What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-16 · 154 added, 178 removed, 312 unchanged (52% of the section changed)

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Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Our mission is to make it fast and easy for businesses to delight their customers and employees.

We deliver modern and innovative AI-guided customer and employee service solutions that enable companies of all sizes to drive delightful engagement and increase productivity.

We started with Freshdesk, our customer service (CS) product, and later expanded our offering to include Freshservice, our IT and employee service management (ITSM) product.

Next, we introduced Freshsales and Freshmarketer, our sales force and marketing automation solutions, and Freshchat, our messaging/chat product offering.

We currently have more than 67,100 businesses using our software to make engaging customers and employees more efficient and enjoyable.

A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.

A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 16, 2024.

We provide people-first, AI service software that organizations use to deliver exceptional customer and employee experiences.

We provide our solutions in two product families:

Customer Experience (CX) and Employee Experience (EX).

CX products include Freshdesk, Freshdesk Omni, Freshchat, Freshsales, and Freshmarketer.

EX products include Freshservice, Freshservice for Business Teams and Device42.

Our latest generative AI solutions, Freddy AI Agent and Freddy AI Copilot, further enhance the customer and employee experience.

Freddy AI Agent offers always-on, autonomous, personalized resolutions to customer and employee queries.

Freddy AI Copilot provides always-on contextual assistance for customer support, employee support, marketing and sales use cases to boost productivity.

Currently, over 72,000 companies choose Freshworks' uncomplicated solutions to increase efficiency and loyalty.

In June 2024, we acquired all outstanding shares of D42 Parent, Inc., an IT asset management company for approximately $238.1 million, which primarily consisted of $225.3 million in cash, and approximately $12.9 million of common stock and stock options.

Our consolidated financial statements and key business metrics as of and for the year ended December 31, 2024 include D42 Parent, Inc.

since the acquisition date.

We generate revenue primarily from the sale of subscriptions for accessing our cloud-based software products over the contract term.

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We also sell professional services that include product configuration, data migration, systems integration, and training.

Professional services revenue is recognized as services are performed.

With the acquisition of D42 Parent, Inc.

in June 2024, we also sell software licenses with associated maintenance.

Our customer base and operations have scaled over time.

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These macroeconomic events could adversely affect demand for our products and services.

Foreign currency exchange rate fluctuations negatively impacted our revenue growth in 2022, but in 2023, the United States Dollar weakened against the Euro and British Pound contributing to positive impacts in our revenue.

However the volatility in the foreign currency market still exists, and could impact our results of operations.

For the years ended December 31, 2023 and 2022, we had approximately 27% and 26%, respectively, of revenue exposure related to the Euro and British Pound Sterling.

If these conditions persist, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Given our subscription-based business model, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods.

The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, productivity of our employees, future results of operations, and financial condition.

For example, during fiscal 2024, our net dollar retention rate was adversely impacted by lower expansion within existing customers driven by macroeconomic pressures and we expect these pressures to persist for the foreseeable future.

Additionally, foreign currency exchange rate fluctuations negatively impacted our revenue growth historically and volatility in the foreign currency market may still exist.

For each of the years ended December 31, 2024, 2023, and 2022 we had approximately 27%, 27%, and 26%,

respectively, of revenue exposure related to the euro and British pound.

If adverse conditions arise, they could have a material adverse impact on our results and our ability to accurately predict our future results and earnings.

Given our business model is primarily subscription-based, the effects of the macroeconomic conditions may not be fully reflected in our revenue until future periods.

The ultimate impact on our business and operations remains highly uncertain, and it is not possible for us to predict the duration and extent to which this will affect our business, future results of operations, and financial condition.

See the section titled “Risk Factors” for further discussion of the challenges and risks we have encountered and could encounter related to these macroeconomic events.

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We believe that larger businesses can benefit from implementing multiple Freshworks products, as once they are a customer they are able to expand their use of these products.

We define annual recurring revenue (ARR) as the sum total of the subscription revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions.

We define annual recurring revenue (ARR) as the sum total of the subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of the contract.

For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR.

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As of December 31, 2024 and 2023, 22,558 and 20,261 of our customers contributed more than $5,000 in ARR, respectively, demonstrating the broad appeal of our products to customers of all sizes and geographies, and as of December 31, 2024 and 2023, customers contributing more than $5,000 in ARR represented 90% and 89% of total ARR, respectively.

We believe that

the number of customers that contribute more than $5,000 in ARR is an indicator of our success in expanding upmarket to larger businesses.

We believe that the number of customers that contribute more than $5,000 in ARR is an indicator of our success in expanding upmarket to larger businesses.

We also run focused programs to acquire startup and incubator customers.

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We measure the rate of expansion within our customer base using net dollar retention rate (as defined under Key Business Metrics ), and we believe that our net dollar retention rate demonstrates our rate of expansion within our existing customer base.

As of December 31, 2023 and 2022, our net dollar retention rate remained flat at 108%.

On constant currency basis, our net dollar retention rate was 107% as of December 31, 2023 which was a decrease from prior year primarily due to lower expansion within existing customers driven by macroeconomic pressures.

Our net dollar retention rate was 103% and 108% as of December 31, 2024 and December 31, 2023, respectively.

On constant currency basis, our net dollar retention rate was 105% which was a decrease from prior year primarily due to lower expansion within existing customers driven by macroeconomic pressures offset by the addition of Device42 and a slight improvement in

our overall churn rate.

These macroeconomic events could adversely affect demand for our products and services and we expect these pressures to persist for the foreseeable future

We have a significant opportunity to expand within our existing customer base and substantially increase the number of customers that purchase multiple Freshworks products.

As of December 31, 2023, approximately 26% of our customers purchased two or more Freshworks products, which includes customers on our Freshworks Customer Service Suite and Freshsales Suite subscription plans counting as customers who purchased multiple products.

As of December 31, 2024, approximately 36% of our customers purchased two or more Freshworks products, which includes customers on our Freshdesk Omni and Freshsales Suite subscription plans counting as customers who purchased multiple products.

These customers represented 46% of total ARR as of December 31, 2024, illustrating the large opportunity we have to sell additional products to our current customer base and drive growth.

We continue to increase the number of customers that have entered into larger subscriptions with us.

We had 2,497 customers each contributing $50,000 or more in ARR as of December 31, 2023, representing an increase of 31% year-over-year from 1,908 customers as of December 31, 2022.

We had approximately 3,053 customers each contributing $50,000 or more in ARR as of December 31, 2024, representing an increase of 22% compared to 2,497 customers as of December 31, 2023.

As of December 31, 2024 and December 31, 2023, customers contributing more than $50,000 in ARR represented approximately 50% and 48% of total ARR, respectively.

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We then divide the Ending ARR by the Entering ARR to arrive at our net dollar retention rate.

Ending ARR includes upsells, cross-sells, and renewals during the measurement period and is net of any contraction or attrition over this period.

Ending ARR includes upsells, cross-sells, renewals, and expansion as a result of acquisitions during the measurement period and is net of any contraction or attrition over this period.

We define ARR as the sum total of subscription, software license, and maintenance revenue we would contractually expect to recognize over the next 12 months from all customers at a point in time, assuming no increases, reductions, or cancellations in their subscriptions, and assuming that revenues are recognized ratably over the term of the contract.

For monthly subscriptions, we take the recurring revenue run-rate of such subscriptions for the last month of the period and multiply it by 12 to get to ARR.

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The net dollar retention rate for customers on monthly contracts has generally been lower than our overall net dollar retention rate.

In addition, as part of our regular review of customer data that includes reviewing customers purchasing our products via resellers so we can properly attribute them as end customers, we may make adjustments that could impact the calculation of net dollar retention.

Our net dollar retention rate was 108% as of December 31, 2023 and 2022.

We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Our net dollar retention rate was 103% and 108% as of December 31, 2024 and 2023, respectively.

Net dollar retention rate decreased from prior year primarily due to lower expansion within existing customers driven by macroeconomic pressures and an unfavorable foreign currency impact, offset by the addition of Device42 and a slight improvement in our overall churn rate.

We expect our net dollar retention rate could fluctuate in future periods due to a number of factors, including, but not limited to, difficult macroeconomic conditions, our expected growth, the level of penetration within our customer base, our ability to upsell and cross-sell products to existing customers, and our ability to retain our customers.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP.

Our consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles (GAAP).

The preparation of these consolidated financial statements requires our management to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue, costs and expenses and related disclosures during the applicable periods.

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Revenue Recognition

We derive revenue from subscription fees and related professional services.

We derive revenue from subscription fees, related professional services, and following the acquisition of D42 Parent, Inc.

in June 2024, software licenses.

We sell subscriptions for our cloud-based solutions directly to customers and indirectly through channel partners through arrangements that are non-cancelable and non-refundable.

Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as service arrangements.

Our subscription arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as

service arrangements.

We also sell software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of D42 Parent, Inc.

in June 2024.

Software license revenue is recognized upon making the software available to the customer and maintenance revenue is recognized as support and updates are provided, which is generally ratably over the contract term.

We record revenue net of sales or value-added taxes.

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Professional services revenue is recognized as services are performed and represents less than 5% of total revenue.

Software License Revenue

Software license revenue is generally sold as bundled arrangements that include the rights to a software license and maintenance and cloud-based software in some cases.

Software license revenue consists of term licenses and is recognized upfront, upon making the software available to the customer.

The associated software maintenance revenue is generally recognized ratably over the contract term as support and updates are provided to the customers over the term of the arrangement.

Customers with Multiple Performance Obligations

Some of our contracts with customers contain both subscriptions and professional services.

Some of our contracts with customers contain both subscriptions, professional services and software licenses.

For these contracts, we account for individual performance obligations separately.

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Deferred Contract Acquisition Costs

Deferred contract acquisition costs are incremental costs that are associated with acquiring customer contracts and consist primarily of sales commissions and the associated payroll taxes and certain referral fees paid to independent third parties.

The costs incurred upon the execution of initial and expansion contracts are primarily deferred and amortized over an expected benefit period of three years.

The Company considers the expected benefit period to exceed the initial contract term for certain costs because of anticipated renewals and because sales commission rates for renewal contracts are not commensurate with sales commissions for initial contracts.

Significant judgement is used to determine the expected benefit period by taking into consideration the Company’s technology life cycle and an estimated customer relationship period, including expected contract renewals.

The costs incurred upon the execution of initial and expansion contracts are primarily deferred and amortized over an estimated benefit period of three years.

The estimated benefit period is determined by taking into consideration our contracts with customers, technology life cycle and other factors.

We consider the estimated benefit period to exceed the initial contract term for certain costs because of anticipated renewals and because sales commission rates for renewal contracts are not commensurate with sales commissions for initial contracts.

Significant judgment is used to determine the benefit period by taking into consideration our technology life cycle and an estimated customer relationship period, including expected contract renewals.

Stock-Based Compensation

We issue stock options and RSUs to employees, consultants, and directors, and stock purchase rights granted under the 2021 Employee Stock Purchase Plan (ESPP) to employees based on their estimated fair value on the date of the grant.

For stock options and ESPP, the fair value is estimated using the Black-Scholes option-pricing model, and stock-based compensation is recognized in the consolidated statements of operations using the straight-line attribution method.

The fair value of RSUs is based on the closing market price of our Class A common stock on the date of the grant.

We recognize stock-based compensation expense over the requisite service period, which is the vesting period of the respective awards.

Stock-based compensation expense related to stock options and ESPP is recognized in the consolidated statements of operations on a straight-line basis over the requisite service period, which is the vesting period of the respective awards.

Forfeitures are accounted for when they occur.

Prior to our IPO, the fair value of our common stock on the date of the grant was determined based on independent third-party valuations as there was no public market, and there was no stock-based compensation expense recognized from the RSUs as the liquidity event-related performance condition was not probable.

Upon the completion of the IPO, the performance condition became probable, and we began to recognize stock-based compensation expense.

Prior to our Initial Public Offering (IPO), we determined the fair value of the common stock underlying stock options and RSUs by considering numerous objective and subjective factors including, but not limited to:

(i) independent third-party

valuations, (ii) the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to its common stock, (iii) the lack of marketability of the common stock, (iv) current business conditions and financial projections, and (iv) the likelihood of achieving an IPO or sale event.

Subsequent to the IPO, the fair values of stock options and the stock purchase rights under the ESPP are estimated using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions.

These assumptions represent our best estimates and involve inherent uncertainties and the application of our judgment.

We also granted a performance-based award with both a service-based vesting condition and a market condition involving a certain range of stock price targets, and the fair value of such award was determined by using the Monte-Carlo simulation model.

The associated stock-based compensation expense is recognized over the longer of the derived service period or the requisite service period, using the accelerated attribution method.

Changes in the assumptions, which are subjective and generally require significant analysis and judgement to develop, can materially affect the valuation of our equity awards and impact how much stock-based compensation expense is recognized.

The Company determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use (ROU) assets on its consolidated balance sheets at the lease commencement date.

Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on either the rate implicit in the lease or the Company's incremental borrowing rate (the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease), whichever is more readily determinable.

The incremental borrowing rate is based on an estimate of the Company's expected unsecured borrowing rate for its notes, adjusted for tenor and collateralized security features.

Changes in the assumptions, which are subjective and generally require significant analysis and judgment to develop, can materially affect the valuation of our equity awards and impact how much stock-based compensation expense is recognized.

We determine whether an arrangement constitutes a lease and record lease liabilities and right-of-use assets on our consolidated balance sheets at the lease commencement date.

Lease liabilities are measured based on the present value of the total lease payments not yet paid, discounted based on either the rate implicit in the lease or our incremental borrowing rate (the estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease), whichever is more readily determinable.

The incremental borrowing rate is based on an estimate of our expected unsecured borrowing rate for our notes, adjusted for tenor and collateralized security features.

We estimate the incremental borrowing rate using yields for maturities that are in line with the duration of the lease payments.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S.

generally accepted accounting principles (GAAP), we believe the following non-GAAP financial measures are useful in evaluating our operating performance:

non-GAAP loss from operations, non-GAAP net loss, and free cash flow.

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance:

non-GAAP income (loss) from operations, non-GAAP net income (loss), and free cash flow.

We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes.

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As a result, our non-GAAP financial measures are presented for supplemental informational purposes only.

We exclude the following items from one or more of our non-GAAP financial measures, including the related income tax effect of these adjustments:

We exclude the following items from one or more of our non-GAAP financial measures:

• Stock-based compensation expense.

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Our expenses for amortization of acquired intangibles are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions, and the allocation of purchase price.

We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

• Gain on sale of non-marketable equity investments.

We exclude gains on the sale of non-marketable equity investments from certain of our non-GAAP financial measures because we believe they are unrelated to our ongoing operating performance and are not expected to recur in our continuing operating results.

We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operating performance of our business.

• Restructuring charges.

We exclude restructuring charges, which primarily consist of employee severance and other employee termination benefits associated with the restructuring plan initiated in November 2024, from our non-GAAP

financial measures, because we do not believe these expenses have a direct correlation to the operating performance of our business.

• Income tax effect and adjustments.

We exclude the income tax effect of the above adjustments and income tax effect associated with acquisitions from our non-GAAP financial measures.

We exclude these costs because we do not believe these expenses have a direct correlation to the operating performance of our business.

Non-GAAP Income (Loss) From Operations and Non-GAAP Net Income (Loss)

We define non-GAAP income (loss) from operations as GAAP loss from operations excluding stock-based compensation expense, employer payroll taxes on employee stock transactions and amortization of acquired intangibles.

We define non-GAAP net income (loss) as GAAP net loss, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangibles, and gain on sale of non-marketable equity investments, net of their related tax effects.

The following tables present a reconciliation of our GAAP loss from operations to our non-GAAP income (loss) from operations and our GAAP net loss to our non-GAAP net income (loss) for each of the periods presented (in thousands):

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Amortization of acquired intangibles 8,160 303 1,591

Restructuring charges

Non-GAAP income (loss) from operations

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Amortization of acquired intangibles 8,160 303 1,591

Gain on sale of non-marketable equity investments — — (23,830)

Restructuring charges

Income tax adjustments (12,017) 1,398 1,978

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Capitalized internal-use software (5,485) (6,271) (5,116)

Free cash flow $ 77,838 $ (14,770) $ 2,343

Free cash flow, including restructuring costs (1)

$ 145,984 $ 77,838 $ (14,770)

Net cash provided by (used in) investing activities

$ 38,803 $ 158,499 $ (284,827)

Net cash provided by (used in) financing activities $ (60,619) $ (156,354) $ 1,058,369

Net cash used in financing activities

$ (67,260) $ (60,619) $ (156,354)

(1) Free cash flow includes $7.3 million of restructuring costs paid during the year ended December 31, 2024.

Components of Our Results of Operations

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Subscription revenue is recognized ratably over the contract term beginning on the commencement date of each subscription, which is the date that the cloud-based software is made available to customers.

We also sell software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of D42 Parent, Inc.

in June 2024.

Professional services revenue comprises less than 5% of total revenue and includes fees charged for product configuration, data migration, systems integration, and training.

Professional services revenue is recognized as services are performed.

We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments.

We generally enter into subscription and software license agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments.

Our payment terms generally require the customers to pay the invoiced amount in advance or within 30 days from the invoice date.

Our professional services are generally billed in advance along with the related subscription arrangements.

Our maintenance and professional services are generally billed in advance along with the related subscription and software license arrangements.

Cost of Revenue

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Research and Development.

Research and development expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for engineering and product development employees, software license fees, rental of office premises, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities.

certain executives, software license fees, rental of office premises, third-party product development services and consulting expenses, and depreciation expense for equipment used in research and development activities.

We capitalize a portion of our research and development expenses that meet the criteria for capitalization of internal-use software.

All other research and development costs are expensed as incurred.

This percentage may fluctuate from period to period depending upon the timing and amount of these expenses.

We believe that continued investment in our products is important for our growth, and as such, we expect that our research and development expenses will continue to increase in dollar amount for the foreseeable future, but such expenses as a percentage of revenue may fluctuate from period to period depending upon the timing and amount of these expenses.

Sales and Marketing.

Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, software license fees, and rental of office premises.

Sales commissions that are considered incremental costs incurred to obtain contracts with customers, are deferred and amortized over the expected benefit period of three years.

Sales and marketing expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for our sales personnel and certain executives, sales commissions for our sales force and reseller commissions for our channel sales partners, as well as costs associated with marketing activities, travel and entertainment costs, software license fees, and rental of office premises.

Sales commissions that are considered incremental costs incurred to obtain contracts with customers, are deferred and amortized over the benefit period of three years.

Marketing activities include online lead generation, advertising, and promotional events.

We expect to continue to make significant investments as we expand our customer acquisition, retention efforts and in-person marketing events and associated business travel.

We expect to continue to make significant investments as we expand our customer acquisition, retention efforts and marketing events and associated business travel.

As a result, we expect that our sales and marketing expenses will continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term.

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General and Administrative.

including consulting, legal, audit, and accounting services, travel and entertainment costs, accounting, legal, human resources, and recruiting personnel, costs of director and officer insurance, costs associated with acquisitions of businesses, software license fees, and rental of office premises.

As a publicly traded company, we expect to increase personnel-related and professional service expenses associated with ongoing compliance and reporting obligations and costs to broaden our IT related infrastructure.

General and administrative expense consists primarily of personnel-related costs, including salaries, related benefits, and stock-based compensation expense for certain executives and other general and administrative personnel, third-party professional services fees, costs of director and officer insurance, and costs associated with acquisitions of businesses, software license fees, and rental of office premises.

We expect to increase personnel-related and professional service expenses associated with ongoing compliance and reporting obligations and costs to broaden our IT related infrastructure.

Our general and administrative expenses are expected to continue to increase in dollar amount for the foreseeable future, however, we expect it to decline as a percentage of revenue over the longer term.

This percentage may fluctuate from period to period depending upon the timing and amount of our general and administrative expenses.

Restructuring Charges .

Restructuring charges primarily consist of employee severance and other employee termination benefits associated with the restructuring plan that we initiated in November 2024.

Refer to Note 13—Restructuring Charges of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

Interest and Other Income, Net

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federal and state net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

Provision for income taxes could also include changes in valuation allowance.

Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as stock-based compensation, and changes in our valuation allowance.

Results of Operations

The following tables sets forth our consolidated statements of operations data for the periods presented (in thousands):

The following tables set forth our consolidated statements of operations data for the periods presented (in thousands):

Year Ended December 31,

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180,629 167,698 156,849

Restructuring charges

Total operating expenses 745,700 663,235 635,599

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(1) Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software.

(2) Sales and marketing expense for the years ended December 31, 2023 and 2022 includes $9.6 million and $3.2 million, respectively, of stock-based compensation expense associated with RSU and options granted to the President in September 2022.

(3) General and administrative expense includes $55.9 million, $55.9 million and $19.1 million of stock-based compensation expense associated with RSUs and PRSUs primarily granted to the CEO in September 2021 for the years ended December 31, 2023, 2022 and 2021, respectively.

Recognition of Stock-Based Compensation

Prior to our initial public offering (IPO), there was no stock-based compensation expense recognized from our equity awards as the liquidity event-related performance condition was not probable.

The performance condition was satisfied upon the completion of the IPO in September 2021, and we began to recognize stock-based compensation expense.

During the year ended December 31, 2021, stock-based compensation expense recognized included a cumulative charge associated with certain RSUs for which the service-based vesting condition had been satisfied upon the completion of the liquidity event.

The following table sets forth our consolidated statements of operations data for the periods presented, as a percentage of revenue:

(2) Sales and marketing expense for the years ended December 31, 2024, 2023, and 2022 includes $6.5 million, $9.6 million, and $3.2 million , respectively, of stock-based compensation expense associated with RSUs, PRSUs and options granted to the President.

After the appointment of the President as our Chief Executive Officer, stock-based compensation expenses were included in General and Administrative.

(3) General and administrative expense includes stock-based compensation expense associated with RSUs and PRSUs primarily granted to the Executive Chairman of $50.4 million, $55.9 million and $55.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table sets forth our consolidated statements of operations for the periods presented, as a percentage of revenue:

Year Ended December 31,

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General administrative 25 29 32

Restructuring charges

Total operating expenses 104 112 128

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(dollars in thousands)

Subscription services $ 582,868 $ 485,322 $ 97,546 20 %

Professional services $ 13,564 $ 12,677 $ 887 7 %

Total revenue $ 596,432 $ 497,999 $ 98,433 20 %

Revenue increased by $98.4 million, or 20%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Of the total increase in revenue, approximately $62.2 million was attributable to revenue from existing customers as of December 31, 2023, net of contraction and churn, and approximately $36.2 million was attributable to revenue from new customers acquired during the year ended December 31, 2023, net of contraction and churn.

Our net dollar retention rate of 108% for the year ended December 31, 2023 reflects the expansion within existing customers and the sale of additional products to these customers.

Cost of Revenue and Gross Margin

Year Ended December 31, Change

2023 2022 $ %

(dollars in thousands)

Cost of revenue $ 103,369 $ 95,772 $ 7,597 8 %

Cost of revenue increased by $7.6 million, or 8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This increase was primarily due to increases of $4.0 million in third-party hosting costs, $3.4 million in software license fees, $1.9 million in amortization of internally capitalized software, partially offset by decreases of $1.0 million in amortization of developed technology and $0.8 million in professional fees including legal costs.

Our gross margin increased to 83% from 81% as we increased revenue and realized benefits from economies of scale and due to ongoing initiatives to improve our cost structure.

Operating Expenses

Year Ended December 31, Change

2023 2022 $ %

(dollars in thousands)

Research and development $ 137,756 $ 135,543 $ 2,213 2 %

Sales and marketing 357,781 343,207 14,574 4 %

General and administrative 167,698 156,849 10,849 7 %

Total operating expenses $ 663,235 $ 635,599 $ 27,636

The increases in our operating expenses in the year ended December 31, 2023 compared to the year ended December 31, 2022 were primarily driven by increases in personnel-related costs due to compensation adjustments and stock-based compensation expense.

Research and Development

Research and development expense increased by $2.2 million, or 2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This increase was primarily due to increases of $1.7 million in personnel-related costs due to compensation adjustments, $1.1 million in stock-based compensation expense, partially offset by a decrease of $1.6 million in professional services fees.

Sales and Marketing

Sales and marketing expense increased by $14.6 million, or 4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This increase was primarily due to increases of $22.7 million in personnel-related costs due to compensation adjustments, $2.4 million in stock-based compensation expense, $1.2 million in travel related expenses for sales and marketing events, partially offset by decreases of $7.3 million in advertising, branding and event costs, $3.6 million in reseller commissions, and $2.1 million in professional services fees.

General and Administrative

General and administrative expense increased by $10.8 million, or 7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This increase was primarily due to increases of $6.0 million in personnel-related costs due to compensation adjustments, $4.9 million in professional services fees, comprised primarily of legal, accounting, and consulting fees, $2.7 million in tax reserves in accordance with ASC 450, partially offset by a decrease of $3.3 million in directors and officers insurance.

Interest and Other Income, Net

Year Ended December 31, Change

2023 2022 $ %

(dollars in thousands)

Interest income $ 45,895 $ 14,771 $ 31,124 211 %

Other income (expense) net 508 (2,189) 2,697 (123) %

Interest and other income, net $ 46,403 $ 12,582 $ 33,821 269 %

Interest income increased by $31.1 million primarily due to approximately $20.2 million of discount amortization on cash equivalents and marketable securities and approximately $11.9 million increase in interest income resulting from an increase in average interest rates compared to prior year.

Other income (expense), net increased primarily due to a $2.7 million decrease in foreign exchange loss during the year ended December 31, 2023.

Provision for Income Taxes

Year Ended December 31, Change

2023 2022 $ %

(dollars in thousands)

Provision for income taxes $ 13,667 $ 11,342 $ 2,325 20 %

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions.

For the years ended December 31, 2023 and 2022, we recorded a provision for income taxes of $13.7 million, and $11.3 million, respectively, on loss before taxes of $123.8 million and $220.8 million, respectively.

The effective tax rates for the years ended December 31, 2023 and 2022 were (11.0)% and (5.1)% respectively.

The effective tax rates differ from the statutory rate of 21% primarily due to nondeductible compensation and change in the valuation allowance.

The $2.3 million increase in tax expense was mainly due to an increase in foreign taxes caused by higher pre-tax earnings from foreign subsidiaries and an increase in unrecognized tax benefit.

Comparison of Fiscal Years Ended December 31, 2022 and 2021

Year Ended December 31, Change

Subscription services, software licenses and maintenance

$ 710,744 $ 582,868 $ 127,876 22 %

(dollars in thousands)

Subscription services $ 485,322 $ 360,506 $ 124,816 35 %

Professional services $ 9,676 $ 13,564 $ (3,888) (29 %)

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Revenue increased by $124.0 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Of the total increase in revenue, approximately $94.9 million was attributable to revenue from existing customers as of December 31, 2021, net of contraction and churn, and approximately $32.1 million was attributable to revenue from new customers acquired during the year ended December 31, 2022, net of contraction and churn.

Of the total increase in revenue, approximately $74.3 million was attributable to revenue from existing customers as of December 31, 2023, net of contraction and churn, and approximately $49.7 million was attributable to revenue from new customers acquired during the year ended December 31, 2024, net of contraction and churn, as well as all revenue from D42 Parent, Inc.

during the year.

Our net dollar retention rate of 103% for the year ended December 31, 2024 reflects the expansion within existing customers and the sale of additional products to these customers.

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Cost of revenue $ 113,330 $ 103,369 $ 9,961 10 %

Gross Margin 81 % 79 %

Cost of revenue increased by $10.0 million, or 10%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This increase was primarily due to increases of $8.5 million in third-party hosting costs, $5.3 million in personnel-related costs due to annual compensation adjustments and higher headcount, $3.8 million in software license fees, $1.4 million in stock-based compensation expense, $1.1 million increase in professional fees including legal costs, and $1.0 million in payment gateway fees, partially offset by $2.7 million decrease in amortization of developed technology and a decrease of $2.0 million in cloud voice service costs .

This increase was primarily due to increases of $2.8 million in amortization of developed technology, $1.8 million in software license fees, $1.6 million in third-party hosting costs, $1.3 million in professional service fees, and $1.2 million in personnel-related costs.

Our gross margin increased to 84% from 83% as we increased revenue and realized benefits from economies of scale primarily related to our third-party hosting costs.

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General and administrative 180,629 167,698 12,931 8 %

Restructuring charges

9,664 — 9,664 100 %

Total operating expenses $ 745,700 $ 663,235 $ 82,465

The increases in our operating expenses in the year ended December 31, 2022 compared to the year ended December 31, 2021 were primarily driven by personnel-related costs due to higher headcount to support the growth of our business, compensation adjustments, and changes in stock-based compensation expense.

The increases in our operating expenses in the year ended December 31, 2024 compared to the year ended December 31, 2023 were primarily driven by increases in personnel-related costs due to annual compensation adjustments, net of certain changes in employee incentives, changes in stock-based compensation expense, and increases in advertising, marketing and branding expenses and professional service fees.

Research and Development

Research and development expense increased by $26.8 million, or 19%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This increase was primarily due to increases of $18.9 million in personnel-related costs due to compensation adjustments and higher headcount, $2.3 million in professional services fees and $1.2 million in third-party cloud infrastructure expenses to support the operations of our research and development, partially offset by a decrease of $8.7 million in stock-based compensation expense.

This increase was primarily due to increases of $17.8 million in personnel-related costs due to compensation adjustments, $4.0 million in stock-based compensation expense, and $2.2 million in software license and third-party hosting fees.

Sales and Marketing

Sales and marketing expense increased by $33.0 million, or 9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This increase was primarily due to increases of $48.5 million in personnel-related costs due to compensation adjustments and higher headcount, $11.2 million in stock-based compensation expense, $5.5 million in travel related expenses for sales and marketing events, $4.8 million in higher advertising, branding and event costs, $4.0 million in reseller commissions, $3.8 million in software license fees and $2.9 million in professional services fees.

This increase was primarily due to increases of $16.9 million in personnel-related costs due to compensation adjustments, $4.7 million amortization of acquired intangible assets, $4.0 million in advertising, branding and event costs, $2.7 million in travel related expenses for events, $2.3 million in reseller commissions, $2.3 million in professional services fees, and $1.3 million in software license fees, partially offset by a decrease of $3.5 million in stock-based compensation expense.

General and Administrative

General and administrative expense increased by $12.9 million, or 8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This increase was primarily due to increases of $30.4 million in stock-based compensation expense, $6.8 million in personnel-related costs due to compensation adjustments and higher headcount, $4.7 million in directors and officers insurance, and $1.1 million in software license fees, partially offset by decreases of $3.3 million related to legal settlements, and $1.5 million in professional services fees, comprised primarily of legal, accounting, and consulting fees.

This increase was primarily due to increases of $7.1 million in personnel-related costs due to compensation adjustments, $5.8 million in stock-based compensation expenses, $1.1 million in professional services fees, comprised primarily of legal, accounting, and consulting fees, partially offset by decreases of $1.7 million in tax reserves in accordance with ASC 450 and $1.6 million in directors and officers insurance.

Restructuring Charges

Restructuring charges of $9.7 million for the year ended December 31, 2024, consisted of employee severance and termination benefits related to a restructuring plan that we initiated in November 2024.

Interest and Other Income, Net

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Interest and other income, net $ 47,773 $ 46,403 $ 1,370 3 %

Interest income increased primarily due to $13.8 million higher interest income earned from marketable securities.

Other income (expense), net decreased primarily due to a $23.8 million gain from the sale of non-marketable equity investments and $0.9 million of benefit from the release of interest and penalties accrued for indirect taxes recorded during fiscal 2021 that did not recur in fiscal 2022, partially offset by $1.3 million in decrease in foreign exchange loss during fiscal 2022.

• not meaningful

Interest income increased by $5.8 million primarily due to higher interest rates and increased interest income earned on larger balances maintained in our marketable securities portfolios.

Other income (expense), net changed by $4.4 million, primarily due to an unfavorable impact from changes in British pound against the U.S.

Provision for Income Taxes

4 unchanged sentences

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions.

For the years ended December 31, 2022 and 2021, we recorded provision for income taxes of $11.3 million and $10.5 million, respectively, on loss before taxes of $220.8 million and $181.5 million, respectively.

For the years ended December 31, 2024 and 2023, we recorded a provision for income taxes of $4.5 million, and $13.7 million, respectively, on loss before taxes of $90.8 million and $123.8 million, respectively.

The effective tax rates for the years ended December 31, 2024 and 2023 were (5.0)% and (11.0)% respectively.

The effective tax rates differ from the statutory rate primarily due to maintaining a full valuation allowance on our U.S.

federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized.

The $0.8 million increase in tax expense was due to a $1.7 million increase in foreign taxes due to higher pre-tax earnings and foreign sales, partially offset by a decrease in unrecognized tax benefit of $0.9 million for the year ended December 31, 2022.

The effective tax rates differ from the statutory rate of 21% primarily due to nondeductible compensation and change in the valuation allowance.

The $9.1 million decrease in tax expense was primarily related to the tax benefit of $14.3 million from D42 Parent, Inc.

acquisition, partially offset by higher tax expenses due to higher pre-tax earnings from foreign subsidiaries.

Liquidity and Capital Resources

As of December 31, 2023 we had cash and cash equivalents of $488.1 million and marketable securities of $699.5 million.

Since inception, we have funded our operations primarily with financing through the issuance of redeemable convertible preferred and common stock to investors, and in September 2021, we completed our IPO that generated net proceeds of approximately $1.1 billion.

As of December 31, 2024 our principal sources of liquidity were cash and cash equivalents of $620.3 million and marketable securities of $449.8 million, which were primarily held for working capital resources.

As of December 31, 2024, we had an accumulated deficit of $3.7 billion.

Our operating activities resulted in cash inflows of $160.6 million for the year ended December 31, 2024.

Our other material cash requirements are related to the settlement of future contractual obligations associated with operating leases and other service subscription agreements (as described in Contractual Obligations below).

We believe our existing cash, cash equivalents and marketable securities, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

We believe we will meet longer term expected future cash requirements and obligations through a combination of our existing cash and cash equivalents balances, cash flow from operations, and issuances of equity securities or debt offerings.

As of December 31, 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Our material cash requirements from known contractual obligations consists of our obligations under operating leases for office space and contractual obligations for third-party cloud infrastructure.

See Item 8 of Part I, "Financial Statements and Supplementary Data — Note 8—Leases and Note 9—Commitments and Contingencies" for additional discussion of our principal contractual commitments.

In November 2024, our board of directors approved the share repurchase program, which authorized the repurchase of up to $400 million of our outstanding Class A common stock.

Under the repurchase program, we may repurchase shares of our outstanding Class A common stock from time to time in the open market, through privately negotiated transactions and/or other means in compliance with the Exchange Act and the rules and regulations thereunder.

Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 under the Exchange Act.

We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of common stock under this authorization.

The timing, manner, price, and amount of any repurchases will be determined by us at our discretion, and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

The repurchase program may be suspended or discontinued at any time.

For the year ended December 31, 2024, we repurchased a total of 985,234 shares of Class A common stock under this program in open market transactions for an aggregate purchase price of $15.5 million.

As of December 31, 2024, $384.5 million remained available for future share repurchases.

We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

We believe we will meet longer term expected future cash requirements and obligations through a combination of our existing cash available balances, cash flow from operations, and issuances of equity securities or debt offerings, as needed.

Our future capital requirements will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and other business initiatives and the continuing market adoption of our products.

7 unchanged sentences

2024 2023 2022

Net cash provided by (used in) operating activities

Net cash provided by operating activities

$ 160,646 $ 86,178 $ (2,525)

Net cash provided by (used in) investing activities

Net cash provided by investing activities

$ 38,803 $ 158,499 $ (284,827)

Net cash provided by (used in) financing activities $ (60,619) $ (156,354) $ 1,058,369

Net cash used in financing activities

$ (67,260) $ (60,619) $ (156,354)

Operating Activities

Net cash provided by operating activities of $160.6 million for the year ended December 31, 2024 reflects our net loss of $95.4 million, adjusted for non-cash items such as stock-based compensation of $216.7 million, amortization of deferred contract acquisition costs of $28.6 million, depreciation and amortization of $19.4 million, non-cash lease expense of $8.8 million, offset by $16.0 million from discount amortization on marketable securities and $12.6 million from changes in deferred income taxes.

Additionally, net cash inflows from changes in operating assets and liabilities were $9.7 million.

The net cash inflows from changes in operating assets and liabilities were due to increases of operating liabilities of $54.8 million in deferred revenue and $14.5 million in accrued and other liabilities;

partially offset by increases in operating assets of $34.5 million in deferred contract acquisition costs, $17.1 million in accounts receivable, $1.4 million in prepaid expenses and other assets and decreases of operating liabilities of $4.3 million in operating lease liabilities and $2.2 million in accounts payable.

Net cash provided by operating activities of $86.2 million for the year ended December 31, 2023 reflects our net loss of $137.4 million, adjusted for non-cash items such as stock-based compensation of $210.7 million, depreciation and amortization of $12.1 million, amortization of deferred contract acquisition costs of $24.0 million, non-cash lease expense of $7.7 million, premium amortization on marketable securities of $15.7 million, and net cash outflows of $14.1 million from changes in operating assets and liabilities.

1 unchanged sentence

partially offset by increases in operating liabilities of $60.8 million in deferred revenue and $1.8 million in accrued and other liabilities.

Net cash used in operating activities of $2.5 million for the year ended December 31, 2022 reflects our net loss of $232.1 million, adjusted for non-cash items such as stock-based compensation of $207.7 million, depreciation and amortization of $11.5 million, amortization of deferred contract acquisition costs of $18.5 million, non-cash lease expense of $6.2 million, premium amortization on marketable securities of $1.6 million, and net cash outflows of $11.1 million from changes in operating assets and liabilities.

The net cash outflows from changes in operating assets and liabilities were due to increases of operating assets of $28.6 million in deferred contract acquisition costs, $18.9 million in accounts receivable, $8.1 million in prepaid expenses and other assets and a decrease of $8.8 million in operating lease liabilities;

partially offset by increases in operating liabilities of $45.5 million in deferred revenue and $7.7 million in accrued and other liabilities.

Net cash provided by operating activities of $11.5 million for the year ended December 31, 2021 reflects our net loss of $192.0 million, adjusted for non-cash items such as stock-based compensation of $173.4 million, gain realized on sale of non-marketable equity investment of $23.8 million, depreciation and amortization of $13.3 million, amortization of deferred contract acquisition costs of $12.8 million, deferred income taxes of $1.9 million, discount amortization on marketable

securities of $1.8 million and net cash inflows of $28.0 million from changes in operating assets and liabilities.

The net cash inflows from changes in operating assets and liabilities were due to increases of $56.0 million in deferred revenue, $17.7 million in accrued and other liabilities, and $2.0 million in accounts payable, partially offset by increases in assets of $24.2 million in deferred contract acquisition costs, $17.5 million in accounts receivable, and $5.9 million in prepaid expenses and other assets.

Investing Activities

Net cash provided by investing activities of $38.8 million for the year ended December 31, 2024 consisted of $267.1 million in proceeds from maturities and sales, net of purchases of marketable securities;

partially offset by $213.9 million cash paid for the business combination, net of cash acquired, $8.9 million in purchases, net of proceeds from sale, of property and equipment, and $5.5 million related to the capitalization of internal-use software.

Net cash provided by investing activities of $158.5 million for the year ended December 31, 2023 consisted of $166.7 million in proceeds from maturities and sales, net of purchases of marketable securities;

partially offset by $2.0 million in purchases, net of proceeds from sale of property and equipment, and $6.3 million related to the capitalization of internal-use software.

Net cash used in investing activities of $284.8 million for the year ended December 31, 2022 consisted of $272.7 million in purchases, net of maturities and sales of marketable securities, $7.0 million in purchases, net of proceeds from sale of property and equipment and $5.1 million related to the capitalization of internal-use software.

Net cash used in investing activities of $420.3 million for the year ended December 31, 2021 consisted of $435.8 million in purchases, net of maturities and sales of marketable securities, $4.9 million in purchases, net of proceeds from sale of property and equipment, $3.6 million related to the capitalization of internal-use software, offset by $24.0 million in proceeds from sale of non-marketable equity investments.

Financing Activities

Net cash used in financing activities of $60.6 million for the year ended December 31, 2023 consisted primarily of $68.0 million in payment of withholding taxes on net share settlement of equity awards, partially offset by $7.3 million in proceeds from issuance of common stock under our employee stock purchase plan, net.

Net cash used in financing activities of $67.3 million for the year ended December 31, 2024 consisted primarily of $60.3 million in payment of withholding taxes on net share settlement of equity awards, $13.7 million cash paid to repurchase shares of our common stock;

partially offset by $6.6 million in proceeds from issuance of common stock under our employee stock purchase plan, net.

Net cash provided by financing activities of $1.1 billion for the year ended December 31, 2021 consisted primarily of $1.1 billion in proceeds from our IPO, net of underwriting discounts, offset by $6.8 million in payments for deferred offering costs, $3.3 million in payment of withholding taxes on net share settlement of equity awards, and $0.9 million in payments for acquisition-related liabilities.

Remaining Performance Obligations on Customer Contracts

We generally enter into subscription agreements with our customers on monthly, annual, or multi-year terms and invoice customers in advance in either monthly or annual installments.

A small portion of our annual contracts may have billing terms that are different from their subscription terms, and most of our multi-year contracts are invoiced annually.

As of December 31, 2023, remaining performance obligations totaled $418.9 million, which comprised $266.4 million of deferred revenue and $152.5 million of unbilled revenue.

We expect that the value of the remaining performance obligations will change from one period to another for several reasons, including new contracts, timing of renewals, cancellations, contract modifications and foreign currency fluctuations.

We believe that fluctuations in remaining performance obligations are not necessarily a reliable indicator of future revenue and we do not utilize it as a key management metric internally.

Contractual Obligations and Commitments

Our principal commitments consist of operating lease obligations for office space and contractual obligations under third-party cloud infrastructure agreements and service subscription agreements.

As of December 31, 2023, our estimated future contractual obligations totaled $367.0 million, of which $29.5 million and $337.5 million were operating lease commitments and other contractual obligations, respectively.

As disclosed in Notes 7 and 8 to the consolidated financial statements included elsewhere in this report, our operating leases included short-term and long-

term commitments of $2.7 million and $26.8 million, respectively.

Our other contractual obligations included short-term and long-term commitments of $63.7 million and $273.8 million respectively.

Our operating leases expire on varying dates through 2032.

Our other contractual obligations have commitments outstanding through December 2028.

Off-Balance Sheet Arrangements

As of December 31, 2023, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Indemnification Agreements

In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us, or from data breaches or intellectual property infringement claims made by third parties.

In addition, we have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees.

No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

Recent Accounting Pronouncements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis