Commerce.com, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of disclosure controls and procedures Our management, with the participation and supervision of our chief executive officer and our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as 45 Table of Contents amended (the Exchange Act)) as of the end of the period covered by this Annual Report on Form 10-K. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level. Management's Report on Internal Control over Financial Reporting This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm as permitted in this transition period under the rules of the SEC for newly public companies. Changes in internal control over financial reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent limitation on the effectiveness of internal control Our management, including our chief executive officer and chief financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Item 9B. Other Information. On February 23, 2021, we determined that the date of our 2021 annual meeting of stockholders (the “Annual Meeting”) will be May 14, 2021. Because we did not hold an annual meeting the previous year, our stockholders who wish to have a proposal considered for inclusion in our proxy materials for the Annual Meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must ensure that such proposal is received by our Secretary at our principal executive offices, BigCommerce Holdings, Inc., 11305 Four Points Drive, Building II, Third Floor, Austin, Texas 78726, on or before the close of business on March 8, 2021, which we have determined to be a reasonable time before it expects to begin to print and send its proxy materials. Any such proposal must also meet the requirements set forth in the rules and regulations of the Securities and Exchange Commission in order to be eligible for inclusion in the proxy materials for the Annual Meeting. In addition, any stockholder who intends to submit a proposal regarding a director nomination or who intends to submit a proposal regarding any other matter of business at the Annual Meeting must also ensure that notice of any such nomination or proposal (including any additional information specified in the Bylaws) is received by our Secretary at our principal executive offices on or before the close of business on March 8, 2021. This deadline will also apply in determining whether notice of a stockholder proposal is timely for purposes of exercising discretionary voting authority with respect to proxies under Rule 14a-4(c)(1) of the Exchange Act. On February 24, 2021, the compensation committee of our board of directors approved the 2021 Executive Bonus Plan (“2021 Bonus Plan”) for our executive officers to be effective for our fiscal year ending December 31, 2021. Participants in the Bonus Plan will be determined by the compensation committee and will be eligible to earn cash bonuses through the achievement of individual or company performance targets to be established by the compensation committee. The 2021 Bonus Plan provides for the payment of cash bonuses based upon achievement of such performance targets and payout formulas determined by the compensation committee. To the extent earned, bonuses under the 2021 Bonus Plan will be paid in a single annual payout following completion of the fiscal year ending December 31, 2021. The 2021 Bonus Plan is attached as Exhibit 10.18 to this Annual Report on Form 10-K and the terms thereof are incorporated by reference. Effective as of December 29, 2020, we fully repaid all outstanding borrowings under the A&R Credit Facility dated as of February 28, 2020 with Silicon Valley Bank and terminated the A&R Credit Facility. The terms and conditions of the A&R Credit Facility are disclosed in Note 8 to the consolidated financial statements, which disclosures are incorporated herein by reference. 46 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Information required by Part III, Item 10, will be included in our Proxy Statement relating to our 2021 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated by reference. Item 11. Executive Compensation. Information required by Part III, Item 11, will be included in our Proxy Statement relating to our 2021 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Information required by Part III, Item 12, will be included in our Proxy Statement relating to our 2021 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. Information required by Part III, Item 13, will be included in our Proxy Statement relating to our 2021 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated by reference. Item 14. Principal Accounting Fees and Services. Information required by Part III, Item 14, will be included in our Proxy Statement relating to our 2021 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated by reference. 47 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Documents Filed with Report (1) Financial Statements; Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2020 and 2019 F-3 Consolidated Statements of Operations for the Years ended December 31, 2020, 2019, and 2018 F-4 Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2020, 2019 and, 2018 F-6 Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (deficit) for the Years ended December 31, 2020, 2019 and, 2018 F-6 Consolidated Statements of Cash Flows for the Years ended December 31, 2020, 2019, and 2018 F-7 Notes to Consolidated Financial Statements F-8 (2) Financial Statement Schedules. Schedules required by this item have been omitted since they are either not required or not applicable or because the information required is included in the consolidated financial statements included elsewhere herein or the notes thereto. (3) Exhibits. The information required by this Item is set forth on the exhibit index that precedes the signature page of this Annual Report on Form 10-K. Item 16. Form 10-K Summary None. 48 Table of Contents Exhibit Index Exhibit Incorporated by Reference Number Description Form File No. Exhibit Filing Date 3.1 Seventh Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect 8-K 001-39423 3.1 August 7, 2020 3.2 Amended and Restated Bylaws of the Registrant, as currently in effect 8-K 001-39423 3.2 August 7, 2020 10.1 Fourth Amended and Restated Investor Rights Agreement, dated as of April 19, 2018 S-1 333-239838 10.1 July 13, 2020 10.2 + Form of Indemnification Agreement for Officers and Directors S-1/A 333-239838 10.4 July 28, 2020 10.3 + BigCommerce Holdings, Inc. Amended and Restated 2013 Stock Plan S-1 333-239838 10.5 July 13, 2020 10.4 + BigCommerce Holdings, Inc. 2020 Equity Incentive Plan S-1/A 333-239838 10.6 July 28, 2020 10.5 + BigCommerce Holdings, Inc. 2020 Employee Stock Purchase Plan S-1/A 333-239838 10.7 July 28, 2020 10.6 Contingent Convertible Debt Agreement, dated October 27, 2017, by and among Silicon Valley Bank, the Registrant, BigCommerce, Inc., and BigCommerce PTY LTD ACN 107 422 631. S-1 333-239838 10.9 July 13, 2020 10.7 2020 Contingent Convertible Debt Agreement, dated February 28, 2020, by and among Silicon Valley Bank, the Registrant, BigCommerce, Inc., and BigCommerce PTY LTD ACN 107 422 631. S-1 333-239838 10.10 July 13, 2020 10.8 + Offer Letter dated May 29, 2015, by and between the Registrant and Brent Bellm S-1 333-239838 10.12 July 13, 2020 10.9 + Amendment to Offer Letter dated February 12, 2019, by and between the Registrant and Brent Bellm S-1 333-239838 10.13 July 13, 2020 10.10 + Offer Letter dated May 10, 2018, by and between the Registrant and Lisa Pearson S-1 333-239838 10.14 July 13, 2020 10.11 + Offer Letter dated September 9, 2016, by and between the Registrant and Brian Dhatt S-1 333-239838 10.15 July 13, 2020 10.12 + Amendment to Offer Letter dated February 2, 2017, by and between BigCommerce, Inc. and Brian Dhatt S-1 333-239838 10.16 July 13, 2020 10.13* Office Lease, dated November 20, 2012, by and between New TPG-Four Points, L.P. and BigCommerce, Inc. S-1 333-239838 10.17 July 13, 2020 10.14* First Amendment to Lease, dated February 5, 2018, by and between G&I VII Four Points LP and BigCommerce, Inc. S-1 333-239838 10.18 July 13, 2020 10.15* Second Amendment to Lease, dated October 4, 2018, by and between G&I VII Four Points LP and BigCommerce, Inc. S-1 333-239838 10.19 July 13, 2020 10.16^ PayPal Commerce Platform Global Partner Agreement, dated January 1, 2020, by and among PayPal, Inc., PayPal Pte. Ltd, BigCommerce, Inc., BigCommerce Pty Ltd, BigCommerce UK Ltd, and BigCommerce Software Ireland Limited S-1 333-239838 10.20 July 13, 2020 10.17 +** BigCommerce Holdings, Inc. 2020 Executive Bonus Plan 10.18 +** BigCommerce Holdings, Inc, 2021 Executive Bonus Plan 21.1 List of Subsidiaries of the Registrant S-1 333-239838 21.1 July 13, 2020 23.1 ** Consent of Independent Registered Public Accounting Firm 31.1** Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 1 31.2** Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1† Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS** XBRL Instance Document. 101.SCH** XBRL Taxonomy Extension Schema Document. 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document. 49 Table of Contents + Indicates management contract or compensatory plan. † The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of BigCommerce Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. (*) Pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC, certain exhibits and schedules to this agreement have been omitted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, any or all of such omitted exhibits or schedules. ** Filed herewith. (^) Portions of this exhibit have been omitted as we have determined that the information (i) is not material and (ii) would likely cause competitive harm to us if publicly disclosed. 50 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . BIGCOMMERCE HOLDINGS, INC Date: February 26, 2021 By: /s/ Brent Bellm Brent Bellm President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Brent Bellm President, Chief Executive Officer and Director February 26, 2021 Brent Bellm (Principal Executive Officer) /s/ Robert Alvarez Chief Financial Officer February 26, 2021 Robert Alvarez (Principal Financial Officer) /s/ Thomas Aylor Vice President, Accounting February 26, 2021 Thomas Aylor (Principal Accounting Officer) /s/ Lawrence Bohn Director February 26, 2021 Lawrence Bohn /s/ Donald E. Clark Director February 26, 2021 Donald E. Clark /s/ John T. McDonald Director February 26, 2021 John T. McDonald /s/ Steven Murray Director February 26, 2021 Steven Murray /s/ Jeff Richards Director February 26, 2021 Jeff Richards /s/ Ellen F. Siminoff Director February 26, 2021 Ellen F. Siminoff 51 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2020 and 2019 F-3 Consolidated Statements of Operations for the Years ended December 31, 2020, 2019, and 2018 F-4 Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2020, 2019 and, 2018 F-5 Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (deficit) for the Years ended December 31, 2020, 2019 and, 2018 F-6 Consolidated Statements of Cash Flows for the Years ended December 31, 2020, 2019, and 2018 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents Report of independent registered public accounting firm To the Shareholders and the Board of Directors of BigCommerce Holdings, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of BigCommerce Holdings, Inc. (“the Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Adoption of ASU no. 2016-02 As discussed in Note 6 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Basis for opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2012. Austin, Texas February 26, 2021 F-2 Table of Contents BigCommerce Holdings, Inc. Consolidated balance sheets (in thousands, except per share amounts) December 31, 2020 2019 Assets Current assets Cash and cash equivalents $ 219,447 $ 7,795 Restricted cash 1,160 1,355 Accounts receivable, net 22,894 15,548 Prepaid expenses and other assets 8,000 5,296 Deferred commissions 2,571 1,677 Total current assets 254,072 31,671 Property and equipment, net 7,122 8,241 Right-of-use-asset 11,842 14,065 Deferred commissions, net of current portion 3,590 2,087 Total assets $ 276,626 $ 56,064 Liabilities, convertible preferred stock, and stockholders’ equity (deficit) Current liabilities Accounts payable $ 5,788 $ 3,881 Accrued liabilities 3,344 5,849 Deferred revenue 11,406 9,399 Current portion of long-term debt — 2,363 Current portion of operating lease liabilities 3,173 2,718 Other current liabilities 22,176 9,704 Total current liabilities 45,887 33,914 Deferred revenue, net of current portion 1,308 1,492 Long-term debt, net of current portion — 38,502 Operating lease liabilities, net of current portion 12,672 15,705 Total liabilities 59,867 89,613 Commitments and contingencies (Note 6) Convertible preferred stock Convertible preferred stock $0.0001 par value; 10,000 and 102,030 shares authorized at December 31, 2020 and December 31, 2019, respectively; 0 shares and 102,030 shares issued and outstanding at December 31, 2020 and 2019, respectively. — 223,754 Stockholders’ equity (deficit) Common stock, $0.0001 par value; 500,000 shares Series 1 and, 5,051 shares Series 2 authorized at December 31, 2020 and 200,000 shares voting and 30,000 shares of non-voting authorized at December 31, 2019; 65,406, and 18,544 shares Series 1 and voting issued and, outstanding at December 31, 2020 2020 and December 31, 2019, respectively, and 4,106 and 0 shares Series 2 and non-voting issued and, outstanding at December 31, 2020, and December 31, 2019, respectively. 7 2 Additional paid-in capital 530,143 17,244 Accumulated other comprehensive loss — — Accumulated deficit (313,391 ) (274,549 ) Total stockholders’ equity (deficit) 216,759 (257,303 ) Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) $ 276,626 $ 56,064 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of operations (in thousands, except per share amounts) Year ended December 31, 2020 2019 2018 Revenue $ 152,368 $ 112,103 $ 91,867 Cost of revenue 34,126 27,023 21,937 Gross profit 118,242 85,080 69,930 Operating expenses: Sales and marketing 72,470 60,740 45,928 Research and development 48,332 43,123 42,485 General and administrative 36,137 22,204 19,497 Total operating expenses 156,939 126,067 107,910 Loss from operations (38,697 ) (40,987 ) (37,980 ) Interest income 31 245 653 Interest expense (3,103 ) (1,612 ) (1,489 ) Change in fair value of financial instruments 4,413 — — Other expense (179 ) (208 ) (52 ) Loss before provision for income taxes (37,535 ) (42,562 ) (38,868 ) Provision for income taxes 25 28 10 Net loss (37,560 ) (42,590 ) (38,878 ) Cumulative dividends and accretion of issuance costs on Series F preferred stock $ (962 ) $ (7,308 ) $ (4,712 ) Net loss attributable to common stockholders $ (38,522 ) $ (49,898 ) $ (43,590 ) Basic and diluted net loss per share attributable to common stockholders $ (0.99 ) $ (2.80 ) $ (2.59 ) Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders 39,092 17,834 16,807 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of comprehensive loss (in thousands) Year ended December 31, 2020 2019 2018 Net loss $ (37,560 ) $ (42,590 ) $ (38,878 ) Other comprehensive income (loss): Net unrealized gain (loss) on marketable debt securities — 14 (14 ) Total comprehensive loss $ (37,560 ) $ (42,576 ) $ (38,892 ) The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of convertible preferred stock and stockholders’ equity (deficit) (in thousands) Convertible preferred stock Series 1 common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Stockholders’ equity (deficit) Shares Amount Shares Amount Balance at December 31, 2017 78,402 $ 148,105 16,059 $ 2 $ 10,633 $ (182,349 ) $ — $ (171,714 ) Adoption of ASC 606 — — — — — 1,164 — 1,164 Issuance of Series F preferred stock, net of issuance costs 23,628 63,629 — — — — — — Exercise of stock options — — 1,386 — 607 — — 607 Stock-based compensation — — — — 2,071 — — 2,071 Accumulated dividend—Series F — 4,662 — — — (4,662 ) — (4,662 ) Accretion of Series F issuance costs — 50 — — (50 ) — — (50 ) Unrealized loss on investments — — — — — — (14 ) (14 ) Net loss — — — — — (38,878 ) — (38,878 ) Balance at December 31, 2018 102,030 216,446 17,445 $ 2 13,261 (224,725 ) (14 ) $ (211,476 ) Exercise of stock options — — 1,099 — 901 — — 901 Stock-based compensation — — — — 3,156 — — 3,156 Accumulated dividend—Series F — 7,234 — — — (7,234 ) — (7,234 ) Accretion of Series F issuance costs — 74 — — (74 ) — — (74 ) Unrealized gain on investments — — — — — — 14 14 Net loss — — — — — (42,590 ) — (42,590 ) Balance at December 31, 2019 102,030 $ 223,754 18,544 $ 2 $ 17,244 $ (274,549 ) $ — $ (257,303 ) Exercise of stock options — — 2,015 — 3,151 — — 3,151 Exercise of warrants — — 383 — 126 — — 126 Stock-based compensation — — — — 11,058 — — 11,058 Adoption of new accounting standard (See Note 2) — — — — — (364 ) — (364 ) Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offerings costs — — 7,878 1 171,128 — — 171,129 Issuance of common stock upon secondary public offering, net of underwriting discounts and commissions and other offering costs — — 1,000 — 65,112 — — 65,112 Conversion of redeemable convertible preferred stock to common stock upon initial public offering (102,030 ) (211,902 ) 34,442 3 211,899 — — 211,902 Conversion of redeemable convertible debt to common stock upon initial public offering — 5,250 1 50,172 — — 50,173 Accumulated dividend—Series F — 918 — — — (918 ) — (918 ) Payment of Series F dividend — (12,814 ) — — — — — Accretion of Series F issuance costs — 44 — — (44 ) — (44 ) Warrants issued in connection with debt — — — — 297 — 297 Net loss — — — — — (37,560 ) — (37,560 ) Balance at December 31, 2020 — $ — 69,512 $ 7 $ 530,143 $ (313,391 ) $ — $ 216,759 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of cash flows (in thousands) Year ended December 31, 2020 2019 2018 Cash flows from operating activities Net loss $ (37,560 ) $ (42,590 ) $ (38,878 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,084 2,569 1,844 Amortization of discount on debt 774 54 49 Stock-based compensation 11,058 3,156 2,071 Provision for expected credit losses 1,594 988 341 Accretion on discount to marketable securities — (69 ) (190 ) Change in fair value of financial instrument (4,413 ) — — Changes in operating assets and liabilities: Accounts receivable (9,305 ) (6,297 ) (4,627 ) Prepaid expenses (2,704 ) (1,786 ) (294 ) Deferred commissions (2,396 ) (903 ) (804 ) Accounts payable 1,907 (1,582 ) 291 Accrued and other current liabilities 9,610 8,164 2,351 Deferred revenue 1,822 (1,673 ) 6,908 Other — — 347 Net cash used in operating activities (26,529 ) (39,969 ) (30,591 ) Cash flows from investing activities: Purchase of marketable securities — — (33,566 ) Purchase of property and equipment (1,964 ) (5,579 ) (3,326 ) Maturity of marketable securities — 23,450 10,375 Net cash (used in) provided by investing activities (1,964 ) 17,871 (26,517 ) Cash flows from financing activities: Proceeds from issuance of convertible preferred stock, net of issuance costs — — 63,629 Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs 171,129 — — Proceeds from issuance of common stock upon secondary offering, net of underwriting discounts and commissions and other offerings costs 65,112 — — Payment of Series F dividends (12,814 ) — — Proceeds from exercise of stock options and warrants 3,279 901 607 Proceeds from debt 41,861 18,500 4,500 Repayment of debt (28,617 ) (2,050 ) (4,500 ) Net cash provided by financing activities 239,950 17,351 64,236 Net change in cash and cash equivalents and restricted cash 211,457 (4,747 ) 7,128 Cash and cash equivalents and restricted cash, beginning of period 9,150 13,897 6,769 Cash and cash equivalents and restricted cash, end of period $ 220,607 $ 9,150 $ 13,897 Supplemental cash flow information: Cash paid for interest $ 2,285 $ 1,626 $ 1,250 Noncash investing and financing activities: Conversion of convertible preferred stock into common stock upon initial public offering $ 211,902 $ — $ — Conversion of convertible debt into common stock upon initial public offering $ 50,173 $ — $ — The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents BigCommerce Holdings, Inc. Notes to consolidated financial statements 1. Overview BigCommerce is leading a new era of ecommerce. Our software-as-a-service (“SaaS”) platform simplifies the creation of beautiful, engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale systems. BigCommerce empowers businesses to turn digital transformation into a competitive advantage. We allow merchants to build their ecommerce solution their way with the freedom of choice that makes the most sense for their unique business and product offerings. We 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 our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation. Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including business-to-consumer and business-to-business. Our headquarters and principal place of business are in Austin, Texas. We were formed in Australia in December 2003 under the name Interspire Pty Ltd and reorganized into a corporation in Delaware under the name BigCommerce Holdings, Inc. in February 2013. References in these consolidated financial statements to “we,” “us,” “our,” the “Company,” or “BigCommerce” refer to BigCommerce Holdings, Inc. and its subsidiaries, unless otherwise stated. Stock split, initial public offering and secondary offering On July 24, 2020, we filed with the Secretary of State of the State of Delaware an amendment to our certificate of incorporation that effected a one-for-three reverse stock split of our common stock. All common stock share and per share information for all periods presented has been adjusted to reflect the reverse stock split. The amendment to our certificate of incorporation adjusted the amount of our authorized shares to: 205,000,000 shares of Series 1 common stock, 45,000,000 shares of Series 2 common stock, and 109,030,573 shares of preferred stock. The common stock has a par value of $0.0001 per share. On July 24, 2020, concurrently with the effectiveness of the reverse stock split, the conversion prices applicable to our preferred stock were adjusted proportionately in accordance with our certificate of incorporation. The Series 1 common stock and Series 2 common stock numbers referenced herein and included in this Annual Report on Form 10-K reflect this split. On August 4, 2020, we completed our IPO, in which we issued and sold 7,877,500 shares of our Series 1 common stock, including 1,027,500 shares of Series 1 common stock that were sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares of Series 1 common stock at $24.00 per share. The IPO resulted in net proceeds of $171.1 million after deducting underwriting discounts, commissions and other offering costs. Existing stockholders sold an additional 2,495,000 shares of Series 1 common stock, including 325,435 shares of Series 1 common stock that were sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares of Series 1 common stock at $24.00 per share. We did not receive any proceeds from the sale of shares by the selling stockholders in the IPO. On November 12, 2020, we completed our Secondary Offering, in which we issued and sold 1,000,000 shares of our Series 1 common stock at $68.00 per share. The Secondary Offering resulted in net proceeds of $65.1 million after deducting underwriting discounts, commissions and other offering costs. Existing stockholders sold an additional 4,750,000 shares of Series 1 common stock, including 750,000 shares of Series 1 common stock that were sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares of Series 1 common stock at $68.00 per share. We did not receive any proceeds from the sale of shares by the selling stockholders in the Secondary Offering. F-8 Table of Contents 2. Summary of significant accounting policies Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Basis of consolidation The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Our fiscal year ends on December 31. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires certain financial instruments to be recorded at fair value; requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods. Significant estimates, judgments, and assumptions in these consolidated financial statements include: allocating variable consideration for revenue recognition; the amortization period for deferred commissions; the allowance for credit losses; a determination of the deferred tax asset valuation allowance and the valuation of our common stock used to determine stock-based compensation expense prior to our IPO. Because of the use of estimates inherent in the financial reporting process and given the additional or unforeseen effects from the COVID-19 pandemic, actual results could differ from those estimates, and such differences could be material to our consolidated financial statements. COVID-19, declared a global pandemic by the World Health Organization on March 11, 2020, has caused disruption to the economies and communities of the United States and our target international markets. In the interest of public health, many governments closed physical stores and places of business deemed non-essential. This precipitated a significant shift in shopping behavior from offline to online. Our business has benefited from this shift, both in accelerated sales growth for our existing customers’ stores, and in our sales of new store subscriptions to customers. Nevertheless, we do not have certainty that those trends will continue; the COVID-19 pandemic and the uncertainty it has created in the global economy could materially adversely affect our business, financial condition, and results of operations. Segment and geographic information Our chief operating decision maker is our chief executive officer. Our 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, we have determined that we operate as a single operating and reportable segment. Revenue by geographic region was as follows: Year ended December 31, (in thousands) 2020 2019 2018 Revenue: Americas—U.S. $ 120,934 $ 91,057 $ 75,025 Americas—other 5,371 3,761 3,000 EMEA 12,396 7,370 6,123 APAC 13,667 9,915 7,719 Total revenue $ 152,368 $ 112,103 $ 91,867 Long-lived assets by geographic region was as follows: Year ended December 31, (in thousands) 2020 2019 Long-lived assets: Americas—U.S. $ 6,596 $ 7,699 Americas—other — — EMEA — — APAC 526 542 Total long-lived assets $ 7,122 $ 8,241 Cash and cash equivalents We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist of money market funds and investment securities and are stated at fair value. F-9 Table of Contents Restricted cash We maintain a portion of amounts collected through our online payment processor with the online payment processor as a security deposit for future chargebacks. Additionally, we have amounts on deposit with certain financial institutions that serve as collateral for letters of credit and lease deposits. Accounts receivable Accounts receivable are stated at net of provision for expected credit losses and include unbilled receivables. Unbilled receivables arise primarily when we provide subscriptions services in advance of billing. 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. The accounts receivable balance at December 31, 2020 and December 31, 2019 included unbilled receivables of $7.5 million and $4.0 million, respectively. We assess the collectability of outstanding accounts receivable on an ongoing basis and maintain an allowance for credit losses for accounts receivable deemed uncollectable. Upon adoption of ASU 2016-13, we analyzed the accounts receivable portfolio for significant risks, historical activity, and an estimate of future collectability to determine the amount that will ultimately be collected. This estimate is analyzed quarterly and adjusted as necessary. Identified risks pertaining to our accounts receivable include the delinquency level, customer type, and current economic environment. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Adoption of ASU 2016-13 resulted in an increase in the allowance for credit losses of approximately $0.4 million as of January 1, 2020, primarily related to unbilled receivables. The allowance for credit losses consisted of the following: (in thousands) Balance at December 31, 2017 $ 376 Provision for expected credit losses 341 Accounts written off (120 ) Balance at December 31, 2018 $ 597 Provision for expected credit losses 988 Accounts written off (418 ) Balance at December 31, 2019 $ 1,167 Cumulative effect adjustment upon adoption 364 Provision for expected credit losses 1,594 Accounts written off (1,133 ) Balance at December 31, 2020 $ 1,992 Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives or the related lease terms (if shorter). The estimated useful lives of property and equipment are as follows: Estimated useful life Computer equipment 3 years Computer software 3 years Furniture and fixtures 5 years Leasehold improvements 1-10 years Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred. The carrying values of property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with groups of assets used in combination over their estimated useful lives against their respective carrying amounts. If projected undiscounted future cash flows are less than the carrying value of the asset group, impairment is recorded for any excess of the carrying amount over the fair value of those assets in the period in which the determination is made. F-10 Table of Contents Research and development and internal use software Research and development expenses consist primarily of personnel and related expenses for our research and development staff, which include: salaries, benefits, bonuses, and stock-based compensation; the cost of certain third-party contractors; and allocated overhead. Expenditures for research and development, other than internal use software costs, are expensed as incurred. Software development costs associated with internal use software, which are incurred during the application development phase and meet other requirements under the guidance are capitalized. To date, software costs eligible for capitalization have not been significant. Concentration of credit risks, significant clients, and suppliers Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Our investment policy limits investments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies, and highly rated corporate securities, subject to certain concentration limits and restrictions on maturities. Our cash and cash equivalents and restricted cash are held by financial institutions that management believes are of high credit quality. Amounts on deposit may at times exceed federally insured limits. We have not experienced any losses on our deposits of cash and cash equivalents. We are exposed to credit risk in the event of default by the financial institutions holding our cash and cash equivalents and bond issuers. Accounts receivable are derived from sales to our customers and our strategic technology partners who operate in a variety of sectors. We do not require collateral. Estimated credit losses are provided for in the consolidated financial statements and historically have been within management’s expectations. One of our strategic partners accounted for 15% of our revenue for the year ended December 31, 2020 and 12% of our revenue for each of the years ended December 31, 2019 and 2018, and accounted for 24%, 20% and 22% of our accounts receivable balance at December 31, 2020, 2019 and 2018, respectively. Advertising costs We expense advertising costs as incurred. Advertising expenses were approximately $12.9 million, $11.8 million and $8.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Leases We determine if an arrangement is a lease or contains a lease at inception. At the commencement date of a lease, we recognize a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As our leases typically do not provide an implicit rate, we use our incremental borrowing rate for most leases. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred and excludes lease incentives. Lease terms may include options to extend or terminate the lease. We record a ROU asset and a lease liability when it is reasonably certain that we will exercise that option. Operating lease costs are recognized on a straight-line basis over the lease term. We also lease office space under short-term arrangements and have elected not to include these arrangements in the ROU asset or lease liabilities. Income taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period of the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized. To date, we have provided a valuation allowance against all of our deferred tax assets as we believe the objective and verifiable evidence of our historical pretax net losses outweighs any positive evidence of its forecasted future results. We will continue to monitor the positive and negative evidence, and we will adjust the valuation allowance as sufficient objective positive evidence becomes available. We account for uncertain tax positions in accordance with ASC 740, “Income Taxes”, which clarifies the accounting for uncertainty in tax positions. These provisions require recognition of the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected as a component of income tax expense. F-11 Table of Contents Stock-based compensation We issue stock options and restricted stock units ("RSUs"). Stock-based compensation related to stock options is measured at the date of grant and is recognized on a straight-line basis over the service period, net of estimated forfeitures. We use the Black-Scholes option-pricing model to estimate the fair value of stock options awarded at the date of grant. Stock-based compensation related to restricted stock units is measured at the date of grant and recognized using the accelerated attribution method, net of forfeitures, over the remaining service period. Accounting pronouncements In June 2018, the FASB Issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326)” which modifies the measurement of expected credit losses of certain financial instruments. Credit losses on trade and other receivables, available-for-sale debt securities, and other instruments will reflect our current estimate of the expected credit losses and will generally result in the earlier recognition of allowance for losses. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of the new standard resulted in the recording of a cumulative-effect adjustment to accumulated deficit of $0.4 million on January 1, 2020. We will continue to actively monitor the impact of the recent COVID-19 pandemic on expected credit losses. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). We adopted this guidance on January 1, 2020 on a prospective basis, which did not result in a material impact to our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes,” as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. Although the amendments in ASU 2019-12 become effective for fiscal years beginning after December 15, 2020, we elected to early adopt the ASU as of January 1, 2019 on a prospective basis. There is no material tax impact of the early adoption of ASU 2019-12 on our financial position and results of operations. Foreign currency Our functional and reporting currency and the functional and reporting currency of our subsidiaries is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are re-measured to U.S. dollars using the exchange rates at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are measured in U.S. dollars using historical exchange rates. Revenue and expenses are measured using the actual exchange rates prevailing on the dates of the transactions. Gains and losses resulting from re-measurement are recorded within Other expense in our consolidated statements of operations and were not material for all periods presented. 3. Revenue recognition and deferred costs Our sources of revenue consist of subscription solutions fees and partner and services fees. These services allow customers to access our hosted software over the contract period. The customer is not allowed to take possession of the software or transfer the software. Our revenue arrangements do not contain general rights of refund in the event of cancellations. The following table disaggregates our revenue by major source: Year ended December 31, (in thousands) 2020 2019 2018 Subscription solutions $ 103,706 $ 82,689 $ 70,484 Partner and services 48,662 29,414 21,383 Total revenue $ 152,368 $ 112,103 $ 91,867 Subscription solutions Subscription solutions revenue consists primarily of platform subscription fees from all plans. It also includes recurring professional services and sales of SSL certificates. Subscription solutions are charged monthly, quarterly, or annually for our customers to sell their products and process transactions on our platform. Subscription solutions are generally charged per online store and are based on the store’s subscription plan. Monthly subscription fees for Pro and Enterprise plans are adjusted if a customer’s gross merchandise volume or orders processed are above specified plan thresholds on a trailing twelve-month basis. For most subscription solutions arrangements, we have determined we meet the variable consideration F-12 Table of Contents allocation exception and, therefore, recognize 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. A portion of our Enterprise subscription plans include an upfront promotional period in order to incentivize the customer to enter into a subscription arrangement. For these Enterprise arrangements, the total subscription fee is recognized on a straight-line basis over the term of the contract. 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 our retail customers are generally month-to-month, while contracts with our enterprise customers generally range from one to three years. Contracts are typically non-cancellable and do not contain refund-type provisions. Revenue is presented net of sales tax and other taxes we collect on behalf of governmental authorities. Partner and services Our partner and services revenue consists of revenue share, partner technology integrations, and marketing services provided to partners. Revenue share relates to fees earned by our partners from customers using our platform, where we have an arrangement with such partner to share such fees as they occur. Revenue share is recognized at the time the earning activity is complete, which is generally monthly. 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. Fees 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. We also derive revenue from the sales of website themes and applications upon delivery. We recognize revenue share, and revenue from the sales of third-party applications, on a net basis as we have determined that we are the agent in our arrangements with third-party application providers. All other revenue is recognized on a gross basis, as we have determined we are the principal in these arrangements. Contracts with multiple performance obligations 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. Our subscription contracts are generally comprised of a single performance obligation to provide access to our 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, we may be required to allocate the contract’s transaction price to each performance obligation using our best estimate of SSP. Contracts with our technology solution partners often include multiple performance obligations. In determining whether integration services are distinct from hosting services we consider various factors. These considerations included the level of integration, interdependency, and interrelation between the implementation and hosting service, as well as any promises in the contract. We have concluded that the integration services included in contracts with hosting obligations are not distinct. As a result, we defer any arrangement fees for integration services and recognize such amounts over the life of the hosting obligation. Additional consideration for some partner contracts varies based on the level of customer activity on the platform. We have determined we meet the variable consideration allocation exception and therefore recognize these variable fees in the period they are earned. 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 expected cost-plus margin approach, which considers margins achieved on standalone sales of similar products, market data related to historical margins within an industry, industry sales price averages, market conditions, and profit objectives. 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 our infrastructure and platform; amortization expense associated with capitalized internal-use software; and allocation of overhead costs. Deferred revenue Deferred revenue primarily consists of amounts that have been billed to or received from customers in advance of performing the associated services. We recognize revenue from deferred revenue when the services are performed and the corresponding revenue recognition criteria are met. F-13 Table of Contents The net increase in the deferred revenue balance for the year ended December 31, 20 20 is primarily due to increase in SaaS related subscriptions . Amounts recognized from deferred revenue represent primarily revenue from the sale of subscription solutions, integration, and marketing services. As of December 31, 2020, we had $86.9 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. We expect to recognize approximately 55% of the remaining performance obligations as revenue in the next 12 months, and the remaining balance in the periods thereafter. Deferred commissions Certain sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions are not paid on subscription renewals. We amortize deferred sales commissions ratably over the estimated period of our relationship with customers of approximately four years. Based on historical experience, we determine the average life of our customer relationship by taking into consideration our customer contracts and the estimated technological life of our platform and related significant features. We include amortization of deferred commissions in Sales and marketing expense in the consolidated statements of operations. We periodically review the carrying amount of deferred commissions to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. We did not recognize an impairment of deferred commissions during the years ended December 31, 2020 and December 31, 2019. Sales commissions of $4.5 million, $2.5 million and $2.0 million were deferred for the years ended December 31, 2020, 2019 and 2018, respectively; and deferred commission amortization expense was $2.2 million, $1.6 million and $1.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. 4. Fair value measurements Financial instruments carried at fair value include cash and cash equivalents, restricted cash and marketable securities. The carrying amount of accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their relatively short maturities. 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, we consider 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 our data. We had $196.5 million of marketable securities included in our cash equivalents as of December 31, 2020, which were valued using Level 1 inputs and approximated its carry value. At December 31, 2019 the fair value of debt was measured using Level 2 inputs and approximated its carrying value. F-14 Table of Contents 5. Property and equipment Property and equipment, which includes software purchased or developed for internal use, is composed of the following: As of December 31, (in thousands) 2020 2019 Computer software $ 2,347 $ 1,788 Computer equipment 7,938 6,816 Furniture and fixtures 2,379 2,198 Leasehold improvements 7,943 7,834 20,607 18,636 Less: accumulated depreciation and amortization (13,485 ) (10,395 ) Property and equipment, net $ 7,122 $ 8,241 Depreciation expense on property and equipment was $3.1 million, $2.6 million and $1.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. 6. Commitments, contingencies, and leases We had unconditional purchase obligations as of December 31, 2020, as follows: (in thousands) 2021 $ 6,122 2022 4,333 2023 — 2024 and thereafter — Total $ 10,455 Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and that the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. From time to time, we are subject to various claims that arise in the normal course of business. In the opinion of management, we are unaware of any pending or unasserted claims that would have a material adverse effect on our financial position, liquidity, or results. Certain executive officers are entitled to payments in the event of termination of employment in connection with a certain change in control. Our certificate of incorporation and certain contractual arrangements provide for indemnification of our officers and directors for certain events or occurrences. We maintain a directors and officers insurance policy to provide coverage in the event of a claim against an officer of director. Historically, we have not been obligated to make any payments for indemnification obligations, and no liabilities have been recorded for these obligations on the consolidated balance sheets as of December 31, 2020 and 2019. Leases We lease certain facilities under operating lease agreements that expire at various dates through 2028. Some of these arrangements contain renewal options and require us to pay taxes, insurance and maintenance costs. Renewal options were not included in the ROU asset and lease liability calculation. We adopted ASC Topic 842, Leases on January 1, 2019. Operating and short-term rent expenses were $3.7 and $3.2 million, and $0.4 and $0.3 million, respectively, for the years ended December 31, 2020 and 2019. Operating rent expense was $2.5 million for the year ended December 31, 2018. We elected the practical expedient to not provide comparable presentation for periods prior to adoption. Supplemental lease information Year ended December 31, Cash flow information (in thousands) 2020 2019 Cash paid for operating lease liabilities $ 3,666 $ 3,224 Right-of-use assets obtained in exchange for operating lease obligations $ — $ 2,714 F-15 Table of Contents Year ended December 31, Operating lease information 2020 2019 Weighted-average remaining lease-term 6.0 years 6.8 years Weighted-average discount rate 5.42 % 5.50 % The future maturities of operating lease liabilities are as follows: (in thousands) December 31, 2020 2021 $ 3,928 2022 3,062 2023 2,484 2024 2,243 2025 2,011 Thereafter 4,923 Total minimum lease payments $ 18,651 Less imputed interest (2,806 ) Total lease liabilities $ 15,845 7. Other liabilities The following table summarizes the components of other current liabilities: Year ended December 31, (in thousands) 2020 2019 Sales tax payable $ 814 $ 551 Payroll and payroll related expenses 18,255 6,126 Other 3,107 3,027 Other current liabilities $ 22,176 $ 9,704 8. Debt Convertible term loan On October 27, 2017, we entered into a contingent convertible debt agreement (the “Convertible Term Loan”) with Silicon Valley Bank (“SVB”) providing for a term loan of $20.0 million. In conjunction with our IPO on August 5, 2020, the bank exercised its purchase right and repaid $1.1 million of previously paid principal. This balance, combined with the unpaid principal balance of $18.9 was converted into 2,179,360 shares of Series 1 common stock. No further borrowings are allowed under this convertible debt agreement. Interest was calculated on the outstanding principal, with interest payable monthly. The initial interest rate was equal to the prime rate and changes to a rate of prime plus 2.0% on and after January 1, 2020, a rate of prime plus 4.0% on and after January 1, 2021, and a rate of prime plus 6.0% on and after January 1, 2022. The weighted-average effective interest rate was 5.8%, 5.4% and 4.9% during the years ended December 31, 2020, 2019 and 2018. Quarterly principal payments of $125 thousand were due and payable from June 1, 2018 through maturity. On February 28, 2020 we entered into a contingent convertible term loan (the “2020 Convertible Loan”) with SVB, providing for a convertible term loan in an amount of $35.0 million. In conjunction with our IPO on August 5, 2020, the outstanding principal balance of $35 million was converted into 3,070,174 shares of Series 1 common stock. No further borrowings are allowed under this convertible debt agreement. Interest was calculated on the outstanding principal, with interest payable monthly. The 2020 Convertible Term Loan bears interest at (a) 4.5% prior to January 1, 2022, (b) 6.5% from January 1, 2022 and prior to January 1, 2023, (c) 8.5% from January 1, 2023 and prior to January 1, 2024, and (d) 10.5% from and after January 1, 2024. The weighted-average effective interest rate was 4.0% for the year ended December 31, 2020. In addition to the conversion shares on the outstanding principal, this instrument required a deficiency payment if the value of the conversion shares does not meet an applicable required minimum return of (a) 1.25 if converted within 18 months of the agreement, (b) 1.32 if converted between 18 months and 24 months, and (c) 1.55 if converted between 24 months and maturity. The deficiency payment, at the election of the holder, would be settled either (i) by issuance of additional shares of common stock equal to the difference between the minimum return and the conversion value or (ii) in cash in a single installment in the amount of such difference. Management determined that the required minimum return as defined above represented, in substance, an embedded lenders’ put option designed to provide the investor with a fixed monetary amount, settleable in either additional shares or cash. Management determined that this put option should be separated and accounted for as a derivative primarily because the put option met the net settlement criterion and the settlement provisions were not consistent with a fixed-for-fixed equity instrument. Based on the value of the conversion shares issued to the bank upon completion of the IPO, we met the required minimum return under terms of the 2020 Convertible Term Loan and were not required to provide any additional shares or cash. F-16 Table of Contents The put option, with an initial fair value of approximately $ 4.4 million, was recorded as a derivative liability on the accompanying balance sheet and a corresponding discount to the 2020 Convertible Term Loan. The discount was accreted to interest expense on the consolidated statement of operations over the term of the 2020 Convertible Term Loan using the effective interest method. The net balance outstanding under the terms of this agreement was netted against the outstanding principal balance upon conversion to Series 1 Common Stock upon completion of our IPO. We recorded interest expense related to this instrument of $ 0.4 during the year ended December 31, 2020. The estimated fair value of the put option was determined using a multi-scenario probability weighted expected return method analysis in which the future probability of exit events was weighted for its respective probability. Key assumptions included time to exit event, fair value of common stock, and a discount rate. At March 31, 2020, we determined the put option had no fair value due to an increase in market conditions that would make any amounts due under the redemption feature remote. As a result, we recorded a gain in the amount of $4.4 million, which was recorded in the accompanying consolidated statements of operations. This instrument was extinguished upon the conversion of the 2020 Convertible Term Debt upon completion of our IPO. Credit facility On October 27, 2017, we amended and restated our loan and security agreement (as amended, the “Credit Facility”) with SVB. The Credit Facility provided a $20.0 million revolving line of credit (the “Revolving Line”) and a $5.0 million term loan (the “2018 Term Loan”). On June 4, 2019, we amended the Credit Facility to increase the Revolving Line by $5.0 million to $25.0 million. On February 28, 2020, we amended and restated our loan and security agreement (the “A&R Credit Facility”) with SVB. The A&R Credit Facility reduces the amount available under the Revolving Line by $5.0 million to $20.0 million with a further reduction in availability to $10.0 million scheduled for September 30, 2020. On September 29, 2020, we entered into an agreement with SVB to defer the reduction in amounts available under the Revolving Line from $20.0 million to $10.0 million from September 30, 2020 to December 31, 2020. We accounted for the February 28, 2020 amendment and restatement transaction as an extinguishment of debt pursuant to ASC 470-50. We recorded an immaterial loss on extinguishment during the year period ended December 31, 2020. The Revolving Line has a maturity date of October 27, 2021. The Revolving Line bore interest at a rate equal to the prime rate, and the weighted-average effective interest rate was 3.6%, 5.3% and 5.2% for the years ended December 31, 2020, 2019, and 2018, respectively. Interest is calculated on the outstanding principal and is payable monthly. We had no balance outstanding under terms of this agreement at December 31, 2020 and no further borrowings are allowed under this agreement. As of December 31, 2019, we had $18.5 million outstanding under the Revolving Line. Borrowings from the 2018 Term Loan mature 36 months after each draw. The 2018 Term Loan bore interest at a rate equal to the prime rate plus 0.25% and, the weighted-average effective interest rate was 4.2%, 5.3%, and 5.2% for the years ended December 31, 2020, 2019 and 2018, respectively. Interest is calculated on the outstanding principal and is payable monthly. Monthly principal payments commenced on October 1, 2018 with a maturity date of October 1, 2021. The principal amortizes equally from the time of the draw to the maturity date. As of December 31 2020, we had no balance outstanding under terms of this agreement and no further borrowings are allowed. At December 31, 2019, we had $3.3 million outstanding under the 2018 Term Loan. In conjunction with our entry into the A&R Credit Facility, our financial covenants were amended. We are required to maintain a revenue growth rate of 118% each quarter compared to the same quarter in the prior year. The other covenant requires us to maintain a minimum liquidity ratio of 1.5:1. The liquidity ratio is calculated as unrestricted and unencumbered cash plus sixty percent of net accounts receivable to balance outstanding under the Revolving Line. Due to the repayment of the facilities, we had no compliance requirements as of December 31, 2020. Mezzanine Facility Loan On February 28, 2020, we entered into a mezzanine loan and security agreement (the “Mezzanine Facility”) with WestRiver Innovation Lending Fund VIII, L.P. (“WestRiver”) providing for a term loan of $10.0 million. The Mezzanine Facility maturity date is March 1, 2023. Our obligations under the Mezzanine Facility are secured by substantially all of our assets. The Mezzanine Facility contains restrictive covenants, including limits on additional indebtedness, liens, asset dispositions, dividends, investments, and distributions. Borrowings under the Mezzanine Facility bear interest at the greater of (i) 10.0% or (ii) the prime rate then in effect plus 5.25%. Interest is calculated on the outstanding principal on a 360-day year basis, payable monthly. This agreement formally terminated on November 6, 2020 and there was no balance outstanding as of December 31, 2020. In connection with the Mezzanine Facility, we issued warrants to purchase up to 99,000 shares of common stock with an exercise price of $9.21 per share with the warrants expiring on March 1, 2023. The warrant was exercisable for half of the shares. The warrant did not become exercisable for the remaining half of the shares because we did not draw down under the Mezzanine Facility and our ability to draw down under the Mezzanine Facility terminated. The portion of the warrant that was exercisable was exercised in August 2020 and the portion that did not become exercisable terminated upon the termination of the Mezzanine Facility. Upon issuance of the warrants, we recorded the fair value of the first tranche of warrants at $0.3 million. The value of the warrants issued was recorded as a discount on the carrying value of the debt instruments, which was amortized to interest expense over the life of the debt instruments as an adjustment to (increase in) the effective interest rate. Debt fees F-17 Table of Contents Lender fees that were paid upfront to the lenders and debt issuance fees paid to third parties are recorded as a discount from the debt carrying amount and are being amortized to interest expense over the life of the debt. Interest expense related to debt discount amortization was not material for any of the periods presented. Due to the repayment of all outstanding debt obligations, there were no unamortized fees as of December 31, 2020. Net unamortized fees as of De cember 31, 2019 amounted to $ 0.9 million. 9. Stockholders’ equity (deficit) 2020 Equity incentive plan In July 2020, our board of directors approved the 2020 Equity Incentive Plan, or 2020 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and 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. A total of 3,873,885 shares of our Series 1 common stock was initially authorized and reserved for issuance under the 2020 Plan. This reserve will automatically increase on January 1, 2021, and each subsequent anniversary through and including January 1, 2031, by an amount equal to the smaller of (a) 5% of the number of shares of Series 1 and Series 2 common stock issued and outstanding on the immediately preceding December 31 and (b) an amount determined by our board of directors. In addition, this reserve will be increased to include up to 10,330,304 shares that remained available for grant under our 2013 Plan upon its termination or that are subject to awards granted under our 2013 Plan that expire or terminate without having been exercised or settled in full. As of December 31, 2020, a total of 14,204,189 shares were allocated for issuance under the 2020 Plan. As of December 31, 2020, options to purchase a total of 9,182,043 shares of common stock, have been granted under the 2020 Plan, 1,407,811 shares, have been reserved under the 2020 Plan for the vesting of restricted stock units and market stock units, 181,750 shares have been returned to the 2020 Plan as a result of termination of options that expired or terminated without having been exercised and restricted stock awards that terminated prior to the awards vesting, and 3,796,085 shares of common stock remain available for future issuance under the 2020 Plan. In February 2013, we adopted the 2013 Plan under which stock options may be granted to employees, consultants and directors. Upon the completion of our IPO in August 2020, the board of directors terminated the 2013 Plan and all shares that were available for future issuance under the 2013 Plan at such time were transferred to the 2020 Plan. The 2020 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2013 Plan. As of December 31, 2020, no shares remain available for future issuance under the 2013 Plan. Stock options We use the Black-Scholes option-pricing model to estimate the fair value of our share-based payment awards. The Black-Scholes option-pricing model requires estimates regarding the risk-free rate of return, dividend yields, expected life of the award, and estimated forfeitures of awards during the service period. The calculation of expected volatility is based on historical volatility for comparable industry peer groups over periods of time equivalent to the expected life of each stock option grant. As we do not have a significant history as a publicly traded company, we believe that comparable industry peer groups provide a reasonable measurement of volatility in order to calculate a reasonable estimate of fair value of each stock award. The expected term is calculated based on the weighted average of the remaining vesting term and the remaining contractual life of each award. We based the estimate of risk-free rate on the U.S. Treasury yield curve in effect at the time of grant or modification. We have never paid cash dividends and do not currently intend to pay cash dividends, and thus have assumed a dividend yield of zero. Subsequent to our IPO on August 4, 2020, we utilize the quoted market price for our stock on the grant date in the fair value calculation. Prior to our IPO, we estimated the fair value of common stock at the time of grant of the option by considering a number of objective and subjective factors, including independent third-party valuations of our common stock, operating and financial performance, the lack of liquidity of capital stock, and general and industry-specific economic outlook, among other factors. We estimate potential forfeitures of stock grants and adjust compensation cost recorded accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods. The following table summarizes the weighted-average grant date value of options and the assumptions used to develop their fair value. Year ended December 31, 2020 2019 2018 Weighted-average grant date fair value of options $ 7.01 $ 1.20 $ 0.42 Risk-free interest rate 0.34%—0.84% 1.51%—2.53% 2.43%—3.09% Expected volatility 49.64%—51.49% 46.70%—47.87% 47.22%—49.13% Expected life in years 5.49—6.10 years 5.52—6.08 years 5.00—6.08 years Dividend yield — — — F-18 Table of Contents A summary of the changes in common stock options issued under all of the existing stock option plans is as follows: (in thousands, except per share amounts) Shares Weighted average of exercise prices Weighted average of remaining term (years) Aggregate intrinsic value Options outstanding at December 31, 2018 9,006 $ 1.71 8.60 $ 13,327 Granted 2,266 3.45 — — Exercised (1,099 ) 1.17 — — Forfeited (846 ) 1.98 — — Options outstanding at December 31, 2019 9,327 $ 2.22 8.17 $ 65,294 Granted 1,384 14.85 — — Exercised (2,053 ) 2.25 — — Forfeited (443 ) 5.33 — — Options outstanding at December 31, 2020 8,215 $ 4.30 7.65 $ 491,648 Vested and expected to vest at December 31, 2020 (1) 7,578 $ 4.03 7.58 $ 456,531 Vested at December 31, 2020 4,072 $ 1.99 6.85 $ 253,117 (1) The expected-to-vest options are the result of applying the pre-vesting forfeiture rate to outstanding options. The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $72.4 million, $5.6 million and $2.6 million, respectively. The intrinsic value was calculated as the difference between the estimated fair value of our common stock at exercise, and the exercise price of the in-the-money options. The weighted-average grant date fair value of options granted during the years ended December 31, 2020, 2019 and 2018 was $9.6 million, $8.1 million and $6.3 million, respectively. At December 31, 2020, 2019 and 2018, there was an estimated $11.4 million, $9.4 million and $6.2 million, respectively, of total unrecognized compensation costs related to stock options. These costs will be recognized over a weighted-average period of three years. Restricted stock units In May 2020, we issued RSUs and PSUs to certain employees. A summary of activity during the year ended December 31, 2020 is presented below: (in thousands, except per share amounts) Shares Weighted average grant date fair value Nonvested at December 31, 2019 — $ — Granted 1,408 24.67 Vested — — Cancelled/Forfeited/Expired — — Nonvested at December 31, 2020 1,408 $ 24.67 During the year ended December 31, 2020, we granted 192 RSUs to members of management and certain other employees pursuant to the 2020 Plan. The fair value of the RSU grant is determined based upon the market closing price of our common stock on the date of grant. The RSUs vest over the requisite service period of 4 years, subject to the continued employment of the employees. At December 31, 2020, there was an estimated $10.4 million of total unrecognized stock-based compensation costs related to RSUs. These costs will be recognized over a weighted-average period of 3.7 years. Performance-based restricted stock units During the year ended December 31, 2020, we granted 1,216 PSUs to members of management pursuant to the 2013 Plan. These PSUS contained a performance clause which required us to successfully complete an IPO as well as a service condition that required continued employment. These PSUs vest on a tranche by tranche basis over the life of the service period of 1-4 years. At December 31, 2020, there was an estimated $10.4 million of total unrecognized stock-based compensation costs related to these PSUs. These costs will be recognized over a weighted-average period of 1.9 years. F-19 Table of Contents Total stock-based compensation expense recognized was as follows: Year ended December 31, (in thousands) 2020 2019 2018 Cost of revenue $ 769 $ 191 $ 82 Sales and marketing 3,310 838 388 Research and development 2,500 666 432 General and administrative 4,479 1,461 1,169 Total stock-based compensation expense $ 11,058 $ 3,156 $ 2,071 Convertible preferred stock As of December 31, 2019, we had six outstanding series of redeemable convertible preferred stock. These preferred shares were classified as temporary equity within our consolidated balance sheet as of December 31, 2019. Immediately upon closing of our IPO, the outstanding preferred stock was automatically converted into an aggregate of 29,390,733 shares of Series 1 common stock and 5,050,555 shares of Series 2 common stock. Under the terms of Series F preferred stock, dividends were required to be paid at 10 percent, which could be adjusted for the holder’s actual rate of return upon redemption. Upon completion of our IPO with an offering price of $24 per share, we met the threshold for a reduction of dividends and reduced the required dividend rate to 8 percent. We utilized a portion of the proceeds from the IPO to pay the cumulative dividends of $12.8 million to the holders of our Series F preferred stock. As of December 31, 2020, there was no preferred stock issued or outstanding. 10. Income taxes Pretax earnings from continuing operations consist of the following: Year ended December 31, (in thousands) 2020 2019 2018 United States $ (31,891 ) $ (38,720 ) $ (38,471 ) Non-U.S. (5,644 ) (3,842 ) (397 ) Total pre-tax earnings $ (37,535 ) $ (42,562 ) $ (38,868 ) Our components of the provision for income taxes are as follows: Year ended December 31, (in thousands) 2020 2019 2018 Income tax provision (benefit) Current: Federal $ — $ — $ — State 24 25 10 Foreign 1 3 — Total current $ 25 $ 28 $ 10 Deferred: Federal — — — State — — — Foreign — — — Total deferred — — — Total provision (benefit) $ 25 $ 28 $ 10 Our provision for income taxes attributable to continuing operations differs from the expected tax expense (benefit) amount computed by applying the U.S. statutory federal income tax rate of 21% to income from continuing operations before income taxes. The variance is a result of the application of a valuation allowance for net deferred assets, including NOL carryforwards and credits generated in Australia, the UK, and the United States. Income tax expense for the period is a result of the Texas “Gross Margin” tax in the case of the state tax expense and taxable profits in Ireland and Singapore in the case of the foreign tax expense. F-20 Table of Contents Year ended December 31, (in thousands) 2020 2019 2018 U.S. federal taxes at statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit 4.91 3.25 3.45 Foreign tax rate differentials 0.66 0.33 (0.15 ) Research and development credit 4.97 3.24 (0.46 ) Stock-based compensation 16.97 0.38 (0.83 ) Permanent differences, other (8.17 ) (3.77 ) (1.83 ) Change in valuation allowance (40.41 ) (24.50 ) (22.30 ) Other — — 1.09 Effective tax rate (0.07 )% (0.07 )% (0.03 )% The Tax Cuts and Jobs Act of 2017 (the “TJCA”) subjects a U.S. shareholder to current tax on certain earnings of foreign subsidiaries under a provision commonly known as GILTI (global intangible low-taxed income). Under U.S. GAAP, an accounting policy election can be made to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes are as follows: December 31, (in thousands) 2020 2019 Deferred tax assets: Net operating loss and credit carryforwards $ 52,216 $ 36,373 Lease liabilities 3,868 3,854 Deferred revenue 426 871 Depreciation and amortization 8,381 9,144 Stock-based compensation 2,401 682 Other 1,721 702 Gross deferred tax assets $ 69,013 $ 51,626 Valuation allowance (62,917 ) (46,784 ) Deferred tax liabilities: Capitalized software costs — (478 ) Deferred commission (1,448 ) (752 ) Right-of-use assets (2,904 ) (2,887 ) Prepaid expenses and other (1,744 ) (725 ) Gross deferred tax liabilities (6,096 ) (4,842 ) Net deferred tax assets $ — $ — At December 31, 2020, we had NOL carryforwards for U.S. federal income tax purposes of approximately $168.9 million. Of this total, $120.4 million is related to tax years 2018, 2019 and 2020 that do not have an expiration, as a result of the TCJA. The remaining $48.5 million of U.S. federal NOL carryforwards are available to offset future U.S. federal taxable income and begin to expire in 2036. At December 31, 2020, we had NOL carryforwards for certain state income tax purposes of approximately $66.5 million. These state NOL carryforwards are available to offset future state taxable income and begin to expire in 2036. At December 31, 2020, we had foreign NOL carryforwards in Australia and the U.K., combined, of approximately $11.4 million, which are available to offset future foreign taxable income and that do not have an expiration. At December 31, 2020, we did not provide any U.S. income or foreign withholding taxes related to certain foreign subsidiaries’ undistributed earnings, as such earnings have been retained and are intended to be indefinitely reinvested. The majority of our foreign operations are in excess tax basis over book basis positions. It is not practicable to estimate the amount of taxes that would be payable upon remittance of these earnings, because such tax, if any, is dependent upon circumstances existing if and when remittance occur. At December 31, 2020, we had research and development tax credit carryforwards of approximately $5.2 million, which are available to offset future U.S. federal income tax. These U.S. federal tax credits begin to expire in 2034. At December 31, 2020 and December 31, 2019, we did not believe it is more likely than not that our net deferred tax assets will be realized. Therefore, we recorded a full valuation allowance with respect to all net deferred tax assets. During 2020, the valuation allowance increased by F-21 Table of Contents approximately $ 16.1 mi llion. The increase mainly relates to the increase the U.S. federal NOL and R&D tax credit along with an increase in state NOLs and tax credits. We file U.S. federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2017 through 2020 tax years generally remain open and subject to examination by U.S. federal, state and foreign tax authorities. The 2017 tax year generally remains open and subject to examination by foreign tax authorities. Losses generated in any year since inception remain open to adjustment until the statute of limitations closes for the tax year in which the NOL carryforwards are utilized. We are not currently under audit in any taxing jurisdictions. As of December 31, 2020, we had no recorded unrecognized tax benefits. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During 2020 and 2019, we did not recognize any material interest or penalties. 11. Net loss per share Net loss per share Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities. Prior to the IPO, Holders of Series F preferred stock were entitled to receive cumulative dividends at the annual rate of 10% compounded quarterly payable prior and in preference to any dividends on any shares of our common stock. In the event a dividend was paid on common stock, the holders of preferred stock were entitled to a proportionate share of any such dividend as if they were holders of common stock (on an as-if converted basis). Accordingly, all of our outstanding series of preferred stock were considered to be participating securities. The holders of our preferred stock did not have a contractual obligation to share in our losses; therefore, no amount of total undistributed loss was allocated to preferred stock. Net loss attributable to common stockholders was calculated as net loss less current period preferred stock dividends. Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Because we have reported a net loss for 2020, 2019 and 2018, the number of shares used to calculate diluted net loss per share of common stock attributable to common stockholders is the same as the number of shares used to calculate basic net loss per share of common stock attributable to common stockholders for the period presented because the potentially dilutive shares would have been antidilutive if included in the calculation. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported: Year ended December 31, (in thousands) 2020 2019 2018 Preferred stock as-converted — 34,442 34,442 Stock options outstanding 8,215 9,327 9,006 Warrants to purchase common stock — 364 352 Restricted stock units 1,408 — — Convertible debt — 2,180 2,180 Total potentially dilutive securities 9,623 46,313 45,980 F-22 Table of Contents 12. Quarterly results of operations (unaudited) Three months ended December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 Revenue $ 43,143 $ 39,735 $ 36,316 $ 33,174 $ 31,020 $ 28,264 $ 27,235 $ 25,584 Cost of revenue 10,216 8,593 7,837 7,480 8,065 6,806 6,227 5,925 Gross profit 32,927 31,142 28,479 25,694 22,955 21,458 21,008 19,659 Operating expenses: Sales and marketing 20,577 19,328 16,803 15,762 15,295 15,346 15,963 14,136 Research and development 13,942 12,124 11,345 10,921 10,961 10,862 10,468 10,832 General and administrative 12,212 9,745 7,714 6,466 6,456 5,527 5,222 4,999 Total operating expenses 46,731 41,197 35,862 33,149 32,712 31,735 31,653 29,967 Loss from operations (13,804 ) (10,055 ) (7,383 ) (7,455 ) (9,757 ) (10,277 ) (10,645 ) (10,308 ) Interest income 11 2 17 1 — 4 86 155 Interest expense (448 ) (741 ) (1,152 ) (762 ) (483 ) (359 ) (410 ) (360 ) Change in fair value of financial instruments — — — 4,413 — — — — Other expense 59 (75 ) 40 (203 ) (45 ) (86 ) (56 ) (21 ) Loss before provision for income taxes (14,182 ) (10,869 ) (8,478 ) (4,006 ) (10,285 ) (10,718 ) (11,025 ) (10,534 ) Provision for income taxes 19 (14 ) 3 17 7 7 7 7 Net loss $ (14,201 ) $ (10,855 ) $ (8,481 ) $ (4,023 ) $ (10,292 ) $ (10,725 ) $ (11,032 ) $ (10,541 ) Dividends and accretion of issuance costs on Series F preferred stock $ — $ 2,732 $ (1,953 ) $ (1,745 ) $ (1,909 ) $ (1,865 ) $ (1,798 ) $ (1,736 ) Net loss attributable to common stockholders $ (14,201 ) $ (8,123 ) $ (10,434 ) $ (5,768 ) $ (12,201 ) $ (12,590 ) $ (12,830 ) $ (12,277 ) Basic and diluted net loss per share attributable to common stockholders $ (0.21 ) $ (0.16 ) $ (0.54 ) $ (0.31 ) $ (0.67 ) $ (0.70 ) $ (0.73 ) $ (0.70 ) Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders 68,638 49,355 19,149 18,645 18,286 17,959 17,592 17,487 F-23