What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-06 · 290 added, 87 removed, 511 unchanged (42% of the section changed)

12 unchanged sentences

(in thousands, except per share amounts)

September 30,

Current assets

10 unchanged sentences

Deferred commissions, net of current portion

Liabilities, convertible preferred stock, and stockholders’ equity

Intangible assets, net

Liabilities and stockholders’ equity

Current liabilities

6 unchanged sentences

Deferred revenue, net of current portion

Long-term debt, net of current portion

Other long-term liabilities

Operating lease liabilities, net of current portion

1 unchanged sentence

Commitments and contingencies (Note 6)

Convertible preferred stock

Convertible preferred stock, $ 0.0001 par value;

10,000 shares authorized

at June 30, 2021 and December 31, 2020;

issued and outstanding, at June 30, 2021 and December 31, 2020

Stockholders’ equity

Preferred stock, $ 0.0001 par value;

10,000 shares authorized

at September 30, 2021 and December 31, 2020;

issued and outstanding, at September 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

500,000 shares Series 1 and, 5,051 shares Series 2

authorized at June 30, 2021 and December 31, 2020;

authorized at September 30, 2021 and December 31, 2020;

71,619 , and 64,461 shares Series 1

issued and outstanding at June 30, 2021 and December 31, 2020, respectively,

issued and outstanding at September 30, 2021 and December 31, 2020, respectively,

and 0 and 5,051 shares Series 2 issued and, outstanding at

June 30, 2021, and December 31, 2020, respectively

September 30, 2021, and December 31, 2020, respectively

Additional paid-in capital

1 unchanged sentence

Total stockholders’ equity

Total liabilities, convertible preferred stock, and stockholders’

Total liabilities and stockholders’ equity

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

2 unchanged sentences

(in thousands, except per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cost of revenue

4 unchanged sentences

Acquisition related expenses

Amortization of intangible assets

Total operating expenses

16 unchanged sentences

(in thousands)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Other comprehensive income (loss):

16 unchanged sentences

Balance at June 30, 2021

Exercise of stock options

Release of restricted stock units

Stock-based compensation

Purchase of capped call

Balance at September 30, 2021

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

BigCommerce Holdings, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

Convertible Preferred

15 unchanged sentences

Balance at June 30, 2020

Exercise of stock options

Exercise of warrants

Stock-based compensation

Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs

Conversion of redeemable preferred stock to common stock upon initial public offering

Conversion of redeemable convertible debt to common stock upon initial public offering

Accumulated dividend – Series F

Payment of Series F Dividend

Accretion of Series F issuance costs

Balance at September 30, 2020

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

2 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating

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

Depreciation and amortization

12 unchanged sentences

Cash flows from investing activities:

Cash paid for acquisition

Purchase of property and equipment

2 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of convertible senior notes

Payment of debt issuance costs

Purchase of capped calls

Proceeds from exercise of stock options

Payment of dividends

Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs

Proceeds from debt

7 unchanged sentences

Noncash investing and financing activities:

Issuance of warrants

Reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheet to the amounts show in the statements of cash flows above:

Conversion of convertible preferred stock into common stock upon initial public offering

Conversion of convertible debt into common stock upon initial public offering

Reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheet to the amounts shown in the statements of cash flows above:

Cash and cash equivalents

21 unchanged sentences

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

Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2020, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 26, 2021.

The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other period.

Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2020, which are included in our Annual Report on Form 10-K, filed with the SEC on February 26, 2021.

The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other period.

Basis of consolidation

13 unchanged sentences

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.

The COVID-19 pandemic has continued to cause economic disruption in the United States and our target international markets.

As a result, we have experienced a significant shift in shopping behavior from offline to online over the last 18 months.

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

3 unchanged sentences

Revenue by geographic region was as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

Long-lived assets by geographic region was as follows:

September 30,

(in thousands)

13 unchanged sentences

All marketable securities are considered available to support current operations and are classified as current assets.

Summary of significant accounting policies (continued)

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

For available-for-sale debt securities in an unrealized loss position, our management first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in other income (expense) in the results of operations.

For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

For available-for-sale debt securities that do not meet the aforementioned criteria, our

Summary of significant accounting policies (continued)

management evaluates whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

9 unchanged sentences

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

The accounts receivable balance at June 30, 2021 and December 31, 2020 included unbilled receivables of $ 8.4 million, $ 7.5 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.

The accounts receivable balance at September 30, 2021 and December 31, 2020 included unbilled receivables of $ 9.6 million, $ 7.5 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 uncollectible.

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.

12 unchanged sentences

Balance at June 30, 2021

Provision for expected credit losses

Accounts written off

Balance at September 30, 2021

Property and equipment

6 unchanged sentences

Leasehold improvements

Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred.

Summary of significant accounting policies (continued)

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.

18 unchanged sentences

We also lease office space under short-term arrangements and have elected not to include these arrangements in the ROU asset or lease liabilities.

Business combination

We record tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting.

We use best estimates and assumptions, including but not limited to, future expected cash flows, expected asset lives, and discount rates, to assign a fair value to the tangible and intangible assets acquired and liabilities assumed in business combinations as of the acquisition date.

These estimates are inherently uncertain and subject to refinement.

We allocate any excess purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed to goodwill.

During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our condensed consolidated statements of operations.

Acquisition related expenses

Acquisition related expenses consist primarily of cash payments for third-party acquisition costs, other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions.

We recognized $ 1.1 million in third-party acquisition costs during the six months ended June 30, 2021.

Acquisition related expenses consist primarily of cash payments for third-party acquisition costs and other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions.

In connection with our acquisition of Feedonomics LLC (“Feedonomics”) on July 23, 2021, as further discussed in Note 5 “Business Combination”, we entered into a contingent compensation arrangement with certain employees of the acquiree, in which payment will be made to those individuals within ten business days after the first and second anniversaries of the closing or upon the earlier achievement of certain product and financial milestones.

The compensation arrangement is contingent upon continued post-acquisition employment with us.

We account for the cost related to the first and second contingent compensation arrangement payments over the service periods of 12 and 24 months, respectively, beginning on the acquisition date, assuming earlier achievement of product and financial milestones is unlikely to be met.

We recognized $ 9.8 million and $ 10.9 million in acquisition related expenses during the three and nine months ended September 30, 2021, respectively.

Summary of significant accounting policies (continued)

Goodwill and other acquired intangible, net

We assess goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value.

When we elect to perform a qualitative assessment and conclude it is not more likely than not the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit is necessary;

otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined.

If the carrying value of the reporting unit exceeds the estimated fair value, impairment is recorded.

We evaluate the recoverability of finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of such asset may not be recoverable.

If such review determines the carrying amount of the indefinite-lived asset is not recoverable, the carrying amount of such asset is reduced to its fair value.

Acquired finite-lived intangible assets are amortized over their estimated useful lives.

We evaluate the estimated remaining useful life of these assets when events or changes in circumstances indicate a revision to the remaining period of amortization.

If we revise the estimated useful life assumption for any assets, the remaining unamortized balance is amortized over the revised estimated useful life on a prospective basis.

We account for income taxes under the asset and liability method.

8 unchanged sentences

Any interest and penalties related to uncertain tax positions will be reflected as a component of income tax expense .

Summary of significant accounting policies (continued)

Stock-based compensation

2 unchanged sentences

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, net of forfeitures, and recognized ratably over the service period.

Stock- based compensation related to performance based 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.

Stock-based compensation related to restricted stock units is measured at the date of grant, net of estimated forfeitures, and recognized ratably over the service period.

Stock- based compensation related to performance based restricted stock units is measured at the date of grant and recognized using the accelerated attribution method, net of estimated forfeitures, over the remaining service period.

Accounting pronouncements

3 unchanged sentences

We adopted this standard on January 1, 2021 using the modified retrospective method.

As further discussed in Note 7 “Debt”, we issued certain convertible senior notes and entered into certain contracts in the Company’s own equity during the quarter ended September 30, 2021.

The accounting for these instruments was based on the guidance in ASU 2020-06.

The adoption of this standard did not have any material impact on our financial statements.

6 unchanged sentences

The following table disaggregates our revenue by major source:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

15 unchanged sentences

Revenue is presented net of sales tax and other taxes we collect on behalf of governmental authorities.

Revenue recognition and deferred costs (continued)

Subsequent to our acquisition of Feedonomics on July 23, 2021, subscription revenue includes revenue from Feedonomics.

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

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

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

both marketplaces and advertising).

The service offerings constitute a single combined performance obligation.

Services are performed and Fees are determined based on monthly usage and are billed in arrears.

Partner and services

8 unchanged sentences

All other revenue is recognized on a gross basis, as we have determined we are the principal in these arrangements.

Revenue recognition and deferred costs (continued)

Contracts with multiple performance obligations

3 unchanged sentences

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.

Feedonomics’ subscription contracts can include multiple performance obligations but due to the nature of the service, they are performed over the same period.

Contracts with our technology solution partners often include multiple performance obligations.

14 unchanged sentences

and allocation of overhead costs.

With our acquisition of Feedonomics on July 23, 2021, cost of revenue also includes personnel and other costs related to feed management services along with other customer support personnel.

Deferred revenue

1 unchanged sentence

We recognize revenue from deferred revenue when the services are performed, and the corresponding revenue recognition criteria are met.

We recognized $ 8.0 million of previously deferred revenue during the six months ended June 30, 2021.

The net increase in the deferred revenue balance for the six months ended June 30, 2021 is primarily due to increases in SaaS related subscriptions.

We recognized $ 9.5 million of previously deferred revenue during the nine months ended September 30, 2021.

The net increase in the deferred revenue balance for the nine months ended September 30, 2021 is primarily due to increases in SaaS related subscriptions.

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

As of September 30, 2021, we had $ 129.4 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 50 % of the remaining performance obligations as revenue in the following 12 -month period, and the remaining balance in the periods thereafter.

Revenue recognition and deferred costs (continued)

As of June 30, 2021, we had $ 107.0 million of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods.

We expect to recognize approximately 52 % of the remaining performance obligations as revenue in the following 12 -month periods, and the remaining balance in the periods thereafter.

Deferred commissions

5 unchanged sentences

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 no t recognize an impairment of deferred commissions during the six months ended June 30, 2021 and the year ended December 31, 2020.

Sales commissions of $ 1.41 million and $ 1.76 million were deferred for the six months ended June 30, 2021 and 2020, respectively;

and deferred commission amortization expense was $ 0.79 million and $ 0.97 million for the six months ended June 30, 2021 and 2020, respectively.

We did no t recognize an impairment of deferred commissions during the nine months ended September 30, 2021 and the year ended December 31, 2020.

Sales commissions of $ 4.5 million and $ 2.9 million were deferred for the nine months ended September 30, 2021 and 2020, respectively;

and deferred commission amortization expense was $ 2.4 million and $ 1.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Fair value measurements, cash equivalents and marketable securities

10 unchanged sentences

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

The following tables summarize the estimated fair value of our cash equivalents and marketable securities.

As of June 30, 2021

The following tables summarize the estimated fair value of our cash equivalents, marketable securities and debt.

As of September 30, 2021

(in thousands)

1 unchanged sentence

Money market funds

U.S treasury securities

Corporate securities

6 unchanged sentences

The following tables summarize the estimated fair value of our cash equivalents and marketable securities.

As of June 30, 2021

As of September 30, 2021

(in thousands)

2 unchanged sentences

Marketable securities:

U.S treasury securities

Corporate securities

3 unchanged sentences

Money market funds

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

The estimated fair value of the notes was approximately $ 347.8 million as of September 30, 2021.

The Notes were categorized as Level 2 instruments as the estimated fair value was determined based on estimated or actual bids and offers of the Notes in an inactive market on the last business day of the period.

Business combinations

July 2021 Acquisition of Feedonomics, LLC

On July 23, 2021 , we acquired 100 % of Feedonomics, a SaaS company offering online product feed management platform used by merchants to optimize product data and syndicate and list products into multiple sales channels, including advertising, marketplace, affiliate and social channels, for a total purchase price of $ 80.9 million in cash.

Our purchase accounting is not yet complete, and the fair value of assets acquired, and liabilities assumed, including valuation of intangibles assets, may change as additional information is received during the measurement period.

The measurement period will end no later than one year from the acquisition date.

The financial results of Feedonomics are included in our financial statements beginning July 23, 2021.

For the three-month ended September 30, 2021, our results include $ 5.9 million of revenue and $ 0.3 million of net loss in our Condensed Statements of Operations related to Feedonomics.

Acquisition related costs of $ 9.8 million were expensed as incurred during the three months ended September 30, 2021.

The table below summarizes the preliminary estimated fair value of the asset acquired and liability assumed at the date of the acquisition.

(in thousands)

July 23rd, 2021

Accounts receivable

Prepaid expenses and other assets

Acquisition related intangible assets

Other non-current assets

Accounts payable and accrued liabilities

Customer prepaid liabilities

Operating lease liabilities

Net asset acquired, excluding goodwill

Total purchase consideration

Business combinations (continued)

We acquired Feedonomics because it is complementary to our core business.

The purchase price was based on the expected financial performance of Feedonomics, not on the value of the net identifiable assets at the time of the acquisition.

This resulted in a significant portion of the purchase price being attributed to goodwill.

The goodwill amount represents synergies expected to be realized from the business combination and assembled workforce.

Assets acquired and liabilities assumed were reviewed and adjusted to their fair values at the date of the acquisition, as necessary.

The fair value of the developed technology and the trade name were determined using the relief from royalty method and customer relationships and non-compete agreement were determined using the multi-period excess earning model.

The valuation of the intangibles assets incorporate significant unobservable input and require management judgement and estimate, including the amount and timing of the future cashflow and the determination of the discount rate.

The goodwill of $ 41.4 million from this transaction is expected to be deductible for tax purposes.

We are still evaluating the tax treatment of contingent compensation arrangements which may be treated as consideration for tax purposes and increase the amount of tax deductible goodwill when paid.

In conjunction with the transaction, we entered into a contingent compensation arrangement with certain employees of Feedonomics for their post-acquisition services, in which $ 32.5 .0 million will be made to those individuals within ten business days after both the first and second anniversaries of the closing or upon the earlier achievement of certain product and financial milestones for an aggregate amount of $ 65.0 million.

Product milestones include certain product enhancement and integration with existing products and financial milestones include certain revenue and gross margin targets.

As the contingent compensation is related to post-acquisition services, it is not considered as part of the purchase price of $ 80.9 million.

We recognized $ 9.2 million in additional compensation expense related to these contingent compensation arrangements for the three and nine months ended September 30, 2021.

We include this expense in acquisition related expenses in our condensed consolidated statements of operations.

The preliminary estimated fair value of identifiable intangible assets acquired at the date of the acquisitions are as follows:

(in thousands)

Estimated fair value

Weighted average amortization period (in years)

Developed technology

Customer relationship

Non-compete agreement

Total acquisition-related intangible assets

Unaudited pro forma financial information

The unaudited pro forma financial information in the table below presents the combined results of the Company and Feedonomics as if this acquisition had occurred on January 1, 2020.

The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the acquisition actually occurred on January 1, 2020.

For the three and nine months ended September 30, 2021, pro forma adjustments include a reduction in transaction-related costs of $ 0.6 million and $ 1.7 million excluding the compensation cost related to post-acquisition compensation arrangement, respectively, because they are non-recurring in nature, an increase in amortization of intangible of $ 0.5 million and $ 4.2 million, respectively, and a decrease of $ 5.1 million and increase of $ 3.0 million in compensation costs related to the post-acquisition compensation arrangement, respectively.

For the three and nine months ended September 30, 2020, pro forma adjustments include an increase in amortization of intangible of $ 1.9 million and $ 5.6 million, respectively and an increase in compensation cost of $ 12.2 million and $ 36.6 million related to the post-acquisition compensation arrangement, respectively.

Three months ended September 30,

Nine months ended September 30,

(in thousands)

Total revenue

Goodwill and intangible assets

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

The changes to the carrying amount of goodwill as follows:

(in thousands)

Balance as of December 31, 2020

Goodwill acquired

Balance as of September 30, 2021

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

There was no impairment of goodwill as of September 30, 2021.

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

Definite-lived intangible assets amortization was $ 1.4 million and $ 1.4 million for three and nine months ended September 30, 2021, respectively.

We did no t record any amortization expense for the three and nine months ended September 30, 2020.

Definite-lived intangible assets consists of the following:

(in thousands)

September 30, 2021

December 31, 2020

Weighted average remaining useful life as of September 30, 2021 (in years)

Accumulated amortization

Net carrying amount

Accumulated amortization

Net carrying amount

Developed technology

Customer relationship

Non-compete agreement

Total definite-lived intangible

As of September 30, 2021, expected amortization expense for definite-lived intangible assets was as follows:

(in thousands)

September 30, 2021

2021 (October 1st through December 31st)

Commitments, contingencies, and leases

4 unchanged sentences

Certain executive officers are entitled to payments in the event of termination of employment in connection with a certain change in control.

Commitments, contingencies, and leases (continued)

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 June 30, 2021 or December 31, 2020.

We maintain a directors and officers insurance policy to provide coverage in the event of a claim against an officer or director.

We lease certain facilities under operating lease agreements that expire at various dates through 2028 .

1 unchanged sentence

Renewal options were not included in the ROU asset and lease liability calculation.

Operating and short- term rent expenses was $ 0.9 million for each of the three-month periods ended June 30, 2021 and 2020, and $ 1.8 million for the six-month periods ended June 30, 2021 and 2020.

Operating and short- term rent expenses was $ 1.0 million and $ 0.9 million for the three-month periods ended September 30, 2021 and 2020, respectively, and $ 2.8 million and $ 2.7 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

Short-term rent expense was not material for any of the periods presented.

Commitments, contingencies, and leases (continued)

Supplemental lease information

Cash flow information (in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash paid for operating lease liabilities

Right-of-use assets obtained in exchange for operating lease obligations

Right-of-use assets obtained in acquisition

Operating lease information

Six months ended June 30,

Nine months ended September 30,

Weighted-average remaining lease-term

2 unchanged sentences

(in thousands)

June 30, 2021

2021 (July 1st through December 31st)

September 30, 2021

2021 (October 1st through December 31st)

Total minimum lease payments

3 unchanged sentences

The following table summarizes the components of other current liabilities:

As of June 30,

As of September 30,

As of December 31,

2 unchanged sentences

Payroll and payroll related expenses

Acquisition related compensation

Other current liabilities

2021 Convertible Senior Notes

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

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

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

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

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

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

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2021, if the Last Reported Sale Price (as defined in the indenture for the Notes) per share of Common

Stock (as defined in the indenture for the Notes) exceeds one hundred and thirty percent ( 130 %) of the Conversion Price (as defined in the indenture for the Notes) for each of at least twenty ( 20 ) Trading Days (as defined in the indenture for the notes) (whether or not consecutive) during the thirty ( 30 ) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;

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

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

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

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

We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

The initial conversion rate for the Notes is 13.6783 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 73.11 per share of common stock.

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

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

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

and (ii) the trading day immediately before the date we send such notice.

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

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

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

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

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

The effective interest rate for the Notes was 0.84 %.

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

2021 Capped Call Transactions

In connection with the pricing of the 2021 Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions.

Debt (continued)

We used $ 35.6 million of the net proceeds from the Notes to enter into privately negotiated capped call instruments the (“Capped Call Transactions”) with certain financial institutions.

The Capped Call Transactions are generally expected to reduce potential dilution to holders of our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of our common stock is greater than the strike price of the Capped Call Transactions with such reduction and/or offset subject to a cap The Capped Call Transactions have an initial cap price of approximately $ 106.34 per share, which represents a premium of 100 % over the last reported sale prices of our common stock of $ 53.17 per share on September 9, 2021, and is subject to certain adjustments under the terms of the Capped Call Transactions.

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

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

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

The net carrying amount of the Notes consists of the following:

(in thousands)

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Principal balance

Unamortized issuance costs

Carrying value, net

The total interest expense recognized related to the Notes consists of the following:

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Contractual interest expense

Amortization of issuance costs

Convertible Term Loans

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No further borrowings are allowed under these convertible debt agreements.

The weighted -average interest rate was 5.6 % during the six-month period ended June 30, 2020.

Debt (continued)

The weighted -average interest rate was 5.8 % during the nine-month period ended September 30, 2020.

In addition to the conversion shares on the outstanding principal, one of the convertible debt agreements, in the amount of $ 35.0 million, required a deficiency payment if the value of the conversion shares did not meet an applicable required minimum return.

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.

Our 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.

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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 $ 0.3 million during the six-month period ended June 30, 2020.

We recorded interest expense related to this instrument of $ 0.4 million during the nine-month period ended September 30, 2020.

Debt (continued)

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.

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We had no outstanding balances as of December 31, 2020 and no further borrowings are allowed under the credit facility.

The weighted average interest rate for these borrowings was 3.6 percent for the six-month period ended June 30, 2020.

The weighted average interest rate for these borrowings was 4.0 percent for the nine-month period ended September 30, 2020.

Mezzanine Facility Loan

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Interest expense related to debt discount amortization was not material for any of the periods presented.

Net unamortized debt issuance fees as of June 30, 2020 amounted to $ 0.8 million.

Net unamortized debt issuance fees as of September 30, 2021 amounted to $ 10.0 million.

Stockholders’ equity (deficit)

Equity Incentive Plans – Stock Options

During the six months ended June 30, 2021, the Company granted an aggregate of 251,000 shares of stock options, with a weighted average exercise price of $ 58.01 per share.

During the nine months ended September 30, 2021, we granted an aggregate of 263,136 shares of stock options, with a weighted average exercise price of $ 58.17 per share.

The fair value of options granted was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions (i) expected term of 6.0 years, (ii) expected volatility of 56 %, (iii) risk-free interest rate 1.0 % and (iv) expected dividend yield of 0 %.

Restricted Stock Units

During the six months ended June 30, 2021, we granted an aggregate of 571,639 RSUs with a weighted grant-date fair value of $ 56.65 .

During the nine months ended September 30, 2021, we granted an aggregate of 1,302,480 RSUs with a weighted grant-date fair value of $ 58.09 .

The RSUs vest over the requisite service period of 4 years from the date of grant, subject to the continued employment of the employees.

Stock Based Compensation Expense

Stock-based compensation expense was included in the following line items in the accompanying condensed consolidated statements of operations during the periods presented (in thousands):

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(in thousands)

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The difference in the 21 % U.S.

statutory tax rate and the annual forecasted effective tax rate ((.02%) as of Q2 2021) is primarily a result of valuation allowances offsetting the benefit of forecasted losses in the U.S., Australia, and the United Kingdom.

Forecasted income tax expense is related to non-U.S.

jurisdictions where we are profitable along with state income taxes.

The effective tax rates for the three months ended June 30, 2021 and 2020 were ( 0.05 ) % and ( 0.04 ) % respectively.

The effective tax rates for the six months ended June 30, 2021 and 2020 were ( 0.03 ) % and ( 0.16 ) % respectively.

We file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions including the Australia and the United Kingdom.

statutory tax rate and the annual forecasted effective tax rate ((.52%) as of September 30, 2021) is primarily a result of valuation allowances offsetting the benefit of forecasted losses in the U.S., Australia, and the United Kingdom.

Forecasted income tax expense is primarily related to changes in U.S.

deferred tax liabilities associated with amortization of tax deductible goodwill, non-U.S.

jurisdictions where we are profitable, and current state income taxes.

The effective tax rates for the three months ended September 30, 2021 and 2020 were ( 1.20 ) % and 0.13 % respectively.

The effective tax rates for the nine months ended September 30, 2021 and 2020 were ( 0.61 ) % and ( 0.03 ) % respectively.

We file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions including Australia, Ireland, Singapore, Ukraine, and the United Kingdom.

We believe adequate provision has been made for all income tax uncertainties.

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Net loss attributable to common stockholders is calculated as net loss less current period preferred stock dividends.

There was no preferred stock outstanding during the six-month period ending June 30, 2021 .

There was no preferred stock outstanding during the nine-month period ending September 30, 2021 .

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, which includes both Series 1 and Series 2 outstanding shares.

Because we have reported a net loss for the six months ended June 30, 2021, and 2020, 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.

Because we have reported a net loss for the three and nine months ended September 30, 2021, and 2020, 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.

Series 1 and Series 2 have the same rights and privileges except Series 2 are not entitled to vote on any matter except as required by law.

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These Series 2 automatically convert to Series 1 upon a qualifying disposition of the shares by the shareholder.

5.1 million shares converted from Series 2 to Series 1 during the six-month period ended June 30, 2021.

There are no Series 2 shares outstanding as of June 30, 2021.

5.1 million shares converted from Series 2 to Series 1 during the nine-month period ended September 30, 2021.

There are no Series 2 shares outstanding as of September 30, 2021.

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:

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(in thousands)

Preferred stock as-converted

Stock options outstanding

Restricted stock units

Warrants to purchase common stock

Acquisition related compensation (1)

Convertible debt

Total potentially dilutive securities

Subsequent events

On July 23, 2021, we entered into an asset purchase agreement to acquire substantially all the assets and liabilities of Feedonomics LLC.

Purchase consideration consisted of approximately $ 145.0 million with $ 80.0 million paid upon closing and up to $ 65.0 million in two annual installments of up to $ 32.5 million each, to be paid upon each of the first and second anniversaries of closing or upon the earlier achievement of certain milestones.

The anniversary payments may be paid in shares of our Series 1 common stock or cash based on our discretion.

In connection with the acquisition of Feedonomics, we entered into a contingent compensation arrangement with certain employees of Feedonomics for their post-acquisition services.

Of the $ 65.0 million to be paid, $ 61.1 million can be settled in our own stock assuming a price of $ 50.64 per share.

Special Note Regarding Forward-Looking Statements

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

What changed 10-Q

Item 1. Financial Statements