Commerce.com, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of disclosure controls and procedures 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. 47 Table of Contents 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 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. Item 9B. Other Information. 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. The 2022 Bonus Plan provides for the payment of cash bonuses based upon achievement of such performance targets and payout formulas determined by the compensation committee. To the extent earned, bonuses under the 2022 Bonus Plan will be paid in a single annual payout following completion of the fiscal year ending December 31, 2022. 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 48 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Information required by Part III, Item 10, will be included in our Proxy Statement relating to our 2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021, and is incorporated by reference. Item 11. Executive Compensation. Information required by Part III, Item 11, will be included in our Proxy Statement relating to our 2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021, and is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Information required by Part III, Item 12, will be included in our Proxy Statement relating to our 2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021, and is incorporated by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. Information required by Part III, Item 13, will be included in our Proxy Statement relating to our 2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021, and is incorporated by reference. Item 14. Principal Accounting Fees and Services. Information required by Part III, Item 14, will be included in our Proxy Statement relating to our 2022 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2021, and is incorporated by reference. 49 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Documents Filed with Report (1) Financial Statements; Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-5 Consolidated Statements of Operations for the Years ended December 31, 2021, 2020, and 2019 F-6 Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2021, 2020 and, 2019 F-7 Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (deficit) for the Years ended December 31, 2021, 2020 and, 2019 F-8 Consolidated Statements of Cash Flows for the Years ended December 31, 2021, 2020, and 2019 F-9 Notes to Consolidated Financial Statements F-10 (2) Financial Statement Schedules. Schedules required by this item have been omitted since they are either not required or not applicable or because the information required is included in the consolidated financial statements included elsewhere herein or the notes thereto. (3) Exhibits. The information required by this Item is set forth on the exhibit index that precedes the signature page of this Annual Report on Form 10-K. Item 16. Form 10-K Summary None. 50 Table of Contents Exhibit Index Exhibit Incorporated by Reference Number Description Form File No. Exhibit Filing Date 2.1 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 8-K 001-39423 2.1 July 23, 2021 3.1 Seventh Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect 8-K 001-39423 3.1 August 7, 2020 3.2 Amended and Restated Bylaws of the Registrant, as currently in effect 8-K 001-39423 3.2 August 7, 2020 4.1 Indenture, dated September 14, 2021 between Registrant and U.S National Association 8-K 001-39423 4.1 September 15, 2021 4.2 Form of certificate representing the 0.25% Convertible Senior Notes due 2026 (included as Exhibit A to Exhibit 4.1) 8-K 001-39423 4.1 September 15, 2021 10.1 Form of Capped Call Confirmation 8-K 001-39423 10.1 September 15, 2021 10.2 Fourth Amended and Restated Investor Rights Agreement, dated as of April 19, 2018 S-1 333-239838 10.1 July 13, 2020 10.3 + Form of Indemnification Agreement for Officers and Directors S-1/A 333-239838 10.4 July 28, 2020 10.4 + BigCommerce Holdings, Inc. Amended and Restated 2013 Stock Plan S-1 333-239838 10.5 July 13, 2020 10.5 + BigCommerce Holdings, Inc. 2020 Equity Incentive Plan S-1/A 333-239838 10.6 July 28, 2020 10.6 + BigCommerce Holdings, Inc. 2020 Employee Stock Purchase Plan S-1/A 333-239838 10.7 July 28, 2020 10.7 + Offer Letter dated May 29, 2015, by and between the Registrant and Brent Bellm S-1 333-239838 10.12 July 13, 2020 10.8 + Amendment to Offer Letter dated February 12, 2019, by and between the Registrant and Brent Bellm S-1 333-239838 10.13 July 13, 2020 10.9 + Offer Letter dated May 10, 2018, by and between the Registrant and Lisa Pearson S-1 333-239838 10.14 July 13, 2020 10.10 + Offer Letter dated September 9, 2016, by and between the Registrant and Brian Dhatt S-1 333-239838 10.15 July 13, 2020 10.11 + Amendment to Offer Letter dated February 2, 2017, by and between BigCommerce, Inc. and Brian Dhatt S-1 333-239838 10.16 July 13, 2020 10.12* Office Lease, dated November 20, 2012, by and between New TPG-Four Points, L.P. and BigCommerce, Inc. S-1 333-239838 10.17 July 13, 2020 10.13* First Amendment to Lease, dated February 5, 2018, by and between G&I VII Four Points LP and BigCommerce, Inc. S-1 333-239838 10.18 July 13, 2020 10.14* Second Amendment to Lease, dated October 4, 2018, by and between G&I VII Four Points LP and BigCommerce, Inc. S-1 333-239838 10.19 July 13, 2020 10.15^ PayPal Commerce Platform Global Partner Agreement, dated January 1, 2020, by and among PayPal, Inc., PayPal Pte. Ltd, BigCommerce, Inc., BigCommerce Pty Ltd, BigCommerce UK Ltd, and BigCommerce Software Ireland Limited S-1 333-239838 10.20 July 13, 2020 10.16 +** BigCommerce Holdings, Inc. 2022 Executive Bonus Plan 10.17 + BigCommerce Holdings, Inc, 2021 Executive Bonus Plan 10-K 001-39423 10.18 February 26, 2021 21.1** List of Subsidiaries of the Registrant 23.1 ** Consent of Independent Registered Public Accounting Firm 51 Table of Contents 31.1** Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1† Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS** Inline XBRL Instance Document. 101.SCH** Inline XBRL Taxonomy Extension Schema Document. 101.CAL** Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF** Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in the Exhibit) + Indicates management contract or compensatory plan. † The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of BigCommerce Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. (*) Pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC, certain exhibits and schedules to this agreement have been omitted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, any or all of such omitted exhibits or schedules. ** Filed herewith. (^) Portions of this exhibit have been omitted as we have determined that the information (i) is not material and (ii) would likely cause competitive harm to us if publicly disclosed. 52 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . BIGCOMMERCE HOLDINGS, INC. Date: March 1, 2022 By: /s/ Brent Bellm Brent Bellm President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Brent Bellm President, Chief Executive Officer and Director March 1, 2022 Brent Bellm (Principal Executive Officer) /s/ Robert Alvarez Chief Financial Officer March 1, 2022 Robert Alvarez (Principal Financial Officer) /s/ Thomas Aylor Vice President, Accounting March 1, 2022 Thomas Aylor (Principal Accounting Officer) /s/ Lawrence Bohn Director March 1, 2022 Lawrence Bohn /s/ Donald E. Clarke Director March 1, 2022 Donald E. Clarke /s/ John T. McDonald Director March 1, 2022 John T. McDonald /s/ Steven Murray Director March 1, 2022 Steven Murray /s/ Jeff Richards Director March 1, 2022 Jeff Richards /s/ Ellen F. Siminoff Director March 1, 2022 Ellen F. Siminoff 53 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-5 Consolidated Statements of Operations for the Years ended December 31, 2021, 2020, and 2019 F-6 Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2021, 2020 and, 2019 F-7 Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (deficit) for the Years ended December 31, 2021, 2020 and, 2019 F-8 Consolidated Statements of Cash Flows for the Years ended December 31, 2021, 2020, and 2019 F-9 Notes to Consolidated Financial Statements F-10 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of BigCommerce Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BigCommerce Holdings, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. 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 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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. F-2 Table of Contents /s/ Ernst & Young LLP We have served as the Company’s auditor since 2012. Austin, Texas March 1, 2022 F-3 Table of Contents 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 F-4 Table of Contents BigCommerce Holdings, Inc. Consolidated balance sheets (in thousands, except per share amounts) December 31, 2021 2020 Assets Current assets Cash and cash equivalents $ 297,561 $ 219,447 Restricted cash 1,143 1,160 Marketable securities 102,315 — Accounts receivable, net 39,806 22,894 Prepaid expenses and other assets 9,710 8,000 Deferred commissions 4,013 2,571 Total current assets 454,548 254,072 Property and equipment, net 7,429 7,122 Right-of-use-asset 9,515 11,842 Prepaid expenses, net of current portion 831 — Deferred commissions, net of current portion 5,673 3,590 Intangible assets, net 35,032 — Goodwill 42,432 — Total assets $ 555,460 $ 276,626 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 8,211 $ 5,788 Accrued liabilities 2,941 3,344 Deferred revenue 12,752 11,406 Current portion of operating lease liabilities 2,653 3,173 Other current liabilities 36,254 22,176 Total current liabilities 62,811 45,887 Deferred revenue, net of current portion 1,359 1,308 Long-term debt, net of current portion 335,537 — Operating lease liabilities, net of current portion 10,217 12,672 Other long-term liabilities, net of current portion 7,248 — Total liabilities 417,172 59,867 Commitments and contingencies (Note 6) 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, 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. 7 7 Additional paid-in capital 528,540 530,143 Accumulated other comprehensive loss ( 191 ) — Accumulated deficit ( 390,068 ) ( 313,391 ) Total stockholders’ equity 138,288 216,759 Total liabilities, convertible preferred stock, and stockholders’ equity $ 555,460 $ 276,626 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of operations (in thousands, except per share amounts) Year ended December 31, 2021 2020 2019 Revenue $ 219,855 $ 152,368 $ 112,103 Cost of revenue 48,479 34,126 27,023 Gross profit 171,376 118,242 85,080 Operating expenses: Sales and marketing 99,350 72,470 60,740 Research and development 64,547 48,332 43,123 General and administrative 56,839 36,137 22,204 Acquisition related expenses 23,299 — — Amortization of intangible assets 3,284 — — Total operating expenses 247,319 156,939 126,067 Loss from operations ( 75,943 ) ( 38,697 ) ( 40,987 ) Interest income 130 31 245 Interest expense ( 828 ) ( 3,103 ) ( 1,612 ) Change in fair value of financial instruments — 4,413 — Other expense ( 70 ) ( 179 ) ( 208 ) Loss before provision for income taxes ( 76,711 ) ( 37,535 ) ( 42,562 ) Provision for income taxes ( 34 ) 25 28 Net loss ( 76,677 ) ( 37,560 ) ( 42,590 ) Dividends and accretion of issuance costs on Series F preferred stock $ — $ ( 962 ) $ ( 7,308 ) Net loss attributable to common stockholders $ ( 76,677 ) $ ( 38,522 ) $ ( 49,898 ) Basic and diluted net loss per share attributable to common stockholders $ ( 1.08 ) $ ( 0.99 ) $ ( 2.80 ) Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders 70,933 39,092 17,834 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of comprehensive loss (in thousands) Year ended December 31, 2021 2020 2019 Net loss $ ( 76,677 ) $ ( 37,560 ) $ ( 42,590 ) Other comprehensive income (loss): Net unrealized gain (loss) on marketable debt securities ( 191 ) — 14 Total comprehensive loss $ ( 76,868 ) $ ( 37,560 ) $ ( 42,576 ) The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of convertible preferred stock and stockholders’ equity (deficit) (in thousands) Convertible preferred stock Series 1 common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Stockholders’ equity (deficit) Shares Amount Shares Amount Balance at December 31, 2018 102,030 216,446 17,445 $ 2 13,261 ( 224,725 ) ( 14 ) $ ( 211,476 ) Exercise of stock options — — 1,099 — 901 — — 901 Stock-based compensation — — — — 3,156 — — 3,156 Accumulated dividend—Series F — 7,234 — — — ( 7,234 ) — ( 7,234 ) Accretion of Series F issuance costs — 74 — — ( 74 ) — — ( 74 ) Unrealized loss on investments — — — — — — 14 14 Net loss — — — — — ( 42,590 ) — ( 42,590 ) Balance at December 31, 2019 102,030 $ 223,754 18,544 $ 2 $ 17,244 $ ( 274,549 ) $ — $ ( 257,303 ) Exercise of stock options — — 2,015 — 3,151 — — 3,151 Exercise of warrants — — 383 — 126 — — 126 Stock-based compensation — — — — 11,058 — — 11,058 Adoption of new accounting standard (See Note 2) — — — — — ( 364 ) — ( 364 ) Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offerings costs — — 7,878 1 171,128 — — 171,129 Issuance of common stock upon secondary public offering, net of underwriting discounts and commissions and other offering costs — — 1,000 — 65,112 — — 65,112 Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 102,030 ) ( 211,902 ) 34,442 3 211,899 — — 211,902 Conversion of redeemable convertible debt to common stock upon initial public offering — 5,250 1 50,172 — — 50,173 Accumulated dividend—Series F — 918 — — — ( 918 ) — ( 918 ) Payment of Series F dividend — ( 12,814 ) — — — — — — Accretion of Series F issuance costs — 44 — — ( 44 ) — — ( 44 ) Warrants issued in connection with debt — — — — 297 — — 297 Net loss — — — — — ( 37,560 ) — ( 37,560 ) Balance at December 31, 2020 — $ — 69,512 7 530,143 ( 313,391 ) — 216,759 Exercise of stock options — — 2,427 — 6,540 — — 6,540 Release of restricted stock units — — 337 — 0 — — — Issuance of common stock as consideration for an acquisition 35 — 2,003 — — 2,003 Stock-based compensation — — — — 25,424 — — 25,424 Purchase of capped call — — — — ( 35,570 ) — — ( 35,570 ) Total other comprehensive loss — — — — — — ( 191 ) ( 191 ) Net loss — — — — — ( 76,677 ) — ( 76,677 ) Balance at December 31, 2021 — $ — 72,311 $ 7 $ 528,540 $ ( 390,068 ) $ ( 191 ) $ 138,288 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents BigCommerce Holdings, Inc. Consolidated statements of cash flows (in thousands) Year ended December 31, 2021 2020 2019 Cash flows from operating activities Net loss $ ( 76,677 ) $ ( 37,560 ) $ ( 42,590 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,151 3,084 2,569 Amortization of discount on debt 574 774 54 Stock-based compensation 25,424 11,058 3,156 Allowance for credit losses 3,474 1,594 988 Accretion on discount to marketable securities — — ( 69 ) Change in fair value of financial instrument — ( 4,413 ) — Changes in operating assets and liabilities: Accounts receivable ( 17,279 ) ( 9,305 ) ( 6,297 ) Prepaid expenses ( 2,413 ) ( 2,704 ) ( 1,786 ) Deferred commissions ( 3,525 ) ( 2,396 ) ( 903 ) Accounts payable 2,137 1,907 ( 1,582 ) Accrued and other current liabilities 20,437 9,610 8,164 Deferred revenue 1,397 1,822 ( 1,673 ) Net cash used in operating activities ( 40,300 ) ( 26,529 ) ( 39,969 ) Cash flows from investing activities: Cash paid for acquisition ( 81,067 ) — — Purchase of marketable securities ( 107,006 ) — — Purchase of property and equipment ( 3,304 ) ( 1,964 ) ( 5,579 ) Maturity of marketable securities 4,500 — 23,450 Net cash (used in) provided by investing activities ( 186,877 ) ( 1,964 ) 17,871 Cash flows from financing activities: Payment of debt issuance costs ( 10,037 ) — — Purchase of capped calls ( 35,570 ) Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs — 171,129 — Proceeds from issuance of common stock upon secondary offering, net of underwriting discounts and commissions and other offerings costs — 65,112 — Payment of Series F dividends — ( 12,814 ) — Proceeds from exercise of stock options and warrants 5,881 3,279 901 Proceeds from debt 345,000 41,861 18,500 Repayment of debt — ( 28,617 ) ( 2,050 ) Net cash provided by financing activities 305,274 239,950 17,351 Net change in cash and cash equivalents and restricted cash 78,097 211,457 ( 4,747 ) Cash and cash equivalents and restricted cash, beginning of period 220,607 9,150 13,897 Cash and cash equivalents and restricted cash, end of period $ 298,704 $ 220,607 $ 9,150 Supplemental cash flow information: Cash paid for interest $ — $ 2,285 $ 1,626 Noncash investing and financing activities: Fair value of shares issued as consideration for acquisition 2,003 — — Conversion of convertible preferred stock into common stock upon initial public offering — 211,902 — Conversion of convertible debt into common stock upon initial public offering $ — $ 50,173 $ — 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 297,561 219,447 7,795 Restricted cash 1,143 1,160 1,355 Total cash, cash equivalents and restricted cash $ 298,704 $ 220,607 $ 9,150 The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents BigCommerce Holdings, Inc. Notes to consolidated financial statements 1. Overview BigCommerce is leading a new era of ecommerce. Our software-as-a-service (“SaaS”) platform simplifies the creation of beautiful, engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale systems. BigCommerce empowers businesses to turn digital transformation into a competitive advantage. We allow merchants to build their ecommerce solution their way with the 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. All our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation. Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including business-to-consumer and business-to-business. Our headquarters and principal place of business are in Austin, Texas. We were formed in Australia in December 2003 under the name Interspire Pty Ltd and reorganized into a corporation in Delaware under the name BigCommerce Holdings, Inc. in February 2013 . References in these consolidated financial statements to “we,” “us,” “our,” the “Company,” or “BigCommerce” refer to BigCommerce Holdings, Inc. and its subsidiaries, unless otherwise stated. 2. Summary of significant accounting policies Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Basis of consolidation The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Our fiscal year ends on December 31. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires certain financial instruments to be recorded at fair value; requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods. Significant estimates, judgments, and assumptions in these consolidated financial statements include: allocating variable consideration for revenue recognition; the amortization period for deferred commissions; the allowance for credit losses; a determination of the deferred tax asset valuation allowance and the valuation of our common stock used to determine stock-based compensation expense prior to our IPO. Because of the use of estimates inherent in the financial reporting process and given the additional or unforeseen effects from the COVID-19 pandemic, actual results could differ from those estimates, and such differences could be material to our consolidated financial statements. COVID-19, declared a global pandemic by the World Health Organization on March 11, 2020, has caused disruption to the economies and communities of the United States and our target international markets. In the interest of public health, many governments closed physical stores and places of business deemed non-essential. This precipitated a significant shift in shopping behavior from offline to online. Our business has benefited from this shift, both in accelerated sales growth for our existing customers’ stores, and in our sales of new store subscriptions to customers. Nevertheless, we do not have certainty that those trends will continue; the COVID-19 pandemic and the uncertainty it has created in the global economy could materially adversely affect our business, financial condition, and results of operations. F-10 Table of Contents Segment and geographic information Our chief operating decision maker is our chief executive officer. Our chief executive officer reviews the financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Accordingly, we have determined that we operate as a single operating and reportable segment. Revenue by geographic region was as follows: Year ended December 31, (in thousands) 2021 2020 2019 Revenue: Americas—U.S. $ 169,737 $ 120,934 $ 91,057 Americas—other 8,559 5,371 3,761 EMEA 20,783 12,396 7,370 APAC 20,776 13,667 9,915 Total revenue $ 219,855 $ 152,368 $ 112,103 Long-lived assets by geographic region were as follows: Year ended December 31, (in thousands) 2021 2020 Long-lived assets: Americas—U.S. $ 6,847 $ 6,596 Americas—other — EMEA — APAC 582 526 Total long-lived assets $ 7,429 $ 7,122 Cash and cash equivalents We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist of money market funds and investment securities and are stated at fair value. Restricted cash We maintain a portion of amounts collected through our online payment processor with the online payment processor as a security deposit for future chargebacks. Additionally, we have amounts on deposit with certain financial institutions that serve as collateral for letters of credit and lease deposits. 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 Accounts receivable are stated at net of provision for expected credit losses and include unbilled receivables. Unbilled receivables arise primarily when we provide subscriptions services in advance of billing. Accounts receivable are net of an allowance for credit losses, are not collateralized, and do not bear interest. Payment terms range from due immediately to due within 90 days . The accounts receivable balance at December 31, 2021 and December 31, 2020 included unbilled receivables of $ 13.1 million and $ 7.5 million, respectively. F-11 Table of Contents 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. This estimate is analyzed quarterly and adjusted as necessary. Identified risks pertaining to our accounts receivable include the delinquency level, customer type, and current economic environment. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Adoption of ASU 2016-13 resulted in an increase in the allowance for credit losses of approximately $ 0.4 million as of January 1, 2020, primarily related to unbilled receivables. The allowance for credit losses consisted of the following: (in thousands) Balance at December 31, 2018 $ 597 Provision for expected credit losses 988 Accounts written off ( 418 ) Balance at December 31, 2019 $ 1,167 Cumulative effect adjustment upon adoption 364 Provision for expected credit losses 1,594 Accounts written off ( 1,133 ) Balance at December 31, 2020 $ 1,992 Provision for expected credit losses 3,474 Accounts written off ( 1,599 ) Balance at December 31, 2021 $ 3,867 Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives or the related lease terms (if shorter). The estimated useful lives of property and equipment are as follows: Estimated useful life Computer equipment 3 years Computer software 3 years Furniture and fixtures 5 years Leasehold improvements 1-10 years Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred. The carrying values of property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with groups of assets used in combination over their estimated useful lives against their respective carrying amounts. If projected undiscounted future cash flows are less than the carrying value of the asset group, impairment is recorded for any excess of the carrying amount over the fair value of those assets in the period in which the determination is made. Research and development and internal use software Research and development expenses consist primarily of personnel and related expenses for our research and development staff, which include: salaries, benefits, bonuses, and stock-based compensation; the cost of certain third-party contractors; and allocated overhead. Expenditures for research and development, other than internal use software costs, are expensed as incurred. Software development costs associated with internal use software, which are incurred during the application development phase and meet other requirements under the guidance are capitalized. In addition, implementation costs of hosting arrangements that are service contracts are capitalized. Concentration of credit risks, significant clients, and suppliers Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Our investment policy limits investments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies, and highly rated corporate securities, subject to certain concentration limits and restrictions on maturities. Our cash and cash equivalents and restricted cash are held by financial institutions that management believes are of high credit quality. Amounts on deposit may at times exceed federally insured limits. We have not experienced any losses on our deposits of cash and cash equivalents. We are exposed to credit risk in the event of default by the financial institutions holding our cash and cash equivalents and bond issuers. F-12 Table of Contents Accounts receivable are derived from sales to our customers and our strategic technology partners who operate in a variety of sectors. We do not require collateral. Estimated credit losses are provided for in the consolidated financial statements and historically have been within management’s expectations. One of our strategic partners accounted for 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 We expense advertising costs as incurred. Advertising expenses were approximately $ 16.8 million, $ 12.9 million and $ 11.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. Leases We determine if an arrangement is a lease or contains a lease at inception. At the commencement date of a lease, we recognize a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As our leases typically do not provide an implicit rate, we use our incremental borrowing rate for most leases. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred and excludes lease incentives. Lease terms may include options to extend or terminate the lease. We record a ROU asset and a lease liability when it is reasonably certain that we will exercise that option. Operating lease costs are recognized on a straight-line basis over the lease term. We also lease office space under short-term arrangements and have elected not to include these arrangements in the ROU asset or lease liabilities. 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. F-13 Table of Contents Income taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period of the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized. To date, we have provided a valuation allowance against all of our deferred tax assets as we believe the objective and verifiable evidence of our historical pretax net losses outweighs any positive evidence of its forecasted future results. We will continue to monitor the positive and negative evidence, and we will adjust the valuation allowance as sufficient objective positive evidence becomes available. We 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, 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 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 August 2020, the FASB issued ASU No. 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 Our functional and reporting currency and the functional and reporting currency of our subsidiaries is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are re-measured to U.S. dollars using the exchange rates at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are measured in U.S. dollars using historical exchange rates. Revenue and expenses are measured using the actual exchange rates prevailing on the dates of the transactions. Gains and losses resulting from re-measurement are recorded within Other expense in our consolidated statements of operations and were not material for all periods presented. 3. Revenue recognition and deferred costs Our sources of revenue consist of subscription solutions fees and partner and services fees. These services allow customers to access our hosted software over the contract period. The customer is not allowed to take possession of the software or transfer the software. Our revenue arrangements do not contain general rights of refund in the event of cancellations. The following table disaggregates our revenue by major source: Year ended December 31, (in thousands) 2021 2020 2019 Subscription solutions $ 154,933 $ 103,706 $ 82,689 Partner and services 64,922 48,662 29,414 Total revenue $ 219,855 $ 152,368 $ 112,103 F-14 Table of Contents Subscription solutions Subscription solutions revenue consists primarily of platform subscription fees from all plans. It also includes recurring professional services and sales of SSL certificates. Subscription solutions are charged monthly, quarterly, or annually for our customers to sell their products and process transactions on our platform. Subscription solutions are generally charged per online store and are based on the store’s subscription plan. Monthly subscription fees for Pro and Enterprise plans are adjusted if a customer’s gross merchandise volume or orders processed are above specified plan thresholds on a trailing twelve-month basis. For most subscription solutions arrangements, we have determined we meet the variable consideration allocation exception and, therefore, recognize fixed monthly fees or a pro-rata portion of quarterly or annual fees and any transaction fees as revenue in the month they are earned. A portion of our Enterprise subscription plans include an upfront promotional period in order to incentivize the customer to enter into a subscription arrangement. For these Enterprise arrangements, the total subscription fee is recognized on a straight-line basis over the term of the contract. Professional services, which primarily consist of education packages, launch services, solutions architecting, implementation consulting, and catalog transfer services, are generally billed and recognized as revenue when delivered. Contracts with our retail customers are generally month-to-month, while contracts with our enterprise customers generally range from one to three years . Contracts are typically non-cancellable and do not contain refund-type provisions. Revenue is presented net of sales tax and other taxes we collect on behalf of governmental authorities. 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 partners to share such fees as they occur. Revenue share is recognized at the time the earning activity is complete, which is generally monthly. Revenue for partner technology integrations is recorded on a straight-line basis over the life of the contract commencing when the integration has been completed. Fees for marketing services are recognized either at the time the earning activity is complete, or ratably over the length of the contract, depending on the nature of the obligations in the contract. Payments received in advance of services being rendered are recorded as deferred revenue and recognized when the obligation is completed. We also derive revenue from the sales of website themes and applications upon delivery. We recognize revenue share from the sales of third-party applications, on a net basis as we have determined that we are the agent in our arrangements with third-party application providers. All other revenue is recognized on a gross basis, as we have determined we are the principal in these arrangements. Contracts with multiple performance obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our subscription contracts are generally comprised of a single performance obligation to provide access to our platform, but can include additional performance obligations. For contracts with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”) for any distinct good or service, we may be required to allocate the contract’s transaction price to each performance obligation using our best estimate of SSP. Contracts with our technology solution partners often include multiple performance obligations, 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. 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. 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. F-15 Table of Contents 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 Cost of revenue consists primarily of personnel-related costs, including: stock-based compensation expenses for customer support and professional services personnel; costs of maintaining and securing our infrastructure and platform; amortization expense associated with capitalized internal-use software; and allocation of overhead costs. 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 Deferred revenue primarily consists of amounts that have been billed to or received from customers in advance of performing the associated services. We recognize revenue from deferred revenue when the services are performed and the corresponding revenue recognition criteria are met. 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. Amounts recognized from deferred revenue represent primarily revenue from the sale of subscription solutions, integration, and marketing services. As of December 31, 2021, we had $ 142.9 million of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods. We expect to recognize approximately 49 % of the remaining performance obligations as revenue in the next 12 months, and the remaining balance in the periods thereafter. Deferred commissions Certain sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions are not paid on subscription renewals. We amortize deferred sales commissions ratably over the estimated period of our relationship with customers of approximately four years . Based on historical experience, we determine the average life of our customer relationship by taking into consideration our customer contracts and the estimated technological life of our platform and related significant features. We include amortization of deferred commissions in Sales and marketing expense in the consolidated statements of operations. We periodically review the carrying amount of deferred commissions to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. We did 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; and deferred commission amortization expense was $ 3.5 million, $ 2.2 million and $ 1.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. 4. Fair value measurements Financial instruments carried at fair value include cash and cash equivalents, restricted cash and marketable securities. The carrying amount of accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their relatively short maturities. For assets and liabilities measured at fair value, fair value is the price to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. When determining fair value, we consider the principal or most advantageous market in which it would transact, and assumptions that market participants would use when pricing 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. The standard requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are as follows: • Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. F-16 Table of Contents • Level 3—Inputs are unobservable that are significant to the fair value of the asset or liability and are developed based on the best information available in the circumstances, which might include our data. The following table summarizes the estimated fair value of our cash equivalents and marketable securities. As of December 31, 2021 (in thousands) (Level 1) (Level 2) (Level 3) Total Financial assets: Money market funds $ 262,679 $ — $ — $ 262,679 U.S treasury securities $ 21,926 $ — $ — $ 21,926 Corporate securities $ — $ 80,389 $ — $ 80,389 Total financial assets $ 284,605 $ 80,389 $ — $ 364,994 As of December 31, 2020 (in thousands) (Level 1) (Level 2) (Level 3) Total Financial assets: Money market funds $ 196,521 $ — $ — $ 196,521 As of December 31, 2021 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash equivalents: Money market funds $ 262,679 $ — $ — $ 262,679 Marketable securities: U.S treasury securities $ 21,999 $ ( 74 ) $ 21,925 Corporate securities $ 80,506 $ — $ ( 117 ) $ 80,389 As of December 31, 2020 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash equivalents: Money market funds $ 196,521 $ — $ — $ 196,521 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. 5. 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. F-17 Table of Contents 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 $ 3,107 Prepaid expenses and other assets $ 108 Acquisition related intangible assets $ 36,951 Other non-current assets $ 458 Accounts payable and accrued liabilities $ 287 Customer prepaid liabilities $ 225 Operating lease liabilities $ 345 Net asset acquired, excluding goodwill $ 39,767 Total purchase consideration $ 81,066 Goodwill $ 41,299 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. 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. 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 $ 11,794 4.0 Customer relationship $ 22,525 5.7 Trade name $ 2,470 5.0 Non-compete agreement $ 162 3.0 Total acquisition-related intangible assets $ 36,951 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 F-18 Table of Contents 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. December 31, (in thousands) 2021 2020 Total revenue $ 234,581 $ 171,156 Net loss $ ( 74,599 ) $ ( 91,854 ) 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 . 6. Goodwill and intangible assets Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. The changes to the carrying amount of goodwill as follows: (in thousands) Balance as of December 31, 2020 $ — Goodwill acquired $ 42,432 Balance as of December 31, 2021 $ 42,432 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) Gross amount Accumulated amortization Net carrying amount Gross amount Accumulated amortization Net carrying amount Developed technology $ 12,937 $ ( 1,294 ) $ 11,643 $ — $ — $ — 3.5 Customer relationship $ 22,525 $ ( 1,749 ) $ 20,776 $ — $ — $ — 5.3 Trade name $ 2,470 $ ( 217 ) $ 2,253 $ — $ — $ — 4.6 Non-compete agreement $ 162 $ ( 24 ) $ 138 $ — $ — $ — 2.6 Other intangibles $ 285 $ ( 63 ) $ 222 $ — $ — $ — 2.3 Total definite-lived intangible $ 38,379 $ ( 3,347 ) $ 35,032 $ — $ — $ — As of December 31, 2021, expected amortization expense for definite-lived intangible assets was as follows: (in thousands) December 31, 2021 2022 8,005 2023 7,958 2024 7,823 2025 6,134 2026 3,395 Thereafter 1,717 Total $ 35,032 F-19 Table of Contents 7. Property and equipment 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) 2021 2020 Computer equipment $ 9,081 $ 7,938 Computer software 3,313 2,347 Furniture and fixtures 1,582 2,379 Leasehold improvements 6,234 7,943 20,210 20,607 Less: accumulated depreciation and amortization ( 12,781 ) ( 13,485 ) Property and equipment, net $ 7,429 $ 7,122 Depreciation expense on property and equipment was $ 2.8 million, $ 3.1 million and $ 2.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. 8. Commitments, contingencies, and leases We had unconditional purchase obligations as of December 31, 2021, as follows: (in thousands) December 31, 2021 2022 $ 9,769 2023 11,359 2024 10,750 2025 8,625 2026 and thereafter — Total $ 40,503 Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and that the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. From time to time, we are subject to various claims that arise in the normal course of business. In the opinion of management, we are unaware of any pending or unasserted claims that would have a material adverse effect on our financial position, liquidity, or results. Certain executive officers are entitled to payments in the event of termination of employment in connection with a certain change in control. Our certificate of incorporation and certain contractual arrangements provide for indemnification of our officers and directors for certain events or occurrences. We maintain a directors and officers insurance policy to provide coverage in the event of a claim against an officer 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. Leases We lease certain facilities under operating lease agreements that expire at various dates through 2028 . Some of these arrangements contain renewal options and require us to pay taxes, insurance and maintenance costs. Renewal options were not included in the ROU asset and lease liability calculation. We adopted ASC Topic 842, Leases on January 1, 2019. Operating 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. We elected the practical expedient to not provide comparable presentation for periods prior to adoption. F-20 Table of Contents Supplemental lease information Year ended December 31, Cash flow information (in thousands) 2021 2020 Cash paid for operating lease liabilities $ 3,927 $ 3,666 Right-of-use assets obtained in exchange for operating lease obligations $ — $ — Year ended December 31, Operating lease information 2021 2020 Weighted-average remaining lease-term 5.5 years 6.0 years Weighted-average discount rate 5.46 % 5.42 % The future maturities of operating lease liabilities are as follows: (in thousands) December 31, 2021 2022 3,278 2023 2,534 2024 2,243 2025 2,011 2026 2,071 Thereafter 2,852 Total minimum lease payments $ 14,989 Less imputed interest ( 2,097 ) Total lease liabilities $ 12,892 9. Other liabilities The following table summarizes the components of other current liabilities: Year ended December 31, (in thousands) 2021 2020 Sales tax payable $ 679 $ 814 Payroll and payroll related expenses 17,315 18,255 Acquisition related compensation 14,309 — Other 3,951 3,107 Other current liabilities $ 36,254 $ 22,176 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. 10. Debt 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 F-21 Table of Contents events. From and after July 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate for the Notes is 13.6783 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 73.11 per share of common stock. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events, such as distribution of stock dividends or stock splits. We may not redeem the Notes prior to October 7, 2024. The Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at our option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. Pursuant to the Partial Redemption Limitation (as defined in the indenture for the Notes), we may not elect to redeem less than all of the outstanding Notes unless at least $ 150.0 million aggregate principal amount of Notes are outstanding and not subject to redemption as of the time we send the related redemption notice. If a “fundamental change” (as defined in the indenture for the Notes) occurs, then, subject to a limited exception, noteholders may require us to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date. In accounting for the issuance of the Notes, we recorded the Notes as a liability at face value. The effective interest rate for the Notes was 0.84 %. Transaction costs of $ 10.0 million, attributable to the issuance of the Notes were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet and are amortized to interest expense over the term of the Notes. 2021 Capped Call Transactions In connection with the pricing of the 2021 Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. 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 $ 345,000 $ — Unamortized issuance costs $ ( 9,463 ) $ — Carrying value, net $ 335,537 $ — The total interest expense recognized related to the Notes consists of the following: December 31, (in thousands) 2021 2020 2019 Contractual interest expense $ 254 $ — $ 0 Amortization of issuance costs 574 — — Total $ 828 $ — $ — 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 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 F-22 Table of Contents 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. Based on the value of the conversion shares issued to the bank upon completion of the IPO, we met the required minimum return under terms of the Convertible Term Loan and were not required to provide any additional shares or cash. 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 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 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. Key assumptions included time to exit event, fair value of common stock, and a discount rate. At March 31, 2020, we determined the put option had no fair value due to an increase in market conditions that would make any amounts due under the redemption feature remote. As a result, we recorded a gain in the amount of $ 4.4 million, which was recorded in the accompanying consolidated statements of operations. This instrument was extinguished upon the conversion of the 2020 Convertible Term Debt 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. The Credit Facility provided a $ 20.0 million revolving line of credit (the “Revolving Line”) and a $ 5.0 million term loan (the “2018 Term Loan”). On June 4, 2019, we amended the Credit Facility to increase the Revolving Line by $ 5.0 million to $ 25.0 million. On February 28, 2020, we 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. 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 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. Debt fees 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. Net unamortized debt issuance fees as of December 31, 2021 amounted to $ 9.5 million. 11. Stockholders’ equity (deficit) 2020 Equity incentive plan In July 2020, our board of directors approved the 2020 Equity Incentive Plan, or 2020 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2020 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof. A total of 3,873,885 shares of our Series 1 common stock was initially authorized and reserved for issuance under the 2020 Plan. This reserve will automatically increase on January 1, 2021, and each subsequent anniversary through and including January 1, 2031, by an amount equal to the smaller of (a) 5 % of the number of shares of Series 1 and Series 2 common stock issued and outstanding on the immediately preceding December 31 and (b) an amount determined by our board of directors. 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. F-23 Table of Contents 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 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 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. As we do not have a significant history as a publicly traded company, we believe that comparable industry peer groups provide a reasonable measurement of volatility in order to calculate a reasonable estimate of fair value of each stock award. The expected term is calculated based on the weighted average of the remaining vesting term and the remaining contractual life of each award. We based the estimate of risk-free rate on the U.S. Treasury yield curve in effect at the time of grant or modification. We have never paid cash dividends and do not currently intend to pay cash dividends, and thus have assumed a dividend yield of zero . Subsequent to our IPO on August 4, 2020, we utilize the quoted market price for our stock on the grant date in the fair value calculation. Prior to our IPO, we estimated the fair value of common stock at the time of grant of the option by considering a number of objective and subjective factors, including independent third-party valuations of our common stock, operating and financial performance, the lack of liquidity of capital stock, and general and industry-specific economic outlook, among other factors. We estimate potential forfeitures of stock grants and adjust compensation cost recorded accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods. The following table summarizes the weighted-average grant date value of options and the assumptions used to develop their fair value. Year ended December 31, 2021 2020 2019 Weighted-average grant date fair value of options $ 30.71 $ 7.01 $ 1.20 Risk-free interest rate 0.96%—1.08% 0.34%—0.84% 1.51%—2.53% Expected volatility 54.41%—56.25% 49.64%—51.49% 46.70%—47.87% Expected life in years 6.02—6.06 years 5.49—6.10 years 5.52—6.08 years Dividend yield — — — A summary of the changes in common stock options issued under all of the existing stock option plans is as follows: (in thousands, except per share amounts) Shares Weighted average of exercise prices Weighted average of remaining term (years) Aggregate intrinsic value Options outstanding at December 31, 2019 9,327 $ 2.22 8.17 $ 65,294 Granted 1,384 14.85 — — Exercised ( 2,053 ) 2.25 — — Forfeited ( 443 ) 5.33 — — Options outstanding at December 31, 2020 8,215 $ 4.30 7.65 $ 491,648 Granted 263 58.36 — — Exercised ( 2,426 ) 2.46 — — Forfeited ( 324 ) 11.22 — — Options outstanding at December 31, 2021 5,728 $ 8.77 6.95 $ 168,772 Vested and expected to vest at December 31, 2021 (1) 5,490 $ 6.71 6.91 $ 164,384 Vested at December 31, 2021 3,629 $ 3.53 6.46 $ 116,440 (1) The expected-to-vest options are the result of applying the pre-vesting forfeiture rate to outstanding options. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $ 126.0 million, $ 72.4 million and $ 5.6 million, respectively. The intrinsic value was calculated as the difference between the estimated fair value of our common stock at exercise, and the exercise price of the in-the-money options. The 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. F-24 Table of Contents 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 2.5 years. Restricted stock units 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) Shares Weighted average grant date fair value Nonvested at December 31, 2019 — $ — Granted 1,408 24.67 Vested — — Cancelled/Forfeited/Expired — — Nonvested at December 31, 2020 1,408 $ 24.67 Granted 1,548 57.19 Vested ( 350 ) 24.07 Cancelled/Forfeited/Expired ( 234 ) 42.97 Nonvested at December 31, 2021 2,372 $ 44.10 At December 31, 2021, there was an estimated $ 60.9 million of total unrecognized stock-based compensation costs related to RSUs. These costs will be recognized over a weighted-average period of 3.4 years. Performance-based restricted stock units During the year ended December 31, 2020, we granted 1,216 PSUs to members of management pursuant to the 2013 Plan. These PSUS contained a performance clause which required us to successfully complete an IPO as well as a service condition that required continued employment. 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 . At December 31, 2021, there was an estimated $ 4.4 million of total unrecognized stock-based compensation costs related to these PSUs. These costs will be recognized over a weighted-average period of 1.7 years. Total stock-based compensation expense recognized was as follows: Year ended December 31, (in thousands) 2021 2020 2019 Cost of revenue $ 2,055 $ 769 $ 191 Sales and marketing 7,761 3,310 838 Research and development 5,901 2,500 666 General and administrative 9,707 4,479 1,461 Total stock-based compensation expense $ 25,424 $ 11,058 $ 3,156 Preferred stock As of December 31, 2019, we had six outstanding series of redeemable convertible preferred stock. These preferred shares were classified as temporary equity within our consolidated balance sheet as of December 31, 2019. Immediately upon closing of our IPO, the outstanding preferred stock was automatically converted into an aggregate of 29,390,733 shares of Series 1 common stock and 5,050,555 shares of Series 2 common stock. Under the terms of Series F preferred stock, dividends were required to be paid at 10 percent, which could be adjusted for the holder’s actual rate of return upon redemption. Upon completion of our IPO with an offering price of $ 24 per share, we met the threshold for a reduction of dividends and reduced the required dividend rate to 8 percent. We utilized a portion of the proceeds from the IPO to pay the cumulative dividends of $ 12.8 million to the holders of our Series F preferred stock. As of December 31, 2021 and 2020, there was no preferred stock issued or outstanding. F-25 Table of Contents 12. Income taxes Pretax earnings from continuing operations consist of the following: Year ended December 31, (in thousands) 2021 2020 2019 United States $ ( 62,558 ) $ ( 31,891 ) $ ( 38,720 ) Non-U.S. ( 14,153 ) ( 5,644 ) ( 3,842 ) Total pre-tax earnings $ ( 76,711 ) $ ( 37,535 ) $ ( 42,562 ) Our components of the provision for income taxes are as follows: Year ended December 31, (in thousands) 2021 2020 2019 Income tax provision (benefit) Current: Federal $ — $ — $ — State 11 24 25 Foreign 134 1 3 Total current $ 145 $ 25 $ 28 Deferred: Federal ( 202 ) — — State 23 — — Foreign — — — Total deferred ( 179 ) — — Total provision (benefit) $ ( 34 ) $ 25 $ 28 Our provision for income taxes attributable to continuing operations differs from the expected tax expense (benefit) amount computed by applying the U.S. statutory federal income tax rate of 21 % to income from continuing operations before income taxes. The variance is 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, (in thousands) 2021 2020 2019 U.S. federal taxes at statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit 5.58 4.91 3.25 Foreign tax rate differentials 0.83 0.66 0.33 Research and development credit 2.65 4.97 3.24 Purchase price accounting 0.35 0.00 0.00 Stock-based compensation 26.29 16.97 0.38 162(m) addback ( 15.65 ) 0.00 0.00 Permanent differences, other ( 0.92 ) ( 8.17 ) ( 3.77 ) Change in valuation allowance ( 40.09 ) ( 40.41 ) ( 24.50 ) Other — — — Effective tax rate 0.04 % ( 0.07 )% ( 0.07 )% The Tax Cuts and Jobs Act of 2017 (the “TJCA”) subjects a U.S. shareholder to current tax on certain earnings of foreign subsidiaries under a provision commonly known as GILTI (global intangible low-taxed income). Under U.S. GAAP, an accounting policy election can be made to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. F-26 Table of Contents Significant components of deferred taxes are as follows: December 31, (in thousands) 2021 2020 Deferred tax assets: Net operating loss and credit carryforwards $ 76,475 $ 52,216 Lease liabilities 2,834 3,868 Deferred revenue 358 426 Depreciation and amortization 7,942 8,381 Stock-based compensation 3,367 2,401 Other 7,954 1,721 Gross deferred tax assets $ 98,930 $ 69,013 Valuation allowance ( 92,531 ) ( 62,917 ) Deferred tax liabilities: Foreign DTLs ( 429 ) — Goodwill DTL ( 321 ) — Deferred commission ( 1,885 ) ( 1,448 ) Right-of-use assets ( 2,049 ) ( 2,904 ) Prepaid expenses and other ( 1,809 ) ( 1,744 ) Gross deferred tax liabilities ( 6,493 ) ( 6,096 ) Net deferred tax assets $ ( 94 ) $ — At December 31, 2021, we had NOL carryforwards for U.S. federal income tax purposes of approximately $ 243.8 million. 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. federal NOL carryforwards are available to offset future U.S. federal taxable income and begin to expire in 2036 . At December 31, 2021, we had NOL carryforwards for certain state income tax purposes of approximately $ 113.8 million. These state NOL carryforwards are available to offset future state taxable income and begin to expire in 2036 . At December 31, 2021, we had foreign NOL carryforwards in Australia and the U.K., combined, of approximately $ 26.0 million, which are available to offset future foreign taxable income and that do not have an expiration. At December 31, 2021, we did not provide any U.S. income or foreign withholding taxes related to certain foreign subsidiaries’ undistributed earnings, as such earnings have been retained and are intended to be indefinitely reinvested. The majority of our foreign operations are in excess tax basis over book basis positions. It is not practicable to estimate the amount of taxes that would be payable upon remittance of these earnings, because such tax, if any, is dependent upon circumstances existing if and when remittance occurs. 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. federal income tax. These U.S. federal tax credits begin to expire in 2034 . 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. We file U.S. federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2018 through 2021 tax years generally remain open and subject to examination by U.S. federal, state and foreign tax authorities. The 2018 tax year generally remains open and subject to examination by foreign tax authorities. Losses generated in any year since inception remain open to adjustment until the statute of limitations closes for the tax year in which the NOL carryforwards are utilized. We are 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 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: December 31, (in thousands) 2021 2020 Balance, beginning of year $ — $ — Increase for tax positions related to the current year — — Increase for tax positions related to the prior years 396 — Decrease for tax positions related to prior years — — Balance, end of year $ 396 $ — F-27 Table of Contents 13. Net loss per share Net loss per share Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities. 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. The holders of our preferred stock did not have a contractual obligation to share in our losses; therefore, no amount of total undistributed loss was allocated to preferred stock. Net loss attributable to common stockholders was calculated as net loss less current period preferred stock dividends. There was no preferred stock outstanding during the year ended December 31, 2021. Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, which includes both Series 1 and Series 2 outstanding shares. Because we have reported a net loss for the 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, (in thousands) 2021 2020 2019 Preferred stock as-converted — — 34,442 Stock options outstanding 5,684 8,215 9,327 Acquisition related compensation (1) 1,756 Warrants to purchase common stock — — 364 Restricted stock units 2,331 1,408 — Convertible debt 4,719 — 2,180 Total potentially dilutive securities 14,490 9,623 46,313 F-28