What changed in this filing

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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-02-26 · 472 added, 264 removed, 703 unchanged (51% of the section changed)

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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

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.

In connection with the preparation of this Annual Report on Form 10-K, our management conducted an assessment of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, as of December 31, 2021 (under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)).

Based on that assessment, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective because of control deficiencies in our information technology general controls (“ITGCs”) related to IT program change management that resulted in the material weakness described below.

Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at the level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or Rule 15(d)-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management (under the supervision and with the participation of our principal executive officer and our principal financial officer) assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

In making this assessment, management used the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

Based on our assessment and those criteria, management believes that, as of December 31, 2021, our internal control over financial reporting was not effective due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As part of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021, management identified certain control deficiencies in the area of program change management that, when viewed in combination, aggregated to a material weakness.

Specifically, management determined that we did not maintain effective controls over program change management for financially significant applications to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately.

As a result, the effective functioning of access management controls, process-level automation and IT-dependent controls could have been compromised, which could result in misstatements potentially impacting financial statement accounts and disclosures that would not be prevented or detected.

The material weakness did not result in any financial statement modifications.

As permitted by the U.S.

Securities and Exchange Commission staff guidance, we have excluded Feedonomics Holdings, LLC and Quote Ninja, Inc.

(dba B2B Ninja) from our assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, because these businesses were acquired during 2021.

The total assets and revenues of Feedonomics Holdings, LLC and Quote Ninja, Inc., both wholly-owned subsidiaries, represent 1.5% and 6.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.

Remediation plan

Management is taking actions to remediate the deficiencies that resulted in the material weakness and to improve the design and effectiveness of our ITGCs.

The remediation actions include the following:

Reassessing the design of internal controls related to the change management process.

Expanding the management and governance over IT system controls.

Implementing additional controls specific to applications that manage and process IT program changes.

We are in the process of completing the remediation activities as of the date of this report and believe that upon completion, we will have strengthened our ITGCs to address and successfully remediated the identified material weakness.

However, control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.

We expect to complete the remediation activities as early as practicable in fiscal year 2022.

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.

Except for the material weakness discussed above, which was identified during the quarter ended December 31, 2021, there have been no changes in our internal controls over financial reporting that occurred in the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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.

On February 28, 2022, our board of directors approved the 2022 Executive Bonus Plan (“2022 Bonus Plan”) for our executive officers to be effective for our fiscal year ending December 31, 2022.

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.

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The 2022 Bonus Plan is attached as Exhibit 10.17 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.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance.

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Incorporated by Reference

Asset Purchase Agreement by and among BigCommerce Holdings, Inc, BigCommerce Omni LLC, Feedonomics LLC, and certain other affiliated parties and significant equity holders of Feedonomics LLC, dated July 23, 2021

July 23, 2021

Seventh Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect

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August 7, 2020

Indenture, dated September 14, 2021 between Registrant and U.S National Association

September 15, 2021

Form of certificate representing the 0.25% Convertible Senior Notes due 2026 (included as Exhibit A to Exhibit 4.1)

September 15, 2021

Form of Capped Call Confirmation

September 15, 2021

Fourth Amended and Restated Investor Rights Agreement, dated as of April 19, 2018

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July 28, 2020

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.

July 13, 2020

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.

July 13, 2020

Offer Letter dated May 29, 2015, by and between the Registrant and Brent Bellm

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BigCommerce Holdings, Inc, 2021 Executive Bonus Plan

February 26, 2021

List of Subsidiaries of the Registrant

July 13, 2020

Consent of Independent Registered Public Accounting Firm

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in the Exhibit)

Indicates management contract or compensatory plan.

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BIGCOMMERCE HOLDINGS, INC.

February 26, 2021

March 1, 2022

/s/ Brent Bellm

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President, Chief Executive Officer and Director

February 26, 2021

March 1, 2022

(Principal Executive Officer)

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Chief Financial Officer

February 26, 2021

March 1, 2022

Robert Alvarez

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Vice President, Accounting

February 26, 2021

March 1, 2022

(Principal Accounting Officer)

/s/ Lawrence Bohn

February 26, 2021

March 1, 2022

Lawrence Bohn

/s/ Donald E.

February 26, 2021

March 1, 2022

/s/ Steven Murray

February 26, 2021

March 1, 2022

Steven Murray

/s/ Jeff Richards

February 26, 2021

March 1, 2022

Jeff Richards

February 26, 2021

March 1, 2022

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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generally accepted accounting principles.

Adoption of ASU no.

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).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 1, 2022 expressed an adverse opinion thereon.

Basis for Opinion

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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.

We are a public accounting firm registered with the 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.

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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.

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosure to which they relate.

Revenue Recognition

Description of the Matter

As described in Note 3 to the consolidated financial statements, the Company's contracts with its technology solution partners often include multiple performance obligations.

Judgment exists in determining which performance obligations are distinct and allocating consideration to each distinct performance obligation.

Auditing the Company's recognition of revenue related to its technology solution partners arrangements was complex because of the management judgments required in identifying distinct performance obligations and allocating consideration to the distinct performance obligations to meet the allocation objective.

How We Addressed the Matter in Our Audit

Our audit procedures included, among others, evaluating management’s revenue recognition policy which included the application of management’s judgment in the identification of distinct performance obligations and the allocation of consideration to each distinct performance obligation.

In addition, we read executed contracts, inquired of management and operations personnel and reviewed other supporting documentation to understand the terms of the arrangement and evaluate the appropriateness of management’s application of the Company’s accounting policy.

Business Combinations

Description of the Matter

As described in Note 5 to the consolidated financial statements, on July 23, 2021, the Company acquired all of the outstanding equity of Feedonomics, LLC (Feedonomics), for total consideration of $81.1 million in cash.

The transaction was accounted for as a business combination.

Auditing the Company's accounting for its acquisition of Feedonomics was complex due to the significant estimation required by management in determining the fair value of the intangible assets, which primarily included developed technology and customer relationships, and given the Company’s limited history of acquisitions.

The significant estimation was primarily due to the sensitivity of the respective fair values to underlying assumptions including projected revenue growth rates and customer attrition.

These assumptions relate to the future performance of the acquired businesses, are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

To test the estimated fair value of the intangible assets, our audit procedures included, among others, evaluating the Company's use of the income approach (including the relief-from-royalty methods and multi-period excess earnings), and testing the significant assumptions used in the models, including the completeness and accuracy of the underlying data.

We involved our valuation specialists to assist with our evaluation of the methodologies used by the Company and significant assumptions included in the fair value estimates.

For example, we compared the forecasted results to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, to historical results of the acquired business and to other guideline companies within the same industry.

We also performed sensitivity analyses to evaluate the changes in fair value that would result from changes in the significant assumptions.

/s/ Ernst & Young LLP

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Austin, Texas

February 26, 2021

March 1, 2022

Report of independent registered public accounting firm

To the Shareholders and the Board of Directors of BigCommerce Holdings, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited BigCommerce Holdings, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, BigCommerce Holdings, Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Feedonomics LLC and Quote Ninja, Inc., which is included in the 2021 consolidated financial statements of the Company and constituted 1.5% and 0% of total assets and 4.5% and 0% of net assets, respectively, as of December 31, 2021 and 6.5% and 0% of revenues and 0% and 0% of net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Feedonomics LLC and Quote Ninja, Inc.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management identified a material weakness related to information technology general controls in the area of program change management for the significant applications used in the preparation of the financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of BigCommerce Holdings, Inc.

as of December 31, 2021 and 2020, the related consolidated statements of comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report dated March 1, 2022, which expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Austin, Texas

March 1, 2022

BigCommerce Holdings, Inc.

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Restricted cash

Marketable securities

Accounts receivable, net

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Right-of-use-asset

Prepaid expenses, net of current portion

Deferred commissions, net of current portion

Liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Intangible assets, net

Liabilities and stockholders’ equity

Current liabilities

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Deferred revenue

Current portion of long-term debt

Current portion of operating lease liabilities

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Operating lease liabilities, net of current portion

Other long-term liabilities, net of current portion

Total liabilities

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.

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock $ 0.0001 par value;

10,000 shares authorized at

December 31, 2021 and December 31, 2020;

0 shares issued

and outstanding at December 31, 2021 and 2020.

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

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

72,311 , and 65,406 shares Series 1 issued and outstanding at December 31, 2021 and December 31, 2020, respectively, and 0 and 4,106 shares Series 2 issued and, outstanding at December 31, 2021, and

December 31, 2020, respectively.

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Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities, convertible preferred stock, and stockholders’ equity

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

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General and administrative

Acquisition related expenses

Amortization of intangible assets

Total operating expenses

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Provision for income taxes

Cumulative dividends and accretion of issuance costs on Series F preferred stock

Dividends and accretion of issuance costs on Series F preferred stock

Net loss attributable to common stockholders

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Balance at December 31, 2018

Adoption of ASC 606

Issuance of Series F preferred stock,

net of issuance costs

Exercise of stock options

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Exercise of stock options

Stock-based compensation

Accumulated dividend—Series F

Accretion of Series F issuance costs

Unrealized gain on investments

Balance at December 31, 2019

Exercise of stock options

Exercise of warrants

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Balance at December 31, 2020

Exercise of stock options

Release of restricted stock units

Issuance of common stock as consideration for an acquisition

Stock-based compensation

Purchase of capped call

Total other comprehensive loss

Balance at December 31, 2021

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

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Stock-based compensation

Provision for expected credit losses

Allowance for credit losses

Accretion on discount to marketable securities

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Cash flows from investing activities:

Cash paid for acquisition

Purchase of marketable securities

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Cash flows from financing activities:

Proceeds from issuance of convertible preferred stock, net of issuance costs

Payment of debt issuance costs

Purchase of capped calls

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

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Noncash investing and financing activities:

Fair value of shares issued as consideration for acquisition

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

Restricted cash

Total cash, cash equivalents and restricted cash

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

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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 allow merchants to build their ecommerce solution their way with the flexibility to fit 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.

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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.

Summary of significant accounting policies

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Total revenue

Long-lived assets by geographic region was as follows:

Long-lived assets by geographic region were as follows:

Year ended December 31,

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Additionally, we have amounts on deposit with certain financial institutions that serve as collateral for letters of credit and lease deposits.

Marketable securities

All marketable securities have been classified as available-for-sale and are carried at estimated fair value.

We determine the appropriate classification of our investments in debt securities at the time of purchase.

Securities may have stated maturities greater than one year.

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

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, our 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.

If this assessment indicates that a credit loss exists, an allowance is recorded for the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security.

Impairment losses attributable to credit loss factors are charged against the allowance when management believes an available-for-sale security is uncollectible or when either of the criteria regarding intent or requirement to sell is met.

Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit loss factors is recognized as a component of accumulated other comprehensive (loss) income, along with unrealized gains.

Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in other income (expense) in the results of operations.

The cost of securities sold is based on the specific-identification method.

Accounts receivable

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The accounts receivable balance at December 31, 2021 and December 31, 2020 included unbilled receivables of $ 13.1 million and $ 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.

We assess the collectability of outstanding accounts receivable on an ongoing basis and maintain an allowance for credit losses for accou nts receivable deemed uncollecti ble.

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.

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Balance at December 31, 2019

Cumulative effect adjustment upon adoption

Provision for expected credit losses

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Balance at December 31, 2020

Cumulative effect adjustment upon adoption

Provision for expected credit losses

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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.

In addition, implementation costs of hosting arrangements that are service contracts are capitalized.

Concentration of credit risks, significant clients, and suppliers

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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.

One of our strategic partners accounted for 14 %, 15 % and 12 % of our revenue at December 31, 2021, 2020 and 2019, respectively, and accounte d for 19 %, 24 % and 20 % of our accounts receivable balance at December 31, 2021, 2020 and 2019, respectively.

Advertising costs

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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 and other acquisition related expenses.

We recognized $ 23.3 million, $ 0.0 million, and $ 0.0 million in acquisition related expenses during the years ended December 31, 2021, 2020, and 2019, respectively.

For the year ended December 31, 2021, $ 1.8 million was recognized on acquisition related spend and $ 21.5 million was recognized in connection with contingent compensation arrangements, as further discussed in Note 5 “ Business Combination.” We entered into contingent compensation arrangements, in which payments will be made after the first and second anniversaries of the closing or upon the earlier achievement of certain product and financial milestones.

The compensation arrangements are 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.

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.

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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.

We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely upon its technical merits at the reporting date.

The unrecognized tax benefit is the difference between the tax benefit recognized and the tax benefit claimed on our income tax return.

All of our gross unrecognized tax benefits, if recognized, would not affect its effective tax rate, but would be recorded as an adjustment to equity before consideration of valuation allowances.

We do not expect unrecognized tax benefits to decrease within the next twelve months.

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2021, we have no t accrued any interest or penalties related to unrecognized tax benefits.

We believe that all material tax positions in the current and prior years have been analyzed and properly accounted for and that the risk of additional material uncertain tax positions that have not been identified is remote.

Stock-based compensation

We issue stock options and restricted stock units ("RSUs").

We issue stock options, restricted stock units ("RSUs") and performance based restricted stock units (“PSUs”) to our employees and other eligible service providers.

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.

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

Stock-based compensation related to PSUs 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

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 2020, 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.

2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which simplifies the accounting for convertible debt instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital.

In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

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.

Foreign currency

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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

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.

For most subscription solutions arrangements, we have determined we meet the variable consideration 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.

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

S ubsequent 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 provide 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

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 relates to fees earned by our partners from customers using our platform, where we have an arrangement with such partners to share such fees as they occur.

Revenue share is recognized at the time the earning activity is complete, which is generally monthly.

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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.

We recognize revenue share 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.

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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.

Contracts with our technology solution partners often include multiple performance obligations, which can include integrations and marketing activities.

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.

These considerations included the level of integration, interdependency, and interrelation between the implementation and hosting service.

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.

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

Additional consideration for some partner contracts varies based on the level of customer activity on the platform.

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.

For most of our contracts, we have determined that we meet the variable consideration allocation exception and therefore recognize these variable fees in the period they are earned.

Judgment is required to determine which performance obligations are distinct and the allocation of consideration to 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 s atisfied.

For certain arrangements, we may be required to allocate the contract’s transaction price to multiple performance obligations based on SSP.

T he 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

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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

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

We recognized $ 10.3 million of previously deferred revenue during the year ended December 31, 2021.

The net increase in the deferred revenue balance for the year ended December 31, 2021 is primarily due to increase in SaaS related subscriptions.

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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.

We did no t recognize an impairment of deferred commissions during the years ended December 31, 2021, 2020 and 2019, respectively.

Sales commissions of $ 7.0 million, $ 4.5 million and $ 2.5 million were deferred for the years ended December 31, 2021, 2020 and 2019, respectively;

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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.

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 assets 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.

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

The following table summarizes the estimated fair value of our cash equivalents and marketable securities.

As of December 31, 2021

(in thousands)

Financial assets:

Money market funds

U.S treasury securities

Corporate securities

Total financial assets

As of December 31, 2020

(in thousands)

Financial assets:

Money market funds

As of December 31, 2021

(in thousands)

Cash equivalents:

Money market funds

Marketable securities:

U.S treasury securities

Corporate securities

As of December 31, 2020

(in thousands)

Cash equivalents:

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 $ 312.2 million as of December 31, 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

On July 23, 2021 , we acquired substantially all the assets and assumed certain specified liabilities of Feedonomics, LLC’s existing business (“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 $ 81.1 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 year ended December 31, 2021, our results include $ 14.4 million of revenue and $ 0.1 million of net income in our Condensed Statements of Operations related to Feedonomics.

Acquisition related costs of $ 23.3 million were expensed as incurred during the year ended December 31, 2021.

The table below summarizes the preliminary estimated fair value of the assets acquired and liabilities 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

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 judgment and estimate, including the amount and timing of the future cash flow and the determination of the discount rate.

Key assumptions in the valuation of the intangibles include, the revenue growth rate, customer attrition rate, technology useful life, and the weighted average cost of capital.

In Q4, we finalized the purchase price due to the finalization of post close adjustments, which led to an increase in the overall purchase price of $ 0.1 million.

Additionally, we increased the valuation of intangible assets by $ 0.2 million due to adjustments to our intangibles valuation.

The combination of these two adjustments reduced goodwill by $ 0.1 million.

The goodwill of $ 41.3 million from this transaction is expected to be primarily 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 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 $ 81.1 million.

We recognized $ 21.4 million in additional compensation expense related to these contingent compensation arrangements for the year ended December 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 us 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 year ended December 31, 2021, pro forma adjustments include a reduction in transaction-related costs of $ 1.7 million excluding the compensation cost related to post-acquisition compensation arrangement, because they are non-recurring in nature, an increase in amortization of intangible of $ 4.2 million and a decrease of $ 5.1 million in compensation costs related to the post-acquisition

compensation arrangement.

For the year ended December 31, 2020, pro forma adjustments include an increase in amortization of intangible of $ 7.5 million and an increase in compensation cost of $ 48.8 million related to the post-acquisition compensation arrangement.

(in thousands)

Total revenue

November 2021 Acquisition of Quote Ninja, Inc.

(dba B2B Ninja)

During the year ended December 31, 2021, BigCommerce completed the acquisition of Quote Ninja, Inc., a premier enterprise software solution providing leading business-to-business ("B2B") ecommerce capabilities for merchants of all sizes.

The total purchase price was $ 2.0 million paid from our common stock.

In addition to the closing stock consideration, we entered into a contingent compensation arrangement with certain employees of B2B for their post-acquisition services, in which $ .5 million in additional common stock will be paid to those individuals on the first and second anniversaries of the closing for an aggregate amount of $ 1.0 million The purchase price primarily included $ 1.1 million of intangible assets and $ 0.9 million of goodwill that is not expected to be deductible for tax purposes.

The identifiable intangible assets, which primarily consisted of completed technology, have estimated use lives of three years .

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 December 31, 2021

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

There was no impairment of goodwill as of December 31, 2021.

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

Definite-lived intangible assets amortization was $ 3.3 million, $ 0.0 million and $ 0.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Definite-lived intangible assets consists of the following:

(in thousands)

December 31, 2021

December 31, 2020

Weighted average remaining useful life as of December 31, 2021 (in years)

Accumulated amortization

Net carrying amount

Accumulated amortization

Net carrying amount

Developed technology

Customer relationship

Non-compete agreement

Other intangibles

Total definite-lived intangible

As of December 31, 2021, expected amortization expense for definite-lived intangible assets was as follows:

(in thousands)

December 31, 2021

Property and equipment

Property and equipment, which includes software purchased or developed for internal use, is composed of the following:

Property and equipment, which includes computer software that was purchased or developed for internal use, is composed of the following:

As of December 31,

(in thousands)

Computer software

Computer equipment

Computer software

Furniture and fixtures

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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.

We maintain a directors and officers insurance policy to provide coverage in the event of a claim against an officer or 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, 2021 and 2020.

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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 expenses were $ 3.8 and $ 3.7 million, which included short-term rent expense of $ 0.5 and $ 0.4 million, respectively, for the years ended December 31, 2021 and 2020.

Operating rent expense was $ 3.2 million for the year ended December 31, 2019.

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Payroll and payroll related expenses

Acquisition related compensation

Other current liabilities

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.

Included in other long-term liabilities at December 31, 2021, is $ 7.2 million that has been accrued in connection with acquisition of Feedonomics and B2B, as further discussed in Note 5 “Business Combination”.

There were no similar amounts accrued at December 31, 2020.

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

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.

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)

December 31, 2021

December 31, 2020

Principal balance

Unamortized issuance costs

Carrying value, net

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

(in thousands)

Contractual interest expense

Amortization of issuance costs

Convertible Term Loans

Prior to our IPO, we entered into two contingent convertible debt agreements (the “Convertible Term Loans”) with Silicon Valley Bank (“SVB) providing for two term loans with a combined borrowing of $ 55.0 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.

This balance, combined with the unpaid principal of $ 53.9 million was converted into 5,249,534 shares of Series 1 common stock.

No further borrowings are allowed under these convertible debt agreements.

The weighted -average interest rate was 5.8 % during the year ended December 31, 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.

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 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 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 discount was accreted to interest expense in the consolidated statements of operations over the term of the 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.

We recorded interest expense related to this instrument of $ 0.4 million 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.

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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.

This instrument was extinguished upon the conversion of the 2020 Convertible Term Debt and completion of our IPO.

Credit Facility

In 2020, we had an available credit facility with SVB that provided for a $ 20.0 million line of credit and a $ 5.0 million term loan.

The outstanding balance under this credit facility was repaid in 2020.

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 4.0 percent for year ended December 31, 2020.

Mezzanine Facility Loan

On October 27, 2017, we amended and restated our loan and security agreement (as amended, the “Credit Facility”) with SVB.

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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.

We did not draw upon the funds available under this facility and formally terminated this facility on November 6, 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.

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.

The warrant did not become exercisable for the remaining half of the shares because we did not draw upon the Mezzanine Facility and our ability to draw upon under the Mezzanine Facility terminated.

Warrants to purchase 49,500 shares of common stock that were exercisable, were exercised in August 2020 and the remaining portion that did not become exercisable terminated upon the termination of the Mezzanine Facility.

We recorded the fair value of the warrants issued in connection with the Mezzanine Facility as a discount on the carrying value of the debt instruments.

This discount of $ 0.3 million was amortized to interest expense over the life of the debt instruments as an adjustment to the effective interest rate.

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

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.

Net unamortized debt issuance fees as of December 31, 2021 amounted to $ 9.5 million.

Stockholders’ equity (deficit)

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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.

On January 1, 2021 the reserve increased by 3,484,045 shares.

As of December 31, 2021, a total of 7,703,241 shares of common stock remain available for future issuance under the 2020 plan.

2013 Equity incentive 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.

Upon the completion of our IPO in August 2020, the board of directors terminated the 2013 Plan and 1,470,291 shares that were available for future issuance under the 2013 Plan were transferred and authorized for issuance under the 2020 Plan.

As of August 2020, no further awards may be granted 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 Black-Scholes option-pricing model requires estimates regarding the risk-free rate of return, dividend yields, expected life of the award, and expected annual volatility 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.

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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.

The total grant date fair value of options vested for the years ended December 31, 2021, 2020, and 2019 was $ 6.4 million, $ 11.4 million, and $ 9.4 million.

At December 31, 2021, 2020 and 2019, there was an estimated $ 11.5 million, $ 11.4 million and $ 9.4 million, respectively, of total unrecognized compensation costs related to stock options.

These costs will be recognized over a weighted-average period of three years.

These costs will be recognized over a weighted-average period of 2.5 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:

During the year ended December 31, 2021, we granted 1,352,746 RSUs to members of management, board members and certain other employees pursuant to the 2020 Plan, and 195,339 RSUs related to an acquisition under the 2021 Inducement 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.

The following table summarizes the RSU activity, including vesting of the performance-based restricted stock units below, under the Plans for the year ending December 31, 2021:

(in thousands, except per share amounts)

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Nonvested at December 31, 2020

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.

Cancelled/Forfeited/Expired

Nonvested at December 31, 2021

At December 31, 2021, there was an estimated $ 60.9 million of total unrecognized stock-based compensation costs related to RSUs.

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These PSUS contained a performance clause which required us to successfully complete an IPO as well as a service condition that required continued employment.

As of December 31, 2021, 810 PSUs remain unvested and outstanding.

These PSUs vest on a tranche by tranche basis over the life of the service period of 1 - 4 years .

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Total stock-based compensation expense

Convertible preferred stock

Preferred stock

As of December 31, 2019, we had six outstanding series of redeemable convertible preferred stock.

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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.

As of December 31, 2021 and 2020, there was no preferred stock issued or outstanding.

Pretax earnings from continuing operations consist of the following:

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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.

The variance is primarily 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.

Current 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, the Ukraine and Singapore in the case of the foreign tax expense along with withholding taxes.

Deferred income tax expense is a result of taxable temporary differences related to indefinite-lived assets along with a tax benefit related to the reduction of the valuation allowance.

Year ended December 31,

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Research and development credit

Purchase price accounting

Stock-based compensation

162(m) addback

Permanent differences, other

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Deferred tax liabilities:

Capitalized software costs

Deferred commission

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federal income tax purposes of approximately $ 243.8 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.

Of this total, $ 195.4 million is related to tax years 2018-2021 that do not have an expiration, as a result of the TCJA.

The remaining $ 48.4 million of U.S.

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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, 2021, we had research and development tax credit carryforwards of approximately $ 6.8 million, which are available to offset future U.S.

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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

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 have established a valuation allowance due to uncertainties regarding the realizability of deferred tax assets based on our lack of earnings history.

During 2021, the valuation allowance increased by approximately $ 29.2 mi llion due to continuing operations and an overall net increase of approximately $ 0.4 million due to the tax benefit of IPO costs booked to equity.

federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations.

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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.

We are currently under audit only in the state of Rhode Island.

As of December 31, 2021, we had $ 0.4 million 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.

During 2021 and 2020, we did no t recognize any material interest or penalties.

We had $ 0 of accrued penalties and interest due to the unrecognized tax benefit as of December 31, 2021 and December 31, 2020.

A reconciliation of our liability for unrecognized tax benefits is as follows:

(in thousands)

Balance, beginning of year

Increase for tax positions related to the current year

Increase for tax positions related to the prior years

Decrease for tax positions related to prior years

Balance, end of year

Net loss per share

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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).

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, subject to certain adjustments as set forth in our certificate of incorporation.

In the event a dividend is 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.

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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:

There was no preferred stock outstanding during the year ended December 31, 2021.

Because we have reported a net loss for the years ended December 31, 2021, 2020, and 2019, 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.

A pre-IPO preferred shareholder received Series 2 upon the conversion of their preferred shares at the time of our initial public offering.

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

A total of 5.1 million shares converted from Series 2 to Series 1 during the year ended December 31, 2021.

There are no Series 2 shares outstanding as of December 31, 2021.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have been antidilutive:

Year ended December 31,

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Stock options outstanding

Acquisition related compensation (1)

Warrants to purchase common stock

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Total potentially dilutive securities

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

Cost of revenue

Operating expenses:

Sales and marketing

Research and development

General and administrative

Total operating expenses

Loss from operations

Interest income

Interest expense

Change in fair value of financial instruments

Other expense

Loss before provision for income taxes

Provision for income taxes

Dividends and accretion of issuance costs on Series F

preferred stock

Net loss attributable to common stockholders

Basic and diluted net loss per share attributable to common

Weighted average shares used to compute basic and diluted net

loss per share attributable to common stockholders

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-K

Item 9A. Controls and Procedures