption may be converted any time prior to the close of business on the second business day immediately before the redemption date;

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2021, if the Last Reported Sale Price (as defined in the indenture for the 2026 Convertible Notes) per share of Common Stock (as defined in the indenture for the Notes) exceeds one hundred and thirty percent ( 130 percent) of the Conversion Price (as defined in the indenture for the 2026 Convertible Notes) for each of at least twenty ( 20 ) Trading Days (as defined in the indenture for the notes) (whether or not consecutive) during the thirty ( 30 ) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;

(2) during the five (5) consecutive Business Days (as defined in the indenture for the 2026 Convertible Notes) immediately after any ten (10) consecutive Trading Day period (such ten (10) consecutive Trading Day period, the “Measurement Period”) if the Trading Price per $ 1,000 principal amount of Notes for each Trading Day of the Measurement Period was less than ninety-eight percent ( 98 percent) of the product of the Last Reported Sale Price per share of Common Stock on such Trading Day and the Conversion Rate (as defined in the indenture for the 2026 Convertible Notes) on such Trading Day;

(3) if the Company calls any or all of the 2026 Convertible Notes for redemption, such Notes called for redemption may be converted any time prior to the close of business on the second business day immediately before the redemption date;

or (4) upon the occurrence of specified corporate events.

From and after July 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

As of March 31, 2024 and December 31, 2023, no conditions for the notes to convert have been called or met.

As of June 30, 2024 and December 31, 2023, no conditions for the notes to convert have been called or met.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The initial conversion rate for the Notes is 13.68 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 73.11 per share of common stock.

The initial conversion rate for the 2026 Convertible Notes is 13.68 shares of common stock per $ 1,000 principal amount of 2026 Convertible Notes, which represents an initial conversion price of approximately $ 73.11 per share of common stock.

The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events, such as distribution of stock dividends or stock splits.

The Company may not redeem the Notes prior to October 7, 2024.

The Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

The Company may not redeem the 2026 Convertible Notes prior to October 7, 2024.

The 2026 Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.

Pursuant to the Partial Redemption Limitation (as defined in the indenture for the Notes), the company may not elect to redeem less than all of the outstanding Notes unless at least $ 150.0 million aggregate principal amount of Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.

If a “fundamental change” (as defined in the indenture for the Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their Notes for cash.

The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date.

In accounting for the issuance of the Notes, the Company recorded the Notes as a liability at face value.

The effective interest rate for the Notes was 0.84 percent.

Transaction costs of $ 10.0 million, attributable to the issuance of the Notes were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet and are amortized to interest expense over the term of the Notes.

The redemption price will be a cash amount equal to the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.

Pursuant to the Partial Redemption Limitation (as defined in the indenture for the 2026 Convertible Notes), the company may not elect to redeem less than all of the outstanding Notes unless at least $ 150.0 million aggregate principal amount of Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.

If a “fundamental change” (as defined in the indenture for the 2026 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their Notes for cash.

The repurchase price will be equal to the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date.

In accounting for the issuance of the 2026 Convertible Notes, the Company recorded the 2026 Convertible Notes as a liability at face value.

The effective interest rate for the 2026 Convertible Notes was 0.84 percent.

Transaction costs of $ 10.0 million, attributable to the issuance of the 2026 Convertible Notes were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet and are amortized to interest expense over the term of the 2026 Convertible Notes.

The net carrying amount of the Company’s debt consists of the following:

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(in thousands)

2 unchanged sentences

Contractual Interest Rate

Outstanding Principal as of March 31, 2024

Carrying Value as of March 31, 2024

Outstanding Principal as of June 30, 2024

Carrying Value as of June 30, 2024

Carrying Value as of December 31, 2023

5 unchanged sentences

Total long-term portion of debt

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The total interest expense recognized related to the Company’s debt consists of the following:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

3 unchanged sentences

2021 Capped Call Transactions

In connection with the pricing of the Notes, the Company used $ 35.6 million of the net proceeds from the Notes to enter into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions.

The Capped Call Transactions are generally expected to reduce potential dilution to holders of the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of the Company’s common stock is greater than the strike price of the Capped Call Transactions with such reduction and/or offset subject to a cap.

In connection with the pricing of the 2026 Convertible Notes, the Company used $ 35.6 million of the net proceeds from the 2026 Convertible Notes to enter into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions.

The Capped Call Transactions are generally expected to reduce potential dilution to holders of the Company’s common stock upon any conversion of the 2026 Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2026 Convertible Notes upon conversion of the 2026 Convertible Notes in the event that the market price per share of the Company’s common stock is greater than the strike price of the Capped Call Transactions with such reduction and/or offset subject to a cap.

The Capped Call Transactions have an initial cap price of approximately $ 106.34 per share, which represents a premium of 100 percent over the last reported sale prices of the Company’s common stock of $ 53.17 per share on September 9, 2021, and is subject to certain adjustments under the terms of the Capped Call Transactions.

Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s common stock underlying the Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes.

Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s common stock underlying the 2026 Convertible Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Convertible Notes.

The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s common stock.

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On January 1, 2024, 2023 and January 1, 2022 the share reserve increased by 3,820,681 shares, 3,695,569 shares and 3,616,312 shares, respectively.

As of March 31, 2024, a total of 1,096,370 registered shares of common stock remained available for future issuance under the 2020 Plan.

Subsequent to March 31, 2024, the Company registered an additional 9,548,587 shares on Form S-8.

The Company registered an additional 9,548,587 shares on Form S-8 on May 9, 2024.

As of June 30, 2024 , a total of 1,096,370 registered shares of common stock remain available for future issuance under the 2020 Plan.

Stock options

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The following table summarizes the weighted-average grant date value of options and the assumptions used to develop their fair value.

Three months ended March 31,

Year ended December 31,

Six months ended June 30,

Weighted-average grant date fair value of options

Risk-free interest rate

3.65 % - 4.30 %

Expected volatility

65.02 % - 66.56 %

Expected life in years

6.06 - 6.11 years

The Company estimated its future stock price volatility using a combination of its observed option-implied volatilities and its peer historical volatility calculations.

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The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option pricing model.

Stock option activity for the three months ended March 31, 2024 was as follows:

Stock option activity for the six months ended June 30, 2024 was as follows:

(in thousands)

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Plan shares expired or canceled

Balance as of March 31, 2024

Balance as of June 30, 2024

Vested and expected to vest

Exercisable as of March 31, 2024

The expected stock-based compensation expense remaining to be recognized as of March 31, 2024 is $ 8.6 million, which reflects outstanding stock option awards that are vested and outstanding stock option awards that are expected to vest.

Exercisable as of June 30, 2024

The expected stock-based compensation expense remaining to be recognized as of June 30, 2024 is $ 7.4 million, which reflects outstanding stock option awards that are vested and outstanding stock option awards that are expected to vest.

This expense will be recognized over a weighted-average period of 2.54 years.

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Restricted stock units

Restricted stock unit activity for the three months ended March 31, 2024 was as follows:

Restricted stock unit activity for the six months ended June 30, 2024 was as follows:

(in thousands)

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Vested and converted to shares

Balance as of March 31, 2024

Balance as of June 30, 2024

Vested and expected to vest

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Significant assumptions used in the Monte Carlo simulation model for the market-based awards granted are as follows:

Three months ended March 31,

Six months ended June 30,

Risk-free interest rate

Dividend yield

As of March 31, 2024, no market-based or performance-based restricted stock units have been canceled or vested.

Stock compensation expense recognized for the market-based and performance-based awards was not material for the three months ended March 31, 2024.

The aggregate expected stock-based compensation expense remaining to be recognized as of March 31, 2024 is $ 63.6 million related to RSUs, which reflects outstanding stock awards that are vested and outstanding stock awards that are expected to vest.

As of June 30, 2024 , no market-based or performance-based restricted stock units have been canceled or vested.

Stock compensation expense recognized for the market-based and performance-based awards was $ 0.1 million and $ 0.3 million for the three months ended June 30, 2024 , respectively, and was $ 0.2 million and $ 0.3 million for the six months ended June 30, 2024, respectively.

The aggregate expected stock-based compensation expense remaining to be recognized as of June 30, 2024 is $ 58.1 million related to RSUs, which reflects outstanding stock awards that are vested and outstanding stock awards that are expected to vest.

This expense will be recognized over a weighted-average period of 2.34 years.

The income tax expense for the three months ended March 31, 2024 is based on the estimated annual effective tax rate for fiscal 2024.

The income tax expense for the three and six months ended June 30, 2024 is based on the estimated annual effective tax rate for fiscal 2024.

The Company’s provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items, valuation allowances, and any applicable income tax credits.

The Company’s provision for income taxes reflected an effective tax rate of ( 4.75 ) percent and ( 0.90 ) percent for the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024 and 2023, the Company’s effective tax rate was lower than the U.S.

The Company’s provision for income taxes reflected an effective tax rate of ( 1.16 ) percent and ( 1.11 ) percent for the three months ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2024 and 2023, the Company had an effective tax rate of ( 2.45 ) percent and ( 1.00 ) percent, respectively.

For the three and six months ended June 30, 2024 and 2023, the Company’s effective tax rate was lower than the U.S.

federal statutory rate of 21 percent primarily due to the Company’s valuation allowance offsetting the benefits of losses.

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The Company will continue to monitor the positive and negative evidence and will adjust the valuation allowance as sufficient objective positive evidence becomes available.

As of March 31, 2024, the Company had approxim ately $ 0.4 million in uncertain tax positions representing no increase from the balance on December 31, 2023.

Operating losses generated in years prior to 2019 remain open to adjustment until the statute of

Table of Content

limitations closes for the tax year in which the net operating losses are utilized.

As of June 30, 2024, the Company had approxim ately $ 0.4 million in uncertain tax positions rep resenting no increase from the balance on December 31, 2023.

Operating losses generated in years prior to 2019 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized.

Tax years 2019 through 2021 generally remain open to examination by the major taxing jurisdictions to which the Company is subject.

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Basic net loss per share is computed by dividing net loss by the number of shares of common stock outstanding for the period.

Because the Company has reported a net loss for the three months ended March 31, 2024, and 2023, the number of shares used to calculate diluted net loss per share is the same as the number of shares used to calculate basic net loss per share for the period presented because the potentially dilutive shares would have been antidilutive if included in the calculation.

Three months ended March 31,

Because the Company has reported a net loss for the three and six months ended June 30, 2024, and 2023, the number of shares used to calculate diluted net loss per share is the same as the number of shares used to calculate basic net loss per share for the period presented because the potentially dilutive shares would have been antidilutive if included in the calculation.

Three months ended June 30,

Six months ended June 30,

(in thousands)

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The following potentially dilutive securities outstanding have been excluded from the computation of basic weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported:

As of March 31,

As of June 30,

(in thousands)

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Total potentially dilutive securities

Subsequent Event

On August 1, 2024, the Company entered into a privately negotiated exchange agreement with a holder of the 2026 Convertible Notes.

Pursuant to the agreement, in exchange for approximately $ 161.2 million of the 2026 Convertible Notes held by the holder, the Company agreed to issue the holder $ 150.0 million of its 7.5 percent convertible senior notes due 2028 (the “2028 Convertible Notes”).

The 2028 Convertible Notes will be the Company’s unsecured obligations and accrue interest at a rate of 7.5 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year , beginning on October 1, 2024 .

The 2028 Convertible Notes will mature on October 1, 2028 , unless earlier converted, redeemed or repurchased by the Company.

The 2028 Notes will be convertible with an initial conversion rate of 62.5000 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of $ 16.00 per share of common stock, when certain conditions are met.

Additionally, on August 1, 2024, the Company entered into separate, privately negotiated transactions with a limited number of holders of its outstanding 2026 Convertible Notes to repurchase approximately $ 120.6 million aggregate principal amount of the 2026 Convertible Notes for approximately $ 108.7 million of cash.

Table of Content

Special note regarding forward-looking statements

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• our anticipated cash needs and our estimates

regarding our capital requirements and our need for additional financing or refinancing;

regarding our capital requirements, interest expense and our need for additional financing or refinancing;

• our ability to compete in our industry and innovation by our competitors;

• our ability to anticipate market needs or develop new or enhanced services to meet those needs;

• our ability to manage growth and to expand our infrastructure;

• our ability to manage efficient revenue growth and profitable growth;

• our ability to establish and maintain intellectual property rights;

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

What changed 10-Q

Item 1. Financial Statements