What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 283 added, 371 removed, 487 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

Current assets

8 unchanged sentences

Operating lease, right-of-use-assets

Prepaid expenses, net of current portion

Prepaid expenses and other assets, net of current portion

Deferred commissions, net of current portion

5 unchanged sentences

Deferred revenue

Current portion of operating lease liabilities

Other current liabilities

Operating lease liabilities

Other liabilities

Total current liabilities

1 unchanged sentence

Operating lease liabilities, net of current portion

Other long-term liabilities, net of current portion

Other liabilities, net of current portion

Total liabilities

10 unchanged sentences

(in thousands, except per share amounts)

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Cost of revenue (1)

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Other expense

Loss before provision for income taxes

Income (loss) before provision for income taxes

Provision for income taxes

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

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Cost of revenue

7 unchanged sentences

(in thousands)

Three months ended September 30,

Nine months ended September 30,

Other comprehensive income (loss):

Net unrealized gain on marketable securities

Three months ended March 31,

Other comprehensive loss:

Net unrealized loss on marketable securities

Total comprehensive loss

4 unchanged sentences

(in thousands)

For the three and nine months ended September 30, 2024

For the three months ended March 31, 2025

Comprehensive

7 unchanged sentences

Balance at March 31, 2025

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

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

For the three months ended March 31, 2024

Comprehensive

5 unchanged sentences

Stock-based compensation

Total other comprehensive income

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

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

Balance at March 31, 2024

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

3 unchanged sentences

(in thousands)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

1 unchanged sentence

Depreciation and amortization expense

Amortization of discount on convertible note

Amortization of convertible note premium

Amortization of discount on convertible notes

Amortization of premium on convertible notes

Stock-based compensation expense

Provision for expected credit losses

Impairment loss

Gain on lease modification

Gain on convertible note extinguishment

Gain on convertible notes extinguishment

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses

Prepaid expenses and other assets

Deferred commissions

4 unchanged sentences

Cash flows from investing activities:

Cash paid for acquisition

Purchase of property and equipment

Cash paid for website domain name

Purchase of property, equipment, leasehold improvements and capitalized internal-use software

Maturity of marketable securities

Purchase of marketable securities

Net cash provided by 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

Payment of convertible note issuance costs

Repayment of convertible notes and financing obligation

Net cash provided by (used in) financing activities

Net cash used in financing activities

Net change in cash and cash equivalents and restricted cash

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Cash paid for taxes

Right-of-use asset obtained in exchange for new operating lease liability

Noncash investing and financing activities:

Capital additions, accrued but not paid

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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BigCommerce Holdings, Inc.

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BigCommerce Holdings Inc.

(the “Company”) is leading a new era of ecommerce.

The Company’s software-as-a-service (“SaaS”) platform simplifies the creation of engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility.

The Company empowers both its customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale systems.

("BigCommerce," the "Company," "us,""we," or "our") provides a software-as-a-service ("SaaS") ecommerce platform for retailers at all stages of ecommerce growth.

The Company's platform serves customers across a wide variety of sizes, industries, and product categories seeking to differentiate themselves in-market with more tailored commerce experiences.

The Company empowers businesses to turn digital transformation into a competitive advantage, and allows merchants to build their ecommerce solution their way with the flexibility to fit their unique business and product offerings.

The Company provides a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting.

The Company offers three core owned products— the flagship commerce platform, BigCommerce;

the AI-based product data feed management platform, Feedonomics;

and the brand and commerce site builder and visual editor, Makeswift.

These offerings provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting.

All of the Company’s stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation.

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.

and its subsidiaries, unless otherwise stated.

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 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.

In the opinion of management, 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 Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 27, 2025 (our "Annual Report").

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 our Annual Report.

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.

The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any other period.

Basis of consolidation

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References to "fiscal 2025," for example, refer to the fiscal year ended December 31, 2025.

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Use of estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions in the Company’s consolidated financial statements and notes thereto.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions.

Significant estimates and assumptions made by management in these consolidated financial statements include:

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• the period of benefit associated with costs capitalized to obtain revenue contracts;

• fair value of certain stock awards issued;

• valuation of convertible notes;

• incremental borrowing rate used in the measurement of lease liabilities;

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• the useful lives of intangible assets;

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Recent Accounting Pronouncements Not Yet Adopted

ASU 2023-07, Segment Reporting (Topic 280)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires all public entities, including those public entities that have a single reportable segment to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Additionally, it requires a public entity to disclose the title and position of the individual or the name of the group or committee identified as the chief operating decision maker (“CODM”).

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 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)

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Lastly, the amendments in this Update replace the term ‘public entity’ as currently used in Topic 740 with the term ‘public business entity’.

ASU 2023-09 is effective for the Company’s fiscal years beginning after December 15, 2024.

ASU 2023-09 is effective for the Company’s annual periods beginning after December 15, 2024.

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

ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220)

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

Disaggregation of Income Statement Expenses.

The new guidance is intended to provide investors more detailed disclosures around certain types of expenses, including employee compensation, depreciation, intangible asset amortization, and other specific expense categories.

This standard also requires disclosure of the total amount of selling expenses to be presented in the notes to the financial statements.

ASU 2024-03 is effective for the Company's fiscal years beginning after December 15, 2026, and interim periods within fiscal years after December 15, 2027.

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

ASU 2024-04, Induced Conversions of Convertible Debt Instruments (Subtopic 470)

In November 2024, the FASB issued ASU 2024-04,Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments Disclosures.

The amendments in this update are intended to improve relevance and consistency in application of the induced conversion guidance in Subtopic 470-20.

Additionally, the purpose of the update is to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversion.

Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument.

ASU 2024-04 is effective for the Company's fiscal years beginning after December 15, 2025, and interim periods with those annual reporting periods.

Other accounting standard updates effective for interim and annual periods beginning after December 31, 2024 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 (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.

Accordingly, the Company has determined that it operates as a single operating and reportable segment.

The Company provides professional-grade commerce solutions for all types of customers at all stages of their ecommerce growth.

The Company conducts business as a single operating and reportable segment, which is based upon the Company's current organizational and management structure, as well as information used by the chief operating decisions makers (CODM) to allocate resources and assess company performance.

The Company’s CODM consist of the chief executive officer ("CEO") and the chief financial officer ("CFO"), who review the financial information presented on a consolidated basis for purposes of making operating decisions, allocate resources, and evaluate financial performance.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies in Note 2.

In accordance with ASC 280, the Company has determined that consolidated net loss, as reported on the consolidated statement of operations, is the key measure of profitability that is required to be reported as it is the measure determined in accordance with measurement principles most consistent with GAAP.

The CODM uses net loss to allocate resources and assess performance which

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enhances the CODM's ability to compare past financial performance with current financial performance and analyze business performance and trends.

This metric is used when monitoring budget versus actual results, and to assess the performance of the Company's strategic priorities of driving efficient revenue growth.

The significant expenses within net loss on which the CODM relies include those that are reported on the condensed consolidated statements of operations.

The measure of segment assets is reported on the condensed consolidated Balance Sheets as Total assets.

Accounts receivable

Accounts receivable are stated at net realizable value and include both billed and unbilled receivables.

Accounts receivable are net of an allowance for credit losses, are not collateralized, and do not bear interest.

Payment terms range from due immediately to due within 90 days .

Unbilled receivable balances arise primarily when the Company provides services in advance of invoicing for those services.

Billing for revenues relating to the volume of transactions processed by the customer are generally billed a month in arrears, resulting in an unbilled receivable.

The accounts receivable balance at March 31, 2025 and December 31, 2024 included unbilled receivables of $ 11.2 million, and $ 15.5 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.

This estimate is analyzed annually and adjusted as necessary.

Identified risks pertaining to the Company’s invoiced accounts receivable include the delinquency level and customer type.

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.

The allowance for credit losses consisted of the following:

(in thousands)

Balance at December 31, 2024

Provision for expected credit losses

Recoveries of credit losses

Write-offs charged against the allowance

Balance at March 31, 2025

Contract Assets

The Company records a contract asset when revenue recognized on a contract exceeds the billings.

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

Net contract assets were $ 4.3 million as of March 31, 2025 as compared to $ 5.0 million as of December 31, 2024.

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 maintains a reserve which is included in the allowance for credit losses for contract assets deemed uncollectible.

Delinquency level and customer type have been identified as the primary specific risk affecting the Company’s contract assets.

The estimate for losses is analyzed annually and adjusted as necessary.

The Company has provisioned $ 0.5 million for credit losses related to contract assets as of March 31, 2025 and December 31, 2024 .

Deferred commissions

The Company capitalizes certain sales commissions earned by the Company’s go-to-market teams as these commission payments are considered incremental and recoverable costs of obtaining a contract with a customer.

The Company begins amortizing deferred commissions costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the expected period of customer benefit.

The Company amortizes deferred sales commissions ratably over the customer life which is approximately 3 years.

The amortization of deferred commission is recorded in sales and marketing expense within the

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condensed consolidated statement of operations.

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 the deferred costs.

Deferred revenue

Deferred revenue primarily consists of amounts that have been received from customers in advance of the performance obligation being satisfied.

The Company recognizes revenue from deferred revenue when the services are performed and the corresponding revenue recognition criteria are met.

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

The Company recogni zed $ 22.0 million of previously deferred revenue during the three months ended March 31, 2025.

The Company experienced an increase in the deferred revenue balance as of March 31, 2025, compared to December 31, 2024, which was primarily driven by the Company's continued shift to annual billing cycles.

These increases were offset by the impact of amounts included in net contract assets due to timing differences between billings, revenue recognition and cash collections.

Revenue Recognition

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Subscription solutions revenue consists primarily of platform subscription fees from all plans and recurring professional services.

Subscription solutions are charged monthly, quarterly, or annually for the Company’s customers to sell their products and process transactions on the Company’s platform.

Subscription solutions are typically charged annually for the Company’s customers to sell their products and process transactions on the Company’s platform.

Subscription solutions are generally charged per online store and are based on the store’s subscription plan.

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

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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.

Subscription fees 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, the Company utilizes the right to invoice practical expedient and, therefore, recognizes fixed monthly fees or a pro-rata portion of 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 have prepayment terms.

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

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Only amounts deemed probable are recognized as revenue.

Key factors in this determination are historical contract termination rates and general economic factors.

Subscription revenue includes revenue from Feedonomics.

Key factors in this determination are historical contract termination rates, general economic factors, and customer specific factors.

Subscription solutions 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, Alphabet, Meta, etc.).

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Professional services, which primarily consist of education packages, launch services, solutions architecting, implementation consulting, and catalog transfer services, are generally billed and recognized as revenue when delivered.

Contracts with the Company’s retail customers are generally month-to-month, while contracts with the Company’s enterprise customers generally range from one to three years .

Contracts with the Company’s retail customers are generally month-to-month, while contract terms with the Company’s enterprise customers generally range from one to three years .

Contracts are typically non-cancelable and do not contain refund-type provisions.

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Contracts with multiple performance obligations

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A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.

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The Company’s subscription contracts are generally comprised of a single performance obligation to provide access to the Company’s platform, but can include additional performance obligations.

For contracts with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”) for any distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance obligation using the Company’s best estimate of SSP.

For contracts with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”) for any distinct service, the Company may be required to allocate the contract’s transaction price to each performance obligation using the Company’s best estimate of SSP.

Judgment is required to determine the SSP for each distinct performance obligation.

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

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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.

For most contracts, variable fees are recognized in the period they are earned as the Company utilizes the right to invoice practical expedient.

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

Contract assets

Billings scheduled to occur after the performance obligation has been satisfied and revenue recognition has occurred result in contract assets.

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

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 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 $ 1.2 million and $ 1.5 million for credit losses related to contract assets as of September 30, 2024 and December 31, 2023, respectively.

Deferred revenue

Deferred revenue primarily consists of amounts that have been received from customers in advance of the performance obligation being satisfied.

The Company recognizes revenue from deferred revenue when the services are performed and the corresponding revenue recognition criteria are met.

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

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 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.

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.

As of March 31, 2025, the Company ha d $ 177.1 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 obligations are subject to future economic risks, including bankruptcies, regulatory changes and other market factors.

The Company expects to recognize 68 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 September 30, 2024

As of September 30, 2023

As of March 31, 2025

Cost of revenue

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and amortization expense associated with capitalized internal-use software.

Accounts receivable

Accounts receivable are stated at net realizable value and include both billed and unbilled receivables.

Accounts receivable are net of an allowance for credit losses, are not collateralized, and do not bear interest.

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

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.

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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.

Identified risks pertaining to the Company’s invoiced accounts receivable include the delinquency level and customer type.

The allowance for credit losses consisted of the following:

(in thousands)

Balance at December 31, 2023

Provision for expected credit losses

Write-offs charged against the allowance

Balance at March 31, 2024

Provision for expected credit losses

Write-offs charged against the allowance

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

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 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 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.

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.

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.

The Company grants PSUs to executive officers and other members of senior management 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 are referred to as market-based awards.

The Company values these market-based awards on the grant date using the Monte Carlo simulation model.

The determination of fair value is affected by the Company's stock price and a number of assumptions including the expected volatility and the risk-free interest rate.

The Company assumes no dividend yield and recognizes stock-based compensation expense ratably from grant date over the performance period of the award.

The Company assumes no dividend yield and recognizes stock-based compensation expense on a

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straight-line basis from grant date over the service period of the award.

The market-based awards will cliff-vest at the end of the three-year period ranging from 0 percent to 200 percent of the target number of PSUs granted.

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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 percent to 200 percent.

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

The Company recognizes stock-based compensation expense on a straight line basis over the service period, if it is probable that the performance condition will be achieved.

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.

Certain executives have legal rights related to their unvested equity awards through their change in control provision.

Restructuring charges

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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.

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

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

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Revenue recognition and deferred costs

Revenue recognition

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The following table disaggregates revenue by major source:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in thousands)

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Revenue by geographic region was as follows:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in thousands)

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 customers’ bill-to address.

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.

United States

Rest of World

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 approximatel y 76 percent d uring the three months ended March 31, 2025 and 2024 .

Revenue attributed to EMEA was approximately 12 percent and 11 percent for the three months ended March 31, 2025 and 2024, respectively.

No single region, other than the United States and EMEA, represented more than ten percent of total revenue during the three months ended March 31, 2025 and 2024.

Deferred commissions

Certain sales commissions earned by the Company’s go-to-market teams are considered incremental and recoverable costs of obtaining a contract with a customer.

The Company amortizes deferred sales commissions ratably over the average customer life which is three years .

The Company includes amortization of deferred commissions in sales and marketing expense in the condensed consolidated statements of operations.

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.

The Company amortizes certain sales commissions costs that are considered incremental and recoverable costs of obtaining a contract with a customer.

The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred commissions, and the remainder is recorded in deferred commissions, net of current portion reflected on the condensed consolidated balance sheets.

The Company did no t recognize an impairment of deferred commissions for the three months ended March 31, 2025 and 2024.

Sales commissions of $ 0.6 million and $ 2.1 million were deferred for the three months ended March 31, 2025 and 2024, respectively;

deferred commission amortization expense w as $ 2.7 million and $ 2.3 million for the three months ended March 31, 2025 and 2024 , 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 (see note 9.

for convertible notes fair value).

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

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.

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• 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, and marketable securities that were measured at fair value as of September 30, 2024 and December 31, 2023:

As of September 30, 2024

The following table presents information about the Company’s cash equivalents and marketable securities that were measured at fair value as of March 31, 2025 and December 31, 2024:

As of March 31, 2025

(in thousands)

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Total marketable securities

(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 .

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition t o $ 46.5 million of cash as of March 31, 2025 .

As of December 31, 2024

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treasury securities

Commercial paper

Total marketable securities

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

(1) Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets, in addition to $ 44.3 million of cash, as of December 31, 2024 .

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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 September 30, 2024

As of March 31, 2025

As of December 31, 2024

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Total marketable securities

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

The following tables summarize the gains, losses, and estimated fair value of cash equivalents, marketable securities as of March 31, 2025 and December 31, 2024:

As of March 31, 2025

(in thousands)

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treasury securities

Commercial paper

Total marketable securities

Business combination s

Acquisition of Makeswift

Business combinations

In October 2023, the Company acquired all issued and outstanding stock of Makeswift, Inc.

(“Makeswift”) pursuant to a merger agreement.

Makeswift is a leading visual editor for Next.js websites.

The total purchase consideration for Makeswift was approximately $ 9.2 million which consisted of the following:

(in thousands)

Base purchase price

Deferred compensation

Total purchase consideration (1)

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

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

(in thousands)

October 31, 2023

Tangible assets acquired

Right-of-use asset

Intangible assets acquired

Liabilities assumed

Deferred tax liability (1)

Lease liability

Net assets acquired, excluding goodwill

Total purchase consideration

(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:

(in thousands)

Useful life (in years)

Developed technology

Customer relationships

Total acquisition-related intangible assets

The $ 2.2 m illion goodwill balance is primarily attributable to synergies and expanded market opportunities that are expected to be achieved from the integration of Makeswift with the Company’s offerings and assembled workforce.

The goodwill balance is not deductible for income taxes purposes.

As part of the Makeswift merger agreement, $ 2.0 million of the purchase consideration is subject to clawback if any of the key Makeswift employees voluntarily terminate their employment within 18 months after the closing date of the transaction.

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-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 .

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 o f compensation costs during the three months ended March 31, 2025.

The remaining unvested amounts of cash retention payments are recorded in prepaid expenses and other current assets on the condensed consolidated balance sheet as of March 31, 2025 .

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 September 30, 2024.

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

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:

There was no impairment of goodwill for the three months ended March 31, 2025 and 2024.

Finite-lived intangible assets are amortized on a straight-line basis over the useful life.

In the first quarter of fiscal year 2025, the Company acquired a website domain name for $ 2.4 million.

Intangible assets amortiz ation was $ 2.3 million and $ 2.5 million for the three months ended March 31, 2025 and 2024, respectively.

There was no impairment of intangible assets for the three months ended March 31, 2025 and 2024.

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September 30, 2024

December 31, 2023

(in thousands)

Accumulated amortization

Net carrying amount

Accumulated amortization

Net carrying amount

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

Developed technology

Customer relationships

Non-compete agreement

Other intangibles

Total intangible assets

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

As of March 31, 2025, expected amortization expense for intangible assets was as follows:

(in thousands)

September 30, 2024

Remaining three months of 2024

Commitments, contingencies, leases, and restructuring charges

March 31, 2025

Remaining nine months of 2025

Commitments, contingencies, leases, and legal proceedings

Legal Proceedings

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The Company has contractual commitments for services with third-parties related to hosting and internal software systems.

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

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

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

The Company had unconditional purchase obligations as of March 31, 2025 as follows:

(in thousands)

September 30, 2024

Remaining three months of 2024

2027 and thereafter

The Company leases certain facilities under operating lease agreements that expire at various dates through 2029 .

As of March 31, 2025

Remaining nine months of 2025

The Company leases facilities under operating lease agreements that expire at various dates through 2031 .

Some of these arrangements contain renewal options and require the Company to pay taxes, insurance and maintenance costs.

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

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.

Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term.

Right-of-use assets also include adjustments related to deferred lease payments and lease incentives.

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

As of March 31, 2025 , there were no finance leases.

There was no impairment recorded for leases for the three months ended March 31, 2025 and 2024.

During the first quarter of 2025, in connection with the 2024 Restructure (as defined below), the Compan y entered into a sublease agreement for approximately 6 years to relocate its Austin headquarters.

The Company is responsible for additional expenses, including taxes, and provided a cash security deposit to the sublessor.

The sublease commenced in March 2025 , and expires on the earlier of January 31, 2031, or two months prior to such earlier date as the Master Lease (as defined in the Sublease) may otherwise expire or terminate.

Operating lease expense was $ 0.2 million and $ 0.8 million for the three months ended March 31, 2025 and 2024, respectively.

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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 September 30, 2024

Remaining three months of 2024

As of March 31, 2025

Remaining nine months of 2025

Total minimum lease payments

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Total lease liabilities

Defined contribution plan

The Company sponsors a tax-qualified 401(k) defined contribution retirement plan for its U.S.

employees (the "Plan").

The Plan allows for eligible employees to participate by contributing a portion of their compensation on a pre-tax basis, subject to annual limits established by the Internal Revenue Service.

Effective January 1, 2025, the Company implemented an employer matching contribution for its U.S.

employees under the Plan.

Pursuant to the terms of the Plan, the Company matches 50 percent of the first 6 percent of eligible compensation that a participating employee contributes.

Both employee contributions and Company matching contributions are based on participants' total gross eligible earnings.

Employer matching contributions are made on a per-pay-period basis, such that each time an employee makes a contribution through payroll deferral, the Company provides a corresponding matching contribution at the applicable rate.

Employees are immediately vested in their own contributions.

Employer matching contributions vest based on employee tenure as of the applicable pay period:

(i) employees with less than one year of service are 0 percent vested in matching contributions, (ii) employees with more than one year but less than two years of service are 50 percent vested, and (iii) employees with two or more years of service are 100 percent vested.

Vesting will be updated prospectively upon employees reaching their first and second anniversary dates.

Matching contributions are recognized as compensation expense in the period in which the associated employee services are rendered.

For the three months ended March 31, 2025 , the Company recorded $ 0.7 million in expense related to employer matching contributions to the retirement plan.

No matching contribution expense was recorded in fiscal year 2024.

Restructuring charges

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.

During the Company's third quarter of fiscal 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.

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

During the three months ended March 31, 2025, the Company incurred restructuring charges, consisting primarily of severance benefits, accelerated depreciation, and professional services costs.

Within the condensed consolidated balance sheet, the liability for severance benefits o f $ 1.6 million and $ 1.7 million as of March 31, 2025 and December 31, 2024, respectively, are recorded to other current liabilities.

Professional services costs of $ 0.3 million and $ 0.5 million as of March 31, 2025 and December 31, 2024, respectively, are recorded in accounts payable and other current liabilities.

These charges were recorded within Restructuring Charges on the accompanying condensed consolidated statement of operations.

The Company expects to incur additional costs relating to the 2024 Restructure of approximat ely $ 2.8 million to $ 4.7 million through fiscal 2025 relating to severance benefits, contract terminations, accelerated depreciation, and professional services costs.

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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

additional expenses the Company expects to incur are subject to assumptions, and actual expenses may differ from the estimates disclosed above.

The following table summarizes the activities related to the Company's 2024 restructuring charges:

As of March 31, 2025

As of December 31, 2024

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Workforce reduction

Impairment Costs and Lease Termination

Real Estate and Internal Use Software

Other Restructuring Charges

Workforce reduction

Impairment Costs and Lease Reassessment

Real Estate and Internal Use Software

Other Restructuring Charges

1 unchanged sentence

Additional charges

Impairment loss

Real estate and internal-use software charges

Gain on lease termination

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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 September 30,

As of March 31,

As of December 31,

(in thousands)

Sales tax payable

Payroll and payroll related expenses

Acquisition related compensation

Accounting & legal professional services

Sales tax payable

Restructuring related charges

Short-term financing obligation

Other current liabilities

Convertible Notes

Accrued Interest

Other liabilities

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 March 31, 2025

As of December 31, 2024

Outstanding Principal

Unamortized convertible note premium and issuance costs

Net Carrying Value

Outstanding Principal

Unamortized convertible note premium and issuance costs

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Total carrying value of convertible notes

(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.

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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.

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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:

The following table presents details of the Company's convertible notes as of March 31, 2025 which are further discussed below:

Date of Issuance

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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,

Three months ended March 31,

(in thousands)

1 unchanged sentence

Amortization of (premium) and issuance costs

Capitalization of interest expense

2028 Convertible Notes

1 unchanged sentence

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.

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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.

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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.

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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.

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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.

In February 2025, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of its outstanding 2026 Convertible Notes to repurchase approximately $ 59.1 million aggregate principal amount of its 2026 Convertible Notes for aggregate cash consideration of approximately $ 54.4 million, including accrued but unpaid interest.

This transaction resulted in a net gain on repurchases of debt of approximately $ 3.9 million, net of $ 0.6 million write-off of unamortized debt issuance costs.

As of March 31, 2025, approximately $ 4.0 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.

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.

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.

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 2026 Convertible Notes for cash.

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

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 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.

The premiums paid for the Capped Call Transaction have been included as a net reduction to additional paid-in capital within stockholders’ equity.

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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, 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.

This share reserve automatically increased on January 1, 2021, 2022, 2023, 2024, and 2025 will increase on each subsequent January 1st through and including January 1, 2031, by an amount equal to the smaller of (a) 5 percent 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, 2025, 2024, 2023 and January 1, 2022 the share reserve increased b y 3,928,833 shares, 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 September 30, 2024 , a total of 9,996,094 , registered shares of common stock remain available for future issuance under the 2020 Plan.

As of March 31, 2025 , a total of 6,153,944 r egistered 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.

Nine months ended September 30,

Three months ended March 31,

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.

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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 nine months ended September 30, 2024 was as follows:

(in thousands)

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Balance as of December 31, 2024

Options granted under all plans

Options granted

Plan shares expired or canceled

Balance as of September 30, 2024

Balance as of March 31, 2025

Vested and 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.

Exercisable as of March 31, 2025

The total intrinsic value of options exercised during the three months ended March 31, 2025 and 2024 was $ 1.4 million and $ 1.5 million, respectively.

The intrinsic value was calculated as the difference between the estimated fair value of the Company's common stock at exercise, and the exercise price of the in-the-money options.

At March 31, 2025, there was an estimate d $ 5.5 million of total unrecognized compensation expense related to stock options, 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 2.90 years.

Restricted stock units

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

Restricted Stock Units

Restricted stock unit activity for the three months ended March 31, 2025 was as follows:

(in thousands)

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Granted – restricted stock units

Vested and converted to shares

Balance as of March 31, 2025

Vested and expected to vest

Market-based and performance-based restricted stock unit activity for the three months ended March 31, 2025 was as follows:

(in thousands)

Grant Date Fair Value

Aggregate Intrinsic Value

Balance as of December 31, 2024

Granted – market-based and performance-based restricted stock units

Vested and converted to shares

Balance as of September 30, 2024

Balance as of March 31, 2025

Vested and expected to vest

The grant date fair value of the market-based awards was $ 9.91 .

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

Nine months ended September 30,

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

Three months ended March 31,

65.71 % - 75.43 %

Risk-free interest rate

4.22 % - 4.31 %

Dividend yield

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.

The aggregate expected stock-based compensation expense remaining to be recognized as of March 31, 2025 is $ 39.0 million related to RSUs and performance-based, and market-based PSUs, 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 2.46 years.

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.

Subsequent to the three months ended March 31, 2025, the Compensation Committee of the Company's Board of Directors approved 2025 market-based and performance-based PSUs pursuant to the 2020 Plan.

Total market-based PSU awards granted was approximately 300,000 shares, with a grant date fair value of $ 7.97 per share.

Total performance-based PSU awards granted was approximately 234,000 shares, which had a grant date fair value of $ 5.42 share.

The income tax expense for the three months ended March 31, 2025 is based on the estimated annual effective tax rate for fiscal 2025.

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 ( 4.00 ) 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.

For the three months ended March 31, 2025 , the Company’s provision for income taxes reflected income tax expense of $ 0.5 million on $ 0.2 million of pre-tax book income for an effective tax rate of 306.43 percent.

For the three months ended March 31, 2024 , the Company had tax expense of $ 0.3 million on a pre-tax loss of ($ 6.1 ) million for an effective tax rate of ( 4.75 ) percent.

For the three months ended March 31, 2025, the Company’s effective tax rate was higher than the U.S.

federal statutory rate of 21 percent primarily due to deferred tax expense related to tax amortization of acquired goodwill, changes in the Company’s tax reserves,

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and movement in the Company’s valuation allowance position.

The Company’s total income tax expense consists primarily of federal and state current income tax expense unable to be offset by tax attributes due to limitations under tax regulations, deferred income tax expense relating to the tax amortization of acquired goodwill, and current income tax expense from foreign operations.

For the three months ended March 31, 2024 , 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.

The Company’s current income tax expenses and benefits consist primarily of state current income tax expense, deferred income tax expense relating to the tax amortization of acquired goodwill and current income tax expense from foreign operations.

The Company has provided a valuation allowance against most of the Company’s deferred tax assets as it believes the objective and verifiable evidence of the Company’s historical pretax net losses outweighs any positive evidence of forecasted future results.

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 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.

The Company’s total income tax expense consists primarily of state current income tax expense unable to be offset by attributes, deferred income tax expense relating to the tax amortization of acquired goodwill, and current income tax expense from foreign operations.

Operating losses and tax credits 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.

Tax years 2020 through 2024 generally remain open to examination by the major taxing jurisdictions to which the Company is subject.

The Company is currently not under audit by any taxing jurisdiction.

The Company is currently not under an income tax audit by any taxing jurisdiction.

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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 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,

Because the Company has reported a net loss for the three months ended March 31, 2025, and 2024, 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,

(in thousands)

Net loss per share available to shareholders

Weighted average shares outstanding

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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 September 30,

As of March 31,

(in thousands)

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Total potentially dilutive securities

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Special note regarding forward-looking statements

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• the war involving Russia and Ukraine and the potential impact on our operations, global economic and geopolitical conditions;

• the impacts of changes in U.S.

trade policy and global tariffs;

• our anticipated areas of investments and expectations relating to such investments;

• our anticipated cash needs and our estimates

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

regarding our capital requirements and 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 efficient revenue growth and profitable growth;

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

• our ability to establish and maintain intellectual property rights;

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

• our ability to implement a go-to-market strategy that focuses on efficient profitable revenue growth, operating leverage, and healthy cash flow, may be impacted by unforeseen challenges in streamlining our organization and adapting to market dynamics;

• our ability to remediate the material weakness;

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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 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.

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, 2024, filed on February 27, 2025 (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.

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New factors emerge from time to time, and management cannot assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law.

Any forward-looking statements

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only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law.

All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

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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