What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-01 · 306 added, 191 removed, 552 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

Current assets

16 unchanged sentences

Deferred revenue

Current portion of debt

Current portion of operating lease liabilities

1 unchanged sentence

Total current liabilities

Long-term portion of debt

Convertible notes

Operating lease liabilities, net of current portion

3 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive income

Accumulated deficit

6 unchanged sentences

(in thousands, except per share amounts)

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Cost of revenue (1)

8 unchanged sentences

Loss from operations

Gain on convertible note extinguishment

Interest income

6 unchanged sentences

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

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Cost of revenue

7 unchanged sentences

(in thousands)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Other comprehensive income (loss):

Net unrealized gain (loss) on marketable debt securities

Net unrealized gain on marketable securities

Total comprehensive loss

4 unchanged sentences

(in thousands)

For the three and six months ended June 30, 2024

For the three and nine months ended September 30, 2024

Comprehensive

Stockholders’

Income/ (Loss)

Balance at December 31, 2023

10 unchanged sentences

Balance at June 30, 2024

For the three and six months ended June 30, 2023

Proceeds from exercise of stock options

Release of restricted stock units

Stock-based compensation

Total other comprehensive income

Balance at September 30, 2024

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For the three and nine months ended September 30, 2023

Comprehensive

Stockholders’

Income/ (Loss)

Balance at December 31, 2022

2 unchanged sentences

Stock-based compensation

Total other comprehensive loss

Total other comprehensive income

Balance at March 31, 2023

4 unchanged sentences

Balance at June 30, 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 income

Balance at September 30, 2023

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

3 unchanged sentences

(in thousands)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cash flows from operating activities

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:

Depreciation and amortization expense

Amortization of discount on debt

Amortization of discount on convertible note

Amortization of convertible note premium

Stock-based compensation expense

Provision for expected credit losses

Impairment loss

Gain on lease modification

Gain on convertible note extinguishment

Changes in operating assets and liabilities:

11 unchanged sentences

Purchase of marketable securities

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

2 unchanged sentences

Proceeds from financing obligation

Repayment of debt

Payment of convertible note issuance costs

Repayment of convertible notes and financing obligation

Net cash provided by (used in) financing activities

8 unchanged sentences

Fair value of shares issued as consideration for acquisition

Principal amount of 2028 Convertible Notes exchanged

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

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The Company’s platform serves stores in a wide variety of sizes, product categories, and purchase types, including business-to-consumer and business-to-business.

On September 30, 2024 , the Board of Directors of the Company notified Brent Bellm that his employment as the Company’s Chief Executive Officer was terminated.

Subsequent to September 30, 2024, the Board appointed Travis Hess, previously President of the Company, to succeed Mr.

Bellm as the Company’s Chief Executive Officer, effective October 1, 2024.

Concurrently, the Board elected Mr.

Hess as a director of the Company, to fill the vacancy created by Mr.

Bellm’s departure.

Additionally, subsequent to September 30, 2024, the Board appointed Ellen F.

Siminoff as Executive Chair of the Board.

Prior to her appointment as Executive Chair, Ms.

Siminoff served as a director of the Company since February 2020 and will continue to serve as Director.

The Executive Chair is a newly-created role and in this role, Ms.

Siminoff will provide leadership and direction to the Board and work with the Company’s Chief Executive Officer.

References in these condensed consolidated financial statements to “we”, “us”, “our”, the “Company”, or “BigCommerce” refer to BigCommerce Holdings, Inc.

1 unchanged sentence

Summary of significant accounting policies

There have been no significant changes from the significant accounting policies disclosed in Note 2 of the "Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K filed with the SEC on February 29, 2024 (our "Annual Report").

Basis of presentation

The accompanying condensed unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information.

In the opinion of management, the accompanying interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation.

Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

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 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.

The results of operations for the three and nine months ended September 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

3 unchanged sentences

References to “fiscal 2024,” for example, refer to the fiscal year ended December 31, 2024.

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Use of estimates

7 unchanged sentences

• the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions;

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Because of the use of estimates inherent in financial reporting process actual results could differ and the differences could be material to the Company’s consolidated financial statements.

6 unchanged sentences

ASU 2023-07 is effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently assessing the impact this standard will have on the Company’s but does not expect it to have a material impact on the consolidated financial statements.

The Company has assessed the impact of this standard and does not expect it to have a material impact on the consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740)

7 unchanged sentences

Other accounting standard updates effective for interim and annual periods beginning after December 31, 2023 are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The Company’s CODM is the chief executive officer.

The Company’s CODM is the chief executive officer (CEO).

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

6 unchanged sentences

Monthly subscription fees for enterprise plans are adjusted if a customer’s gross merchandise volume (“GMV”) or orders processed are above specified plan thresholds on a trailing twelve-month basis.

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 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.

In both of these scenarios, the total subscription fee is recognized on a straight-line basis over the term of the contract.

For most subscription solutions arrangements, excluding enterprise subscription plans, the Company has determined the Company meets the variable consideration allocation

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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.

The Company utilizes a pricing structure that provides a discount to the contractual price for customers who pay quarterly or annually.

The total subscription fee is recognized on a straight-line basis over the term of the contract.

In determining the amount of revenue to be recognized, the Company determines whether collection of the entire transaction price is probable.

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Subscription revenue includes revenue from Feedonomics.

Feedonomics provides a technology platform and related services that enables online retailers and other sellers to automate online listings of the sellers’ information across multiple third-party marketplaces and advertisers (such as Amazon, Google, Facebook, etc.).

The Company provides these services under service contracts which are generally one year or less, and in many cases month-to-month.

These service types may be sold stand-alone or as part of a

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multi-service bundle (e.g.

These service types may be sold stand-alone or as part of a multi-service bundle (e.g.

both marketplaces and advertising).

26 unchanged sentences

The Company has concluded that the integration services included in contracts with hosting obligations are not distinct.

As a result, the Company defers any arrangement fees for integration services and recognize such amounts over the life of the hosting obligation commencing when the integration has been completed.

As a result, the Company defers any arrangement fees for integration services and recognizes such amounts over the life of the hosting obligation commencing when the integration has been completed.

To determine if marketing activities are distinct, the Company considers the nature of the promise in the contract, the timing of payment, and the partner expectations.

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If the minimum is deemed substantive, revenue is recognized ratably over the life of the agreement.

For most of the Company’s contracts, the Company has determined the variable consideration allocation exception has been met and therefore variable fees are recognized in the period they are earned.

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of the Company’s contracts, the Company has determined the variable consideration allocation exception has been met and therefore variable fees are recognized in the period they are earned.

The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables, contract assets, and deferred revenue.

2 unchanged sentences

Contract assets are recorded on the condensed consolidated balance sheets at the end of each reporting period in Prepaid expenses and other assets, net.

Typically, contract assets arise from agreements that have tiered billings over the contract life,

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

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

Typically, contract assets arise from agreements that have tiered billings over the contract life, promotional billing periods, and partner and services revenue agreements that include substantive minimums.

Net contract assets were $ 7.8 million as of September 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 assesses the collectability of outstanding contract assets on an ongoing basis and maintains 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 $ 1.1 million and $ 1.5 million for credit losses related to contract assets as of June 30, 2024 and December 31, 2023, respectively.

The Company has provisioned $ 1.2 million and $ 1.5 million for credit losses related to contract assets as of September 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 recognized $ 6.6 million and $ 22.5 million of previously deferred revenue during the three and six months ended June 30, 2024.

The Company recognized $ 3.7 million and $ 26.6 million of previously deferred revenue during the three and nine months ended September 30, 2024.

Remaining performance obligation

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.

As of September 30, 2024 , the Company had $ 184.2 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.

2 unchanged sentences

(in thousands)

As of June 30, 2024

As of June 30, 2023

As of September 30, 2024

As of September 30, 2023

Cost of revenue

8 unchanged sentences

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

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 accounts receivable balance at September 30, 2024 and December 31, 2023 included unbilled receivables of $ 11.2 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.

The Company analyzes grouped customers by similar risk profiles, along with the invoiced accounts receivable portfolio and unbilled accounts receivable for significant risks, historical collection activity, and an estimate of future collectability to determine the amount that the Company will ultimately collect.

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an estimate of future collectability to determine the amount that the Company will ultimately collect.

This estimate is analyzed annually and adjusted as necessary.

1 unchanged sentence

The estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances, historical customer delinquency, and assessment of the overall portfolio and general economic conditions.

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The allowance for credit losses consisted of the following:

7 unchanged sentences

Balance at June 30, 2024

Provision for expected credit losses

Write-offs charged against the allowance

Balance at September 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 issues stock options ("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 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.

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

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.

9 unchanged sentences

Adjustments to stock-based compensation expense are made, as needed, each reporting period based on changes in our estimate of the number of units that are probable of vesting.

Revenue recognition and deferred costs

Restructuring charges

Costs to restructure certain internal operations are accounted for as one-time termination and exit costs.

A liability for a cost associated with restructuring activities is recognized and measured at its estimated fair value in our condensed consolidated balance sheet in the period the liability is incurred.

All costs relating to restructurings are recorded as "Restructuring charges" in the condensed consolidated statement of operations.

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.

When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ

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materially from actual results.

This may require us to revise our initial estimates which may materially affect our condensed consolidated results of operations and financial position in the period the revision is made.

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

Additionally, restructuring charges include considerations of various capital alternatives or changes in business activities which include expenses related to our change in go-to-market strategy, asset abandonment costs, accelerated depreciation, software impairments, professional services, and other costs.

Revenue recognition and deferre d costs

Revenue recognition

5 unchanged sentences

The following table disaggregates revenue by major source:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

1 unchanged sentence

Partner and services

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Revenue by geographic region was as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

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.

Revenue attributed to the United States was 76 percent and EMEA was 12 percent for the three and nine months ended September 30, 2024.

No single region, other than the United States and EMEA, represented more than ten percent of total revenue during the three and nine months ended September 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 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.

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

Sales commissions o f $ 2.2 million and $ 3.0 million were deferred for the three months ended September 30, 2024 and 2023 , respectively;

and $ 7.0 million and $ 7.3 million were deferred for the nine months ended September 30, 2024 and 2023, respectively.

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Deferred commission amortization expense wa s $ 2.6 million and $ 1.9 million for the three months ended September 30, 2024 and 2023 , respectively;

and $ 7.3 million an d $ 5.2 million for the nine months ended September 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.

Financial instruments carried at fair value include cash and cash equivalents, restricted cash and marketable securities (see note 9.

for convertible notes fair value).

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 June 30, 2024 and December 31, 2023:

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As of June 30, 2024

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

As of September 30, 2024

(in thousands)

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treasury securities

Commercial paper

Total marketable securities

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 .

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition t o $ 33.0 million of cash, as of September 30, 2024 .

As of December 31, 2023

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Total marketable securities

Convertible senior notes due 2026

(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 .

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

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of cash, as of December 31, 2023 .

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

(in thousands)

As of June 30, 2024

As of September 30, 2024

As of December 31, 2023

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Total marketable securities

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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

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

As of September 30, 2024

(in thousands)

Amortized Cost/ Principal amount

Amortized Cost

Cash equivalents:

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treasury securities

Commercial paper

Total marketable securities

Convertible senior notes due 2026

As of December 31, 2023

(in thousands)

Amortized Cost/ Principal amount

Amortized Cost

Cash equivalents:

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Total marketable securities

Convertible senior notes due 2026

Business combinations

Business combination s

Acquisition of Makeswift

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(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.

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

During the nine months ended September 30, 2024, the Compan y dispersed $ 0.1 million related to the working capital hold back.

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Total purchase consideration

(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 .

(1) Measurement period adjust ments of $ 0.2 million recorded 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 fiscal 2024.

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

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The $ 2.0 million is accounted for as compensation expense and therefore not included in the purchase consideration.

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

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 .

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

The Company incurred $ 0.3 million and $ 1.0 million of compensation costs during the three and nine months ended September 30, 2024, respectively.

The Company ha s $ 0.8 million of unvested amounts of cash r etention payments recorded in prepaid expenses and other current assets and other assets on the condensed consolidated balance sheet as of September 30, 2024 .

Goodwill and intangible assets

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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.

There was no impairment of goodwill as of September 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 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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Intangible assets amortization was $ 2.4 million and $ 2.0 million for the three months ended September 30, 2024 and 2023 , respectively and was $ 7.4 million and $ 6.1 million for the nine months ended September 30, 2024 and 2023, respectively.

There was no impairment of intangible assets as of September 30, 2024.

Intangible assets consists of the following:

June 30, 2024

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September 30, 2024

December 31, 2023

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Net carrying amount

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

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

Developed technology

Customer relationship

Customer relationships

Non-compete agreement

1 unchanged sentence

Total intangible assets

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

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

(in thousands)

June 30, 2024

Remaining six months of 2024

Commitments, contingencies, and leases

September 30, 2024

Remaining three months of 2024

Commitments, contingencies, leases, and restructuring charges

Legal proceedings

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

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

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

(in thousands)

June 30, 2024

Remaining six months of 2024

September 30, 2024

Remaining three 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 2029 .

1 unchanged sentence

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

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.

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

There was no impairment of right-of-use assets, excepted as discussed in the restructuring charges footnote, as of September 30, 2024.

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Operating expense relating to leases w as $ 0.6 million and $ 0.7 million for the three months ended September 30, 2024 and 2023 , respectively, and was $ 2.0 million and $ 2.1 million for the nine months ended September 30, 2024 and 2023, respectively.

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

(in thousands)

As of June 30, 2024

Remaining six months of 2024

As of September 30, 2024

Remaining three months of 2024

Total minimum lease payments

2 unchanged sentences

Restructuring charges

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 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.

In September 2024, the Company commenced a restructuring plan (the “2024 Restructure”) intended to reinvest in product delivery and increase sales capacity, to reduce operating costs, improve operating margins and continue to advance the Company's ongoing commitment to profitable growth.

The 2024 Restructure includes a reduction of the Company's workforce, exits of certain office leases, impairment of certain software development projects and contract amendments and terminations to better align operating expenses with existing economic conditions and the Company's strategic priorities.

In connection with the 2024 Restructure, the Company incurred $ 9.8 million of restructuring charges for the three months ended September 30, 2024 consisting primarily of severance benefits, right-of-use asset impairments, lease termination gain, software impairments, and professional services costs.

Within the condensed consolidated balance sheet, the liability for severance benefits of $ 6.2 million as of September 30, 2024 is recorded to other current liabilities and $ 0.5 million of professional services costs are recorded in accounts payable and other current liabilities.

The Company expects to incur additional costs relating to the 2024 Restructure of approximately $ 3.5 million to $ 5.7 million through fiscal 2025 relating to severance benefits, contract terminations, accelerated depreciation, right-of-use asset impairments, software impairments, and professional services costs.

The additional expenses we expect to incur are subject to assumptions, and actual expenses may differ from the estimates disclosed above.

In September 2024, the Company executed the early lease termination clause (the "Lease Termination") for its corporate headquarters in Austin, Texas that resulted in a one-time lease termination fee of approximately $ 1.9 million.

The Company plans to continue to lease the property through September 2025.

Upon termination of the lease, the Company recognized a gain of approximately $ 1.0 million, representing the lease liability remeasurement of approximately $ 2.9 million, net of the $ 1.9 million carrying value of the right-of-use asset.

The 2024 Restructure included the decision to cease use of the Company's existing leased office space in San Francisco and made such office space available for sublease in August 2024.

As a result, the Company impaired approximately $ 0.7 million in right-of-use asset and the associated furniture, equipment, and leasehold improvements of $ 0.2 million.

These amounts are recorded in restructuring charges on the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2024.

The Company previously implemented certain business transformation initiatives, including moving certain operations to an integrated technology platform.

As part of the 2024 Restructure, the Company determined certain costs related to these initiatives will not be recoverable which resulted in an impairment of capitalized internal use software costs of $ 2.1 million.

In June 2024, the Company started incurring restructuring charges, rela ted 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:

As of September 30, 2024, the Company has incurred approximately $ 2.7 million of costs related to these activities.

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

In fiscal 2024, the Company made payments of $ 1.4 million related to previously recognized expenses and has not recorded any additional charges related to the

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2023 Restructure.

As of September 30, 2024, a liability for severance benefits of approximately $ 0.1 million was recorded in Other current liabilities within the condensed consolidated balance sheet.

The 2023 Restructure is substantially complete.

The following table summarizes the activities related to the Company's restructurings charges:

As of September 30, 2024

As of December 31, 2023

(in thousands)

Liability, as of December 31, 2023

Workforce reduction

Impairment Costs and Lease Termination

Other Restructuring Charges (1)

Workforce reduction

Impairment Costs and Lease Reassessment

Other Restructuring Charges

Liability, beginning of the period

Additional charges

Liability, as of June 30, 2024

Impairment loss

Gain on lease termination

Non-cash items

Liability, end of the period

(1) Other restructuring charges o f $ 3.3 million recorded during the nine months ended September 30, 2024 is comprised of $ 2.7 million of inbound inquiries and interest in the Company and $ 0.6 million of professional services costs associated with the new go-to-market approach.

Other liabilities

The following table summarizes the components of other current liabilities:

As of June 30,

As of September 30,

As of December 31,

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Restructuring related charges

Short-term financing obligation

Other current liabilities

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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 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 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 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 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 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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Convertible Notes

The Company's convertible note obligations, including the level within the fair value hierarchy (see note 4.

Fair Value Measurements), are as follows:

As of September 30, 2024

As of December 31, 2023

Outstanding Principal

Unamortized convertible note premium and issuance costs

Net Carrying Value

Outstanding Principal

Unamortized convertible note premium and issuance costs

Net Carrying Value

(in thousands)

2028 Convertible Notes*

2026 Convertible Notes**

Total carrying value of convertible notes (1)

(1) Included in “Convertible Notes” in the accompanying Condensed Consolidated Balance Sheets, is $ 0.1 million of 2023 financing

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(*) The fair value was calculated using a binomial lattice model which incorporates the terms and conditions of the convertible notes and market-based risk measurement that are indirectly observable, such as market credit spread, and therefore are Level 3 investments.

The lattice model produced an estimated fair value based on changes in the price of the underlying common share price over successive periods of time.

An estimated yield based on market data was used to discount straight debt cash flows.

(**) The fair value is influenced by interest rates, the Company's stock price and is determined by prices observed in market trading.

Since the market for trading of the 2026 Convertible Notes is not considered to be an active market, the estimated fair value is based on Level 2 inputs.

The following table presents details of the Company's convertible notes as of September 30, 2024, which are further discussed below:

Date of Issuance

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Contractual Interest Rate

Outstanding Principal as of June 30, 2024

Carrying Value as of June 30, 2024

Carrying Value as of December 31, 2023

2026 Convertible Senior Notes

Outstanding Principal

(in thousands)

Conversion Rate for Each $1,000 Principal

Initial Conversion Price per Share

2028 Convertible Notes

2026 Convertible Notes

September 2021

2023 Term Debt

Total carrying value of debt

current portion of debt

Total long-term portion of debt

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

Three months ended June 30,

Six months ended June 30,

The total interest expense recognized related to the Company’s convertible notes and financing obligation consists of the following:

Three months ended September 30,

Nine months ended September 30,

(in thousands)

Contractual interest expense

Amortization of issuance costs

Lender fees that were paid upfront to the lenders and debt issuance fees paid to third parties are recorded as a discount to the carrying amount of debt and are being amortized to interest expense over the life of the debt.

Amortization of premium and issuance costs

2028 Convertible Notes

In August 2024 , the Company entered into a privately negotiated exchange agreement (the "Exchange Agreement") with a holder of its 0.25 percent unsecured convertible senior notes due 2026 (the "2026 Convertible Notes").

Pursuant to the Exchange Agreement, the Company exchanged (the "Exchange Transaction") approximately $ 161.2 million in aggregate principal amount of the 2026 Convertible Notes for $ 150.0 million in aggregate principal amount of new 7.50 percent convertible senior notes due 2028 (the “2028 Convertible Notes”) and approximately $ 0.1 million in cash, with such payment representing the accrued and unpaid interest on such 2026 Convertible Notes.

This transaction resulted in a net gain on extinguishment of the 2026 Convertible Notes of $ 1.7 million, net of a $ 2.0 million write-off of unamortized debt issuance costs, which was recorded in Gain on convertible note extinguishment in the condensed consolidated statements of operations.

The 2028 Convertible Notes are senior, initially unsecured obligations of the Company and accrue interest at a rate of 7.50 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.

Before July 3, 2028, noteholders will have the right to convert their 2028 Convertible Notes only upon the occurrence of certain events.

From and after July 3, 2028, noteholders may convert their 2028 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

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

The conversion rate and conversion price will be subject to adjustments related to standard anti-dilution provisions upon the occurrence of certain events.

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The Company may not redeem the 2028 Convertible Notes prior to October 7, 2026.

The 2028 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, 2026 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 for a specified period of time and certain other conditions are satisfied.

The redemption price will be equal to the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.

In addition, calling any 2028 Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2028 Convertible Note, in which case the conversion rate applicable to the conversion of that 2028 Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Pursuant to the Partial Redemption Limitation, the Company may not elect to redeem less than all of the outstanding 2028 Convertible Notes unless at least $ 100.0 million aggregate principal amount of 2028 Convertible 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 2028 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their 2028 Convertible Notes for cash.

The repurchase price will be equal to the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date.

Upon entering into the Exchange Agreement, the Company recorded the $ 150.0 million aggregate principal amount of 2028 Convertible Notes at fair value of $ 157.5 million and related debt issuance costs as a reduction to the fair value of $ 3.0 million.

Debt issuance costs are recorded as a contra-liability and amortized over the term of the 2028 Convertible Notes utilizing an effective interest rate of 8.03 percent.

The $ 7.5 million premium related to the fair value adjustment of the 2028 Convertible Notes is amortized using an effective interest rate of 6.12 percent.

The Company is in compliance with the terms of the indenture, and has not experienced any events that would constitute an event of default.

2026 Convertible Notes

In September 2021 , the Company issued $ 345.0 million aggregate principal amount of its 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”).

Interest on the 2026 Convertible Notes accrue at a rate of 0.25 percent per annum, payable on April 1 and October 1 of each year , beginning on April 1, 2022.

In August 2024, in addition to the Exchange Agreement, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of its outstanding 2026 Convertible Notes to repurchase (the "Repurchase Transactions") approximately $ 120.6 million aggregate principal amount of the 2026 Convertible Notes for aggregate cash consideration of approximately $ 108.7 million, including accrued but unpaid interest of approximately $ 0.2 million on such 2026 Convertible Notes.

This transaction resulted in a net gain on extinguishments of debt of $ 10.4 million, net of a $ 1.5 million write-off of unamortized debt issuance costs which was recorded in Gain on debt extinguishment in the Statement of Operations.

Following the Repurchase Transactions, approximately $ 63.1 million principal amount of 2026 Convertible Notes remain outstanding.

The remaining unamortized debt issuance costs are recorded as a contra-liability and are amortized utilizing the effective interest rate of 0.84 percent over the term of the 2026 Convertible Notes.

The remaining outstanding 2026 Convertible Notes will mature on October 1, 2026 , unless earlier converted, redeemed or repurchased by the Company.

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

(1) during any calendar quarter, 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 2026 Convertible 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 2026 Convertible 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 2026 Convertible 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 2026 Convertible 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 2026 Convertible 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 September 30, 2024 and December 31, 2023 , no conversion for the remaining outstanding 2026 Convertible notes have been called or met.

In addition to the above conditions, the Company must not consummate any privately

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negotiated repurchases or exchanges of the notes if the yield to maturity of the notes is less than 5.23 percent (calculated at the time the definitive documentation is executed).

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 of the remaining outstanding 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 remaining outstanding 2026 Convertible Notes may be redeemed, 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 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.

In connection with the Exchange Transaction, the Company agreed that it will not consummate any privately negotiated repurchases or exchanges of 2026 Convertible Notes on or before April 7, 2025 if the yield to maturity (as defined in the Exchange Agreement) of 2026 Convertible Notes in such a transaction is greater than 5.23 percent, calculated at the time definitive documentation related to such transaction is executed.

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 2026 Convertible 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.

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

The Company is in compliance with the terms of the indenture, and has not experienced any events that would constitute an Event of Default under the 2026 Convertible Notes.

2021 Capped Call Transactions

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A total of 3,873,885 shares of common stock were initially authorized and reserved for issuance under the 2020 Plan.

This share reserve automatically increased on January 1, 2021, 2022, and 2023 and will increase on each subsequent January 1st through and including January 1, 2031, by an amount equal to the smaller of (a) 5 % of the number of shares of common stock issued and outstanding on the immediately preceding December 31 and (b) an amount determined by the board of directors.

This share reserve automatically increased on January 1, 2021, 2022, 2023, and 2024 will increase on each subsequent January 1st through and including January 1, 2031, by an amount equal to the smaller of (a) 5 % of the number of shares of common stock issued and outstanding on the immediately preceding December 31 and (b) an amount determined by the board of directors.

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.

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.

As of September 30, 2024 , a total of 9,996,094 , registered shares of common stock remain available for future issuance under the 2020 Plan.

Stock options

1 unchanged sentence

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

Six months ended June 30,

Nine months ended September 30,

Weighted-average grant date fair value of options

Risk-free interest rate

3.65 % - 4.30 %

Expected volatility

65.27 % - 66.57 %

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.

5 unchanged sentences

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 six months ended June 30, 2024 was as follows:

Stock option activity for the nine months ended September 30, 2024 was as follows:

(in thousands)

4 unchanged sentences

Plan shares expired or canceled

Balance as of June 30, 2024

Balance as of September 30, 2024

Vested and 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.

Exercisable as of September 30, 2024

The expected stock-based compensation expense remaining to be recognized as of September 30, 2024 is $ 5.5 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 2.39 years.

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Restricted stock units

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

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Restricted stock unit activity for the nine months ended September 30, 2024 was as follows:

(in thousands)

5 unchanged sentences

Vested and converted to shares

Balance as of June 30, 2024

Balance as of September 30, 2024

Vested and expected to vest

1 unchanged sentence

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

Six months ended June 30,

Nine months ended September 30,

Risk-free interest rate

Dividend yield

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.

As of September 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 September 30, 2024 , and was $ 0.3 million and $ 0.6 million for the nine months ended September 30, 2024.

The aggregate expected stock-based compensation expense remaining to be recognized as of September 30, 2024 is $ 48.1 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 2.18 years.

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 income tax expense for the three and nine months ended September 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 ( 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.

The Company’s provision for income taxes reflected an effective tax rate of ( 4.00 ) percent and ( 0.72 ) percent for the three months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024 and 2023, the Company had an effective tax rate of ( 2.89 ) percent and ( 0.91 ) p ercent, respectively.

For the three and nine months ended September 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 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.

As of September 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 2020 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized.

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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 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,

Because the Company has reported a net loss for the three and nine months ended September 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 September 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

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 June 30,

As of September 30,

(in thousands)

2 unchanged sentences

Acquisition related compensation

Convertible debt

Convertible notes

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.

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• the anticipated effect on our business of litigation to which we are or may become a party;

• the anticipated benefits and opportunities related to past and ongoing restructuring may not be realized or may take longer to realize than expected;

• our ability to manage key executive succession and retention or continue to attract qualified personnel;

• our ability to remediate the material weakness;

1 unchanged sentence

Although we believe the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors, some of which are beyond our control.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 29, 2024 and “Risk Factors,” in this Quarterly Report on Form 10-Q as well as factors more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 29, 2024 (our "Annual Report") and “Risk Factors,” in this Quarterly Report on Form 10-Q as well as factors more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q.

If one or more of the factors affecting the expectations reflected in our forward-looking information and statements proves incorrect, our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements.

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-Q

Item 1. Financial Statements