Item 1. Financial Statements
Item 1. Financial Statements
BigCommerce Holdings, Inc.
Condensed Consolidated B alance Sheets
(in thousands)
March 31,
December 31,
2025
2024
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
52,084
$
88,877
Restricted cash
1,164
1,479
Marketable securities
68,628
89,283
Accounts receivable, net
44,164
48,117
Prepaid expenses and other assets, net
18,575
14,641
Deferred commissions
8,065
8,822
Total current assets
192,680
251,219
Property and equipment, net
8,128
9,128
Operating lease, right-of-use-assets
7,447
1,993
Prepaid expenses and other assets, net of current portion
4,299
3,146
Deferred commissions, net of current portion
4,381
5,559
Intangible assets, net
17,426
17,317
Goodwill
51,927
51,927
Total assets
$
286,288
$
340,289
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
$
7,822
$
7,018
Accrued liabilities
2,760
3,194
Deferred revenue
48,658
46,590
Operating lease liabilities
2,006
2,438
Other liabilities
21,006
28,766
Total current liabilities
82,252
88,006
Convertible notes
157,788
216,466
Operating lease liabilities, net of current portion
6,994
1,680
Other liabilities, net of current portion
1,179
768
Total liabilities
248,213
306,920
Stockholders’ equity
Common stock
7
7
Additional paid-in capital
659,985
654,905
Accumulated other comprehensive income
124
145
Accumulated deficit
( 622,041
)
( 621,688
)
Total stockholders’ equity
38,075
33,369
Total liabilities and stockholders’ equity
$
286,288
$
340,289
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BigCommerce Holdings, Inc.
Condensed Consolidated Statem ents of Operations
(in thousands, except per share amounts)
(unaudited)
For the three months ended March 31,
2025
2024
Revenue
$
82,370
$
80,360
Cost of revenue (1)
16,984
18,439
Gross profit
65,386
61,921
Operating expenses:
Sales and marketing (1)
30,366
32,432
Research and development (1)
19,206
19,988
General and administrative (1)
13,644
14,929
Amortization of intangible assets
2,335
2,467
Acquisition related costs
333
333
Restructuring charges
1,912
0
Total operating expenses
67,796
70,149
Loss from operations
( 2,410
)
( 8,228
)
Gain on convertible note extinguishment
3,931
0
Interest income
1,300
3,178
Interest expense
( 2,543
)
( 720
)
Other expense
( 107
)
( 332
)
Income (loss) before provision for income taxes
171
( 6,102
)
Provision for income taxes
( 524
)
( 290
)
Net loss
$
( 353
)
$
( 6,392
)
Basic net loss per share
$
( 0.00
)
$
( 0.08
)
Shares used to compute basic net loss per share
78,835
76,626
(1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows:
For the three months ended March 31,
2025
2024
Cost of revenue
$
746
$
656
Sales and marketing
1,775
1,867
Research and development
3,042
3,476
General and administrative
( 144
)
2,592
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BigCommerce Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three months ended March 31,
2025
2024
Net loss
$
( 353
)
$
( 6,392
)
Other comprehensive loss:
Net unrealized loss on marketable securities
( 21
)
( 259
)
Total comprehensive loss
$
( 374
)
$
( 6,651
)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BigCommerce Holdings, Inc.
Condensed Consolidated Statements o f Stockholders’ Equity
(in thousands)
(unaudited)
For the three months ended March 31, 2025
Common Stock
Additional
Paid-in
Accumulated
Accumulated
Other
Comprehensive
Stockholders’
Shares
Amount
Capital
Deficit
Income/ (Loss)
Equity
Balance at December 31, 2024
78,573
$
7
$
654,905
$
( 621,688
)
$
145
$
33,369
Proceeds from exercise of stock options
359
0
1,096
0
0
1,096
Release of restricted stock units
549
0
( 1,225
)
0
0
( 1,225
)
Stock-based compensation
0
0
5,209
0
0
5,209
Total other comprehensive loss
0
0
0
0
( 21
)
( 21
)
Net loss
0
0
0
( 353
)
0
( 353
)
Balance at March 31, 2025
79,481
$
7
$
659,985
$
( 622,041
)
$
124
$
38,075
For the three months ended March 31, 2024
Common Stock
Additional
Paid-in
Accumulated
Accumulated
Other
Comprehensive
Stockholders’
Shares
Amount
Capital
Deficit
Income/ (Loss)
Equity
Balance at December 31, 2023
76,410
$
7
$
620,021
$
( 594,658
)
$
163
$
25,533
Proceeds from exercise of stock options
308
0
974
0
0
974
Release of restricted stock units
507
0
( 1,325
)
0
0
( 1,325
)
Stock-based compensation
0
0
8,388
0
0
8,388
Total other comprehensive loss
0
0
0
0
( 259
)
( 259
)
Net loss
0
0
0
( 6,392
)
0
( 6,392
)
Balance at March 31, 2024
77,225
$
7
$
628,058
$
( 601,050
)
$
( 96
)
$
26,919
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BigCommerce Holdings, Inc.
Condensed Consolidated Statem ents of Cash Flows
(in thousands)
(unaudited)
Three months ended March 31,
2025
2024
Cash flows from operating activities
Net loss
$
( 353
)
$
( 6,392
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense
4,281
3,486
Amortization of discount on convertible notes
187
497
Amortization of premium on convertible notes
( 402
)
0
Stock-based compensation expense
5,209
8,388
Provision for expected credit losses
930
863
Gain on convertible notes extinguishment
( 3,931
)
0
Changes in operating assets and liabilities:
Accounts receivable
3,020
( 2,588
)
Prepaid expenses and other assets
( 5,084
)
( 4,960
)
Deferred commissions
1,935
211
Accounts payable
678
( 889
)
Accrued and other liabilities
( 8,137
)
( 4,601
)
Deferred revenue
2,068
2,568
Net cash provided by (used in) operating activities
401
( 3,417
)
Cash flows from investing activities:
Cash paid for website domain name
( 2,444
)
0
Purchase of property, equipment, leasehold improvements and capitalized internal-use software
( 825
)
( 806
)
Maturity of marketable securities
28,579
29,440
Purchase of marketable securities
( 7,945
)
( 35,565
)
Net cash provided by (used in) investing activities
17,365
( 6,931
)
Cash flows from financing activities:
Proceeds from exercise of stock options
1,096
974
Taxes paid related to net share settlement of stock options
( 1,225
)
( 1,325
)
Payment of convertible note issuance costs
( 217
)
0
Repayment of convertible notes and financing obligation
( 54,528
)
( 134
)
Net cash used in financing activities
( 54,874
)
( 485
)
Net change in cash and cash equivalents and restricted cash
( 37,108
)
( 10,833
)
Cash and cash equivalents and restricted cash, beginning of period
90,356
72,845
Cash and cash equivalents and restricted cash, end of period
$
53,248
$
62,012
Supplemental cash flow information:
Cash paid for interest
$
5,685
$
439
Cash paid for taxes
$
220
$
140
Right-of-use asset obtained in exchange for new operating lease liability
$
5,516
$
0
Noncash investing and financing activities:
Capital additions, accrued but not paid
$
205
$
0
The accompanying notes are an integral part of these condensed consolidated financial statements.
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BigCommerce Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
1. Overview
BigCommerce Holdings Inc. ("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 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.
2. Summary of significant accounting policies
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, 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 in our Annual Report. 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
The accompanying condensed consolidated financial statements include the Company’s accounts and the accounts of the Company’s wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.
The Company’s fiscal year ends on December 31. References to "fiscal 2025," for example, refer to the fiscal year ended December 31, 2025.
Use of estimates
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:
• the allowance for credit losses;
• constrained revenue;
• variable consideration for revenue recognition;
• 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; and
• the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions;
Because of the use of estimates inherent in financial reporting process actual results could differ and the differences could be material to the Company’s consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
ASU 2023-09, Income Taxes (Topic 740)
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires all entities to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update also eliminate requirements such as (1) the disclosure of the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months, (2) or making a statement that an estimate of the range cannot be made, and (3) the disclosure of the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. 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 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. 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.
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.
Segments
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
$
3,338
Provision for expected credit losses
1,083
Recoveries of credit losses
( 153
)
Write-offs charged against the allowance
( 709
)
Balance at March 31, 2025
$
3,559
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. 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. 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
Subscription solutions
Subscription solutions revenue consists primarily of platform subscription fees from all plans and recurring professional services. 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. 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. In determining the amount of revenue to be recognized, the Company determines whether collection of the entire transaction price is probable. Only amounts deemed probable are recognized as revenue. 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.). The Company provides these services under service contracts which are generally one year or less, and in many cases month-to-month. These service types may be sold stand-alone or as part of a multi-service bundle (e.g. both marketplaces and advertising). Services are performed and fees are determined based on monthly usage and are billed in arrears.
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 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. Revenue is presented net of sales tax and other taxes the Company collects on behalf of governmental authorities.
Partner and services
The Company's partner and services revenue includes revenue share, partner technology integrations, and marketing services provided to partners. Revenue share relates to fees earned by the Company’s partners from customers using the Company’s platform, where the Company has an arrangement with such partners to share such fees as they occur. Revenue share is recognized at the time the earning activity is complete, which is generally monthly and variable based on customer usage on the platform. Revenue for partner technology integrations is recorded on a straight-line basis over the life of the contract commencing when the integration has been completed. Revenue for marketing services are recognized either at the time the earning activity is complete, or ratably over the length of the contract, depending on the nature of the obligations in the contract. Payments received in advance of services being rendered are recorded as deferred revenue and recognized when the obligation is completed.
The Company also derives revenue from the sales of website themes and applications upon delivery.
The Company recognizes partner revenue share on a net basis as the Company has determined that the Company is the agent in the Company’s arrangements with third-party application providers. All other revenue is recognized on a gross basis, as the Company has determined the Company is the principal in these arrangements.
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. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.
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 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. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate SSP is the observable prices of products or services sold or priced separately in comparable circumstances to similar customers.
Contracts with the Company’s technology solution partners may include multiple performance obligations, which can include integrations and marketing activities. In determining whether integration services are distinct from hosting services the Company considers various factors. These considerations include the level of integration, interdependency, and interrelation between the implementation and hosting services. The Company has concluded that the integration services included in contracts with hosting obligations are not distinct. As a result, the Company defers any arrangement fees for integration services and recognizes such amounts over the life of the hosting obligation commencing when the integration has been completed. To determine if marketing activities are distinct, the Company considers the nature of the promise in the contract, the timing of payment, and the partner expectations. Additional consideration for some partner contracts varies based on the level of customer activity on the platform. Certain agreements contain minimum guarantees of revenue share. These contracts are evaluated to determine if the guaranteed minimum is substantive. If the minimum is deemed substantive, revenue is recognized ratably over the life of the agreement. 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.
Remaining performance obligation
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)
Current
Noncurrent
Total
As of March 31, 2025
$
120,278
$
56,833
$
177,111
Cost of revenue
Cost of revenue consists primarily of personnel-related costs, including: stock-based compensation expenses for customer support and professional services personnel; costs of maintaining and securing infrastructure and platform; allocation of overhead costs and credit card processing fees; and amortization expense associated with capitalized internal-use software.
Stock-based compensation
The Company issues stock options, restricted stock units (“RSUs”) and performance based restricted stock units (“PSUs”) to employees.
The Company values stock options using the Black-Scholes option-pricing model at the date of grant and recognizes the 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.
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 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.
The Company also grants PSUs which provide for shares of common stock to be earned based on its attainment of the Company's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") and revenue relative to a target specified in the applicable agreement, and are referred to as Company performance-based awards. The Company values these awards at the closing market price on the date of grant. The vesting of Company performance-based awards is conditioned upon the achievement of certain targets and will vest in three annual tranches in a percentage of the target number of shares between 0 percent to 200 percent. 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
Costs to restructure certain internal operations are accounted for as one-time termination and exit costs. A liability for a cost associated with restructuring activities is recognized and measured at its estimated fair value in our condensed consolidated balance sheet in the period the liability is incurred. All costs relating to restructurings are recorded as "Restructuring charges" in the condensed consolidated statement of operations.
The Company recognizes employee severance costs when payments are probable and amounts are estimable or when notification occurs, depending on whether the severance costs paid are part of the Company's general plan. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ 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 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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3. Revenue recognition and deferred costs
Revenue recognition
The Company’s source of revenue consists of subscription solutions fees and partner and services fees. These services allow customers to access the Company’s hosted software over the contract period. The customer is not allowed to take possession of the software or transfer the software. The Company’s revenue arrangements do not contain general rights of refund in the event of cancellations.
Disaggregation of revenue
The following table disaggregates revenue by major source:
Three months ended March 31,
(in thousands)
2025
2024
Subscription solutions
$
62,114
$
60,959
Partner and services
20,256
19,401
Revenue
$
82,370
$
80,360
Revenue by geographic region was as follows:
Three months ended March 31,
(in thousands)
2025
2024
Revenue:
United States
$
62,621
$
61,138
EMEA
9,965
9,192
APAC
5,925
6,254
Rest of World
3,859
3,776
Revenue
$
82,370
$
80,360
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
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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4. Fair value measurements
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. When determining fair value, the Company considers the principal or most advantageous market in which it would transact, and assumptions that market participants would use when pricing asset or liabilities.
The accounting standard for fair value establishes a fair value hierarchy based on three levels of inputs, the first two of which are considered observable and the last unobservable. The standard requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The three levels of inputs that may be used to measure fair value are as follows:
• Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
• Level 2 – Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
• 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 March 31, 2025 and December 31, 2024:
As of March 31, 2025
(in thousands)
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair Value
Cash equivalents (1) :
Money market mutual funds & cash equivalents
$
6,782
$
0
$
0
$
6,782
Marketable securities:
Corporate bonds
0
20,410
0
20,410
U.S. treasury securities
48,218
0
0
48,218
Total marketable securities
$
48,218
$
20,410
$
0
$
68,628
(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
(in thousands)
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair Value
Cash equivalents (1) :
Money market mutual funds & cash equivalents
$
46,033
$
0
$
0
$
46,033
Marketable securities:
Corporate bonds
0
24,943
0
24,943
U.S. treasury securities
62,124
0
0
62,124
Agency bonds
0
2,216
0
2,216
Total marketable securities
$
62,124
$
27,159
$
0
$
89,283
(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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The contractual maturities of the investments classified as marketable securities were as follows:
(in thousands)
As of March 31, 2025
As of December 31, 2024
Due within 1 year
$
68,628
$
70,933
Due in 1 year through 2 years
0
18,350
Total marketable securities
$
68,628
$
89,283
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)
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash equivalents:
Money market mutual funds & cash equivalents
$
6,782
$
0
$
0
$
6,782
Marketable securities:
Corporate bonds
20,289
121
0
20,410
U.S. treasury securities
48,215
5
( 2
)
48,218
Total marketable securities
$
68,504
$
126
$
( 2
)
$
68,628
As of December 31, 2024
(in thousands)
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash equivalents:
Money market mutual funds & cash equivalents
$
46,033
$
0
$
0
$
46,033
Marketable securities:
Corporate bonds
24,859
91
( 7
)
24,943
U.S. treasury securities
62,063
68
( 7
)
62,124
Agency bonds
2,216
0
0
2,216
Total marketable securities
$
89,138
$
159
$
( 14
)
$
89,283
5. Business combinations
In October 2023, the Company acquired all issued and outstanding stock of Makeswift, Inc. (“Makeswift”) pursuant to a merger agreement. 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-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 .
6. Goodwill and intangible assets
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.
Goodwill amounts are not amortized but tested for impairment on an annual basis or more often when circumstances indicate that goodwill may not be recoverable. 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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As of March 31, 2025, expected amortization expense for intangible assets was as follows:
(in thousands)
March 31, 2025
Remaining nine months of 2025
5,711
2026
5,100
2027
3,056
2028
1,115
Total
$
14,982
7. Commitments, contingencies, leases, and legal proceedings
Legal Proceedings
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of its business. In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s reputation and future operating results.
In the ordinary course of business, the Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. The Company is not presently a party to any legal proceedings that, if determined adversely to the Company, would have a material adverse effect on the Company's condensed consolidated financial statements.
Purchase Obligations
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 four years . The Company had unconditional purchase obligations as of March 31, 2025 as follows:
(in thousands)
As of March 31, 2025
Remaining nine months of 2025
$
18,570
2026
28,357
2027
25,500
2028
29,000
Total
$
101,427
Leases
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. 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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The future maturities of operating lease liabilities are as f ollows:
(in thousands)
As of March 31, 2025
Remaining nine months of 2025
$
1,903
2026
1,480
2027
2,086
2028
2,244
Thereafter
4,354
Total minimum lease payments
$
12,067
Less imputed interest
( 3,067
)
Total lease liabilities
$
9,000
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.
8. Restructuring charges
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. 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. The
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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
(in thousands)
Workforce reduction
Real Estate and Internal Use Software
Other Restructuring Charges
Total
Workforce reduction
Real Estate and Internal Use Software
Other Restructuring Charges
Total
Liability, beginning of the period
$
1,748
$
184
$
480
$
2,412
$
1,516
$
0
$
0
$
1,516
Additional charges
861
705
346
1,912
6,971
262
3,899
11,132
Real estate and internal-use software charges
0
0
0
0
0
3,533
0
3,533
Gain on lease termination
0
0
0
0
0
( 988
)
0
( 988
)
Payments
( 1,022
)
( 84
)
( 540
)
( 1,646
)
( 6,674
)
( 73
)
( 3,419
)
( 10,166
)
Non-cash items
0
( 705
)
0
( 705
)
( 65
)
( 2,550
)
0
( 2,615
)
Liability, end of the period
$
1,587
$
100
$
286
$
1,973
$
1,748
$
184
$
480
$
2,412
8. Other liabilities
The following table summarizes the components of other current liabilities:
As of March 31,
As of December 31,
(in thousands)
2025
2024
Payroll and payroll related expenses
$
8,818
$
13,945
Accounting & legal professional services
4,857
3,212
Other
3,859
4,580
Sales tax payable
1,789
2,007
Restructuring related charges
1,683
2,169
Accrued Interest
0
2,853
Other liabilities
$
21,006
$
28,766
9. Debt
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 March 31, 2025
As of December 31, 2024
Outstanding
Principal
Unamortized convertible note premium and issuance costs
Net Carrying Value
Fair Value
Outstanding
Principal
Unamortized convertible note premium and issuance costs
Net Carrying Value
Fair Value
(in thousands)
Amount
Level
Amount
Level
2028 Convertible Notes*
$
150,000
$
3,765
$
153,765
165,037
3
$
150,000
$
4,011
$
154,011
$
155,960
3
2026 Convertible Notes**
4,060
( 37
)
4,023
4,264
2
63,132
( 677
)
62,455
55,912
2
Total carrying value of convertible notes
157,788
216,466
(*) 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. An estimated yield based on market data was used to discount straight debt cash flows.
(**) The fair value is influenced by interest rates, the Company's stock price and is determined by prices observed in market trading. Since the market for trading of the 2026 Convertible Notes is not considered to be an active market, the estimated fair value is based on Level 2 inputs.
The following table presents details of the Company's convertible notes as of March 31, 2025 which are further discussed below:
Date of Issuance
Maturity Date
Contractual Interest Rate
Outstanding Principal
(in thousands)
Conversion Rate for Each $1,000 Principal
Initial Conversion Price per Share
2028 Convertible Notes
August 2024
10/1/2028
7.50
%
$
150,000
$
62.50
$
16.00
2026 Convertible Notes
September 2021
10/1/2026
0.25
%
$
4,060
$
13.68
$
73.11
The total interest expense recognized related to the Company’s convertible notes and financing obligation consists of the following:
Three months ended March 31,
(in thousands)
2025
2024
Contractual interest expense
$
2,832
$
223
Amortization of (premium) and issuance costs
( 215
)
497
Capitalization of interest expense
( 74
)
0
Total
$
2,543
$
720
2028 Convertible Notes
In August 2024 , the Company entered into a privately negotiated exchange agreement (the "Exchange Agreement") with a holder of its 0.25 percent unsecured convertible senior notes due 2026 (the "2026 Convertible Notes"). Pursuant to the Exchange Agreement, the Company exchanged (the "Exchange Transaction") approximately $ 161.2 million in aggregate principal amount of the 2026 Convertible Notes for $ 150.0 million in aggregate principal amount of new 7.50 percent convertible senior notes due 2028 (the “2028 Convertible Notes”) and approximately $ 0.1 million in cash, with such payment representing the accrued and unpaid interest on such 2026 Convertible Notes.
The 2028 Convertible Notes are senior, initially unsecured obligations of the Company and accrue interest at a rate of 7.50 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year , beginning on October 1, 2024. The 2028 Convertible Notes will mature on October 1, 2028 , unless earlier converted, redeemed or repurchased by the Company. Before July 3, 2028, noteholders will have the right to convert their 2028 Convertible Notes only upon the occurrence of certain events. From and after July 3, 2028, noteholders may convert their 2028 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivery, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company's election. The 2028 Convertible Notes will be convertible with an initial conversion rate of 62.5000 shares of common stock per $1,000 principal amount of 2028 Convertible Notes, which represents an initial conversion price of $ 16.00 per share of common stock, when certain conditions are met. The conversion rate and conversion price will be subject to adjustments related to standard anti-dilution provisions upon the occurrence of certain events.
The Company may not redeem the 2028 Convertible Notes prior to October 7, 2026. The 2028 Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after October 7, 2026 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. In addition, calling any 2028 Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2028 Convertible Note, in which case the conversion rate applicable to the conversion of that 2028 Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. Pursuant to the Partial Redemption Limitation, the Company may not elect to redeem less than all of the outstanding 2028 Convertible Notes unless at least $ 100.0 million aggregate principal amount of 2028 Convertible Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.
If a “fundamental change” (as defined in the indenture for the 2028 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their 2028 Convertible Notes for cash. The repurchase price will be equal to the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date.
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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. Debt issuance costs are recorded as a contra-liability and amortized over the term of the 2028 Convertible Notes utilizing an effective interest rate of 8.03 percent. The $ 7.5 million premium related to the fair value adjustment of the 2028 Convertible Notes is amortized using an effective interest rate of 6.12 percent. The Company is in compliance with the terms of the indenture, and has not experienced any events that would constitute an event of default.
2026 Convertible Notes
In September 2021 , the Company issued $ 345.0 million aggregate principal amount of its 2026 Convertible Notes. The 2026 Convertible Notes were issued in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds from the sales of the 2026 Convertible Notes was approximately $ 335.0 million after deducting offering and issuance costs related to the 2026 Convertible Notes and before the 2021 Capped Call transactions. 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 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 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.
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10. Stockholders’ equity
2020 Equity incentive plan
In 2020, the Company adopted the 2020 Equity Incentive Plan, or “2020 Plan”, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based restricted stock units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2020 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof. The Company has granted awards of stock options, restricted stock units, and market-based and performance-based restricted stock units under the 2020 Plan.
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, 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 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
Stock options generally vest and become exercisable over a service period of 4 years from the date of grant, subject to continued service. The following table summarizes the weighted-average grant date value of options and the assumptions used to develop their fair value.
Three months ended March 31,
Three months ended March 31,
2025
2024
Weighted-average grant date fair value of options
$
4.64
$
4.54
Risk-free interest rate
4.10
%
4.10
%
Expected volatility
69.21
%
64.53
%
Expected life in years
6.07 years
6.10 years
The Company estimated its future stock price volatility using a combination of its observed option-implied volatilities and its peer historical volatility calculations. Management believes this is the best estimate of the expected volatility over the expected life of its stock options. The estimated life for the stock options is based on the weighted average of the remaining vesting term and the remaining contractual life of each award. The risk-free interest rate is based on the rate for a U.S. government security with the same estimated life at the time of the option grant. The estimated forfeiture rate applied is based on historical forfeiture rates. 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.
(in thousands)
Outstanding
Weighted-Average Exercise Price
Aggregate Intrinsic Value
Balance as of December 31, 2024
4,684
$
8.25
$
8,311
Options granted
687
7.09
0
Exercised
( 359
)
3.05
1,419
Plan shares expired or canceled
( 668
)
17.36
2
Balance as of March 31, 2025
4,344
$
7.10
$
6,516
Vested and expected to vest
4,009
$
7.07
$
6,516
Exercisable as of March 31, 2025
2,850
$
6.77
$
6,516
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.
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Restricted Stock Units
Restricted stock unit activity for the three months ended March 31, 2025 was as follows:
(in thousands)
Outstanding
Grant Date Fair Value
Aggregate Intrinsic Value
Balance as of December 31, 2024
5,744
$
11.57
$
35,152
Granted – restricted stock units
1,468
7.09
10,411
Canceled
( 648
)
13.91
4,019
Vested and converted to shares
( 590
)
15.40
3,573
Balance as of March 31, 2025
5,974
$
9.84
$
34,408
Vested and expected to vest
4,646
$
10.23
$
26,762
Market-based and performance-based restricted stock unit activity for the three months ended March 31, 2025 was as follows:
(in thousands)
Outstanding
Grant Date Fair Value
Aggregate Intrinsic Value
Balance as of December 31, 2024
396
$
7.90
$
2,281
Granted – market-based and performance-based restricted stock units
168
7.09
1,195
Canceled
( 119
)
8.07
685
Vested and converted to shares
( 163
)
7.09
1,157
Balance as of March 31, 2025
282
$
8.03
$
1,626
Vested and expected to vest
223
$
8.33
$
1,283
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,
2025
Volatility
65.71 % - 75.43 %
Risk-free interest rate
4.22 % - 4.31 %
Dividend yield
0.00 %
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.
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.
11. Income taxes
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.
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 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 an income tax audit by any taxing jurisdiction.
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12. Net loss per share
Basic net loss per share is computed by dividing net loss by the number of shares of common stock outstanding for the period. Because the Company has reported a net loss for the three months ended March 31, 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)
2025
2024
Numerator:
Net loss
$
( 353
)
$
( 6,392
)
Denominator:
Weighted average shares outstanding
78,835
$
76,626
Net loss per share
$
( 0.00
)
$
( 0.08
)
The following potentially dilutive securities outstanding have been excluded from the computation of basic weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported:
As of March 31,
(in thousands)
2025
2024
Stock options outstanding
4,344
4,930
Restricted stock units
6,256
6,608
Acquisition related compensation
0
42
Convertible notes
9,431
4,719
Total potentially dilutive securities
20,031
16,299
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Special note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended ("the Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” and similar words or phrases. These forward-looking statements include statements concerning the following:
• our expectations regarding our revenue, expenses, sales, and operations;
• anticipated trends and challenges in our business and the markets in which we operate;
• 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 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 growth and to expand our infrastructure;
• our ability to establish and maintain intellectual property rights;
• our ability to manage expansion into international markets and new industries;
• our ability to hire and retain key personnel;
• our ability to successfully identify, manage, and integrate any existing and potential acquisitions;
• our ability to adapt to emerging regulatory developments, technological changes, and cybersecurity needs;
• the anticipated effect on our business of litigation to which we are or may become a party;
• the anticipated benefits and opportunities related to past and ongoing restructuring may not be realized or may take longer to realize than expected;
• our ability to manage key executive succession and retention or continue to attract qualified personnel;
• our ability to 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; and
• other statements described in this Quarterly Report on Form 10-Q under “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Although we believe the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors, some of which are beyond our control. For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 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. Therefore, we caution the reader not to place undue reliance on any forward-looking information or statements. The effect of these factors is difficult to predict. Factors other than these also could adversely affect our results, and the reader should not consider these factors to be a complete set of all potential risks or uncertainties. 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
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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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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.