What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-29 · 320 added, 436 removed, 1019 unchanged (43% of the section changed)

7 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of LegalZoom.com, Inc.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of redeemable convertible preferred stock and stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2022.

Basis for Opinions

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The transaction price is based on the contractual amounts and is allocated to each separate performance obligation based on the amount of consideration which management expects to be entitled in exchange for the services provided.

The principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter are (i) a high degree of auditor effort in performing procedures related to the Company’s revenue recognition and (ii) as disclosed by management, material weaknesses existed during the year related to this matter.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of revenue at the transaction price based on contractual amounts.

These procedures also included, among others (i) testing the revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as purchase orders, invoices, customer contracts, proof of shipment, and subsequent payment receipts and (ii) testing a sample of outstanding customer invoice balances as of December 31, 2023 by obtaining and inspecting source documents, such as purchase orders, invoices, customer contracts, proof of shipment, and subsequent payment receipts.

These procedures also included, among others (i) testing the revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as invoices, customer contracts, proof of fulfillment, and subsequent payment receipts and (ii) testing a sample of outstanding customer invoice balances as of December 31, 2024 by obtaining and inspecting source documents, such as invoices, customer contracts, and subsequent payment receipts.

/s/ PricewaterhouseCoopers LLP

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$ 142,064 $ 225,719

Accounts receivable, net of allowances of $ 4,906 and $ 4,730

11,738 13,177

Accounts receivable, net of allowances of $ 2,121 and $ 4,906 , respectively

Prepaid expenses and other current assets

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Intangible assets, net

13,735 18,900

Operating lease right-of-use assets 7,189 8,518

1 unchanged sentence

34,696 29,015

Available-for-sale debt securities (amortized cost of $ 836 and $ 812 )

Available-for-sale debt security (amortized cost of $ 848 and $ 836 )

$ 373,883 $ 447,818

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Impairment of other equity security — — ( 3,000 )

Loss on debt extinguishment — — ( 7,748 )

Income (loss) before income taxes 43,083 31,494 ( 47,673 )

Provision for (benefit from) income taxes 17,541 1,060 ( 10,951 )

Provision for income taxes 13,120 17,541 1,060

Net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

Net income (loss) attributable to common stockholders—basic

Net income (loss) — basic:

$ 29,963 $ 13,953 $ ( 48,733 )

Net income (loss) attributable to common stockholders—diluted

Net income (loss) — diluted:

$ 29,963 $ 13,953 $ ( 48,733 )

Net income (loss) per share attributable to common stockholders:

Net income (loss) per share:

Net income (loss) per share — basic:

$ 0.17 $ 0.07 $ ( 0.25 )

Net income (loss) per share — diluted:

$ 0.16 $ 0.07 $ ( 0.25 )

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

Weighted-average shares used to compute net income (loss) per share:

Weighted-average shares used to compute net income (loss) per share — basic:

180,210 190,466 195,829

Weighted-average shares used to compute net income (loss) per share — diluted:

182,865 194,415 195,829

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154 105 ( 144 )

Change in unrealized gain (loss) on cash flow hedges:

Unrealized gain (loss) on interest rate cap and swaps

Reclassification of prior hedge effectiveness and losses from interest rate cap to net income (loss)

Reclassification to net income (loss) upon discontinuance of interest rate swaps and prior hedge effectiveness

Total net changes in cash flow hedges

Total other comprehensive (loss) income

Total other comprehensive income (loss)

629 ( 1,265 ) 3,292

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LegalZoom.com, Inc.

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

(In thousands)

Series A Redeemable

Convertible Preferred

Stock Common Stock Additional

Common Stock Additional

Capital Accumulated

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Stockholders’

Equity (Deficit)

Shares Amount Shares Amount

Shares Amount

Balance at December 31, 2021 198,084 $ 198 $ 947,160 $ ( 748,012 ) $ ( 1,795 ) $ 197,551

Issuance of common stock upon exercise of stock options — — 831 — 534 — — 534

Issuance of common stock upon vesting of restricted stock awards and ESPP — — 938 1 1,244 — — 1,245

Issuance of common stock upon exercise of stock options and ESPP 540 — 2,436 — — 2,436

Issuance of common stock upon vesting of restricted stock unit awards 1,458 1 — — — 1

Shares surrendered for settlement of minimum statutory tax withholdings ( 4 ) — ( 41 ) — — ( 41 )

Stock-based compensation — — 82,995 — — 82,995

Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering ( 23,081 ) ( 70,906 ) 46,162 46 70,860 — — 70,906

Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions — — 21,989 22 581,811 — — 581,833

Private placement of common stock, net of underwriting discounts and commissions — — 3,214 3 85,047 — — 85,050

Stock issuance costs — — ( 5,636 ) — — ( 5,636 )

Net issuance and repayments of full recourse notes receivable — — — — 43 — — 43

Special dividends — — — — ( 88 ) — — ( 88 )

Repurchase and retirement of common stock ( 9,256 ) ( 9 ) — ( 95,117 ) — ( 95,126 )

Other comprehensive income — — — — 3,292 3,292

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Issuance of common stock upon exercise of stock options and ESPP 976 1 8,444 — — 8,445

Series A Redeemable

Convertible Preferred

Stock Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

(loss) Income Total

Stockholders’

Equity (Deficit)

Shares Amount Shares Amount

Issuance of common stock upon vesting of restricted stock units — — 1,458 1 — — — 1

Issuance of common stock upon vesting of restricted stock unit awards 3,438 3 ( 3 ) — — 1

Shares surrendered for settlement of minimum statutory tax withholdings ( 829 ) — ( 9,587 ) — — ( 9,587 )

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Repurchase and retirement of common stock ( 5,868 ) $ ( 6 ) $ — $ ( 54,867 ) $ — $ ( 54,873 )

Other comprehensive income — — — — — — 3,292 3,292

Net loss — — — — — ( 48,733 ) — ( 48,733 )

Stock repurchase costs — — — ( 100 ) — ( 100 )

Stock repurchase excise tax — — — ( 185 ) — ( 185 )

Other comprehensive loss — — — — ( 1,265 ) ( 1,265 )

Net income — — — 13,953 — 13,953

Balance at December 31, 2023 188,538 $ 189 $ 1,101,474 $ ( 933,061 ) $ 232 $ 168,834

Issuance of common stock upon exercise of stock options and ESPP 651 1 2,413 — — 2,414

Issuance of common stock upon vesting of restricted stock units — — 3,438 3 ( 3 ) — — 1

Issuance of common stock upon vesting of restricted stock unit awards 5,875 6 ( 6 ) — — —

Shares surrendered for settlement of minimum statutory tax withholdings ( 2,217 ) $ ( 2 ) $ ( 19,820 ) $ — $ — $ ( 19,822 )

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Repurchase and retirement of common stock ( 19,228 ) ( 19 ) — ( 164,972 ) — ( 164,991 )

Stock repurchase costs — — — — — ( 100 ) — ( 100 )

Stock repurchase excise tax — — — ( 1,247 ) — ( 1,247 )

Other comprehensive loss — — — — — — ( 1,265 ) ( 1,265 )

Other comprehensive income — — — — 629 629

Net income — — — 29,963 — 29,963

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Amortization of debt issuance costs 227 227 227

Amortization of prior hedge effectiveness — — 3,095

Amortization of right-of-use assets 2,132 2,692 2,049

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Impairment of other equity security — — 3,000

Loss on debt extinguishment — — 7,955

Discontinuance of interest rate swaps and write-off of prior hedge effectiveness — — 8,688

Deferred income taxes ( 4,552 ) 4,712 ( 793 )

Change in fair value of contingent consideration — ( 836 ) ( 150 )

Change in fair value of financial guarantee — — ( 150 )

Change in fair value of derivative instruments — — 392

Change in fair value of other equity security — — ( 1,812 )

Unrealized foreign exchange (gain) loss ( 1,387 ) 3,558 943

Unrealized foreign exchange loss (gain) 648 ( 1,387 ) 3,558

Other — ( 39 ) 168

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Purchase of property and equipment ( 35,696 ) ( 31,593 ) ( 22,098 )

Payment upon extinguishment of interest rate swaps — — ( 3,283 )

Purchase of other equity security — — ( 1,127 )

LegalZoom.com, Inc.

Consolidated Statements of Cash Flows (continued)

(In thousands)

Year Ended December 31,

2023 2022 2021

Net cash used in investing activities ( 35,696 ) ( 31,555 ) ( 30,622 )

Cash flows from financing activities

Repayment of finance and capital lease obligations ( 35 ) ( 14 ) ( 31 )

Payment of debt issuance costs — — ( 767 )

Repayment of 2018 Term Loan — — ( 524,300 )

Repayment of hybrid debt — — ( 1,332 )

Payment upon extinguishment of hybrid debt — — ( 9,774 )

Repayment of finance lease obligations ( 25 ) ( 35 ) ( 14 )

Payment of contingent consideration — — ( 600 )

Repurchase and retirement of common stock ( 54,873 ) ( 95,126 ) —

Repurchase and retirement of shares ( 165,014 ) ( 54,873 ) ( 95,126 )

Payment of stock repurchase costs ( 169 ) ( 100 ) —

Payment of special dividends — — ( 112 )

Proceeds from issuance of common stock in initial public offering, net of underwriting discounts and commissions — — 581,833

Proceeds from private placement, net of underwriting discounts and commissions — — 85,050

Payment of stock issuance costs — — ( 5,636 )

Shares surrendered for settlement of minimum statutory tax withholdings ( 9,587 ) ( 41 ) ( 2,342 )

Shares surrendered for settlement of minimum statutory tax withholding ( 20,491 ) ( 9,587 ) ( 41 )

Proceeds from issuance of stock under employee stock plans 2,414 8,445 2,438

Net cash (used in) provided by financing activities ( 56,150 ) ( 93,343 ) 123,359

Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalent 34 ( 87 ) ( 11 )

Net increase (decrease) in cash, cash equivalents and restricted cash equivalent 36,637 ( 50,215 ) 99,827

Cash and cash equivalents and restricted cash equivalent, at beginning of the period 189,082 239,297 139,470

LegalZoom.com, Inc.

Consolidated Statements of Cash Flows (continued)

(In thousands)

Year Ended December 31,

2024 2023 2022

Net cash used in financing activities ( 183,285 ) ( 56,150 ) ( 93,343 )

Effect of exchange rate changes on cash and cash equivalents ( 313 ) 34 ( 87 )

Net (decrease) increase in cash and cash equivalents ( 83,655 ) 36,637 ( 50,215 )

Cash and cash equivalents, at beginning of the period 225,719 189,082 239,297

Cash and cash equivalents, at end of the period $ 142,064 $ 225,719 $ 189,082

2 unchanged sentences

26,191 6,598 741

6,598 741 1,459

Non-cash operating, investing, and financing activities:

2 unchanged sentences

Purchase of property and equipment included in accounts payable and accrued expenses and other current liabilities 2,342 2,577 646

Conversion of Series A redeemable convertible preferred stock into common stock in connection with initial public offering — — 70,906

Change in fair value of hedged interest rate swaps and interest rate cap — — ( 5,817 )

Accrued stock repurchase excise tax 1,247 185 —

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Our position at business inception allows us to become a trusted business advisor, supporting the evolving needs of a new business across its lifecycle, and we have expanded our platform to include professional expertise and other products, both legal and non-legal, to better meet the needs of small businesses.

Along with business formation, our offerings include ongoing compliance and tax advice and filings, business licenses, accounting, virtual mailbox and e-signature solutions, trademark filings, and estate plans.

Along with business formation, our offerings include ongoing compliance, business licenses, accounting, virtual mailbox and e-signature solutions, trademark filings, and estate plans.

Additionally, we have insights into our customers and leverage our offerings as a channel to introduce small businesses to leading brands in our partner ecosystem, solving even more of their business needs.

Initial Public Offering

The registration statement related to our initial public offering, or IPO, was declared effective on June 29, 2021, and our common stock began trading on the Nasdaq Global Select Market on June 30, 2021.

On July 2, 2021, we completed our IPO for the sale of 19,121,000 shares of our common stock, $ 0.001 par value per share at an offering price of $ 28.00 per share, for proceeds of $ 505.9 million, net of underwriting discounts and commissions.

In addition, we sold 2,868,150 shares of our common stock for net proceeds of $ 75.9 million pursuant to the full exercise of the underwriter’s option to purchase additional shares in connection with the IPO.

In addition, on July 2, 2021, we sold 3,214,285 shares of our common stock in a private placement with an existing related party stockholder for proceeds of $ 85.0 million, net of underwriting discounts and commissions.

We raised aggregate proceeds of $ 666.9 million from our IPO and private placement after deducting underwriting discounts and commissions.

We incurred stock issuance costs of $ 5.6 million.

Proceeds raised from our IPO were used to repay the full outstanding balance of $ 521.6 million on our prior term loan.

Upon the completion of our IPO, 23,081,080 outstanding shares of redeemable convertible preferred stock with a carrying value of $ 70.9 million converted into 46,162,160 shares of common stock.

Following the completion of the IPO, we have one class of authorized and outstanding common stock.

Summary of Significant Accounting Policies

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Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess the purpose and design of the VIE, the nature of the VIE’s risks and the risks that we absorb, the power to direct activities that most significantly impact the economic performance of the VIE, and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.

Beginning in the fourth quarter of 2023, we include partner revenue in transaction and subscription revenue to conform with how we evaluate our performance.

This change had no impact on total revenue.

Prior period disaggregated revenue disclosures have been conformed to the current period presentation.

Certain other reclassifications have been made to prior periods amounts to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.

Estimates are used for, however not limited to, revenue recognition, sales allowances and expected credit loss allowances, available-for-sale debt securities, other equity securities, recoverability of long-lived assets and goodwill, income taxes, commitments and contingencies, valuation of assets and liabilities acquired in business combinations, valuation of assets in asset acquisitions, fair value of derivative instruments and stock-based compensation.

Actual results could differ materially from those estimates.

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Our Chief Executive Officer, as the Chief Operating Decision Maker, organizes our company, manages resource allocations, and measures performance on the basis of one operating segment.

Revenue outside of the U.S., based on the location of the customer, represented less than 1 % of our revenue for the years ended December 31, 2023, 2022 and 2021.

Our property and equipment and right-of-use, or ROU, assets located outside of the U.S.

were immaterial as of December 31, 2023 and 2022.

Refer to Note 21 to our consolidated financial statements.

Foreign Currency

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Dollars using period-end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange for the period for revenue and expenses.

Translation gains and losses are recorded in accumulated other comprehensive (loss) income as a component of our consolidated statements of redeemable convertible preferred stock and stockholders’ equity.

We recognized foreign currency transaction gain in the accompanying consolidated statement of operations of $ 1.4 million for 2023 and losses of $ 3.6 million and $ 0.9 million for 2022 and 2021, respectively.

Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of our consolidated statements of stockholders’ equity.

We recognized foreign currency transaction loss in the accompanying consolidated statement of operations of $ 0.6 million for 2024, a gain of $ 1.4 million for 2023, and a loss of $ 3.6 million for 2022.

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs

used to measure fair value.

The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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.

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At December 31, 2024 and 2023, our financial assets recorded at fair value on a recurring basis consist of cash equivalents and available-for-sale debt securities.

At December 31, 2022, our financial liabilities recorded at fair value on a recurring basis consisted of contingent consideration from the acquisition of United Agency Services Corp, or UA Services.

The cash equivalent consists of money market funds valued using quoted prices in active markets, which represents Level 1 inputs in the fair value hierarchy.

The available-for-sale debt securities are valued using a Monte Carlo simulation, which include inputs that represent Level 3 inputs in the fair value hierarchy.

Contingent consideration is valued using the present value and probability of the estimated future cash outflow, which include inputs that represent Level 3 inputs in the fair value hierarchy.

The carrying amounts of accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items.

Concentrations of Credit Risk

We maintain accounts in U.S.

banks with funds insured by the Federal Deposit Insurance Corporation, or FDIC, and the Financial Services Compensation Scheme, or FSCS, respectively.

Our bank accounts may, at times, exceed the FDIC and FSCS insured limits.

We maintain accounts in the U.S.

banks with funds insured by the Federal Deposit Insurance Corporation, or FDIC.

Our bank accounts may, at times, exceed the FDIC insured limits.

Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents.

Management believes that we are not exposed to any significant credit risk related to our cash or cash equivalents and have not experienced any losses in such accounts.

Due to a large and diverse customer base, no individual customer represented more than 10% of total revenue in December 31, 2023, 2022 and 2021, respectively.

Due to a large and diverse customer base, no individual customer represented more than 10% of total revenue in December 31, 2024, 2023 or 2022.

At December 31, 2024 and 2023, there were no customers with an outstanding balance of 10% or more of our accounts receivable balance.

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Repairs and maintenance are expensed as incurred whereas significant renewals and enhancements are capitalized.

When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the respective

accounts and any resulting gain or loss is reflected in our results of operations.

When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is reflected in our results of operations.

Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows:

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If the fair value is less than the carrying amount including goodwill, then a goodwill impairment charge is recorded by the amount that the carrying value exceeds the fair value, up to the carrying amount of goodwill.

Derivative Financial Instruments

Prior to our IPO in 2021, derivative financial instruments, which included interest rate swaps, an interest rate cap, and a financial guarantee relating to a former executive officer, were recorded at fair value.

For derivatives that qualified for hedge accounting, specifically as cash flow hedges, the change in fair value of the derivatives was recorded as an unrealized gain (loss), net of taxes, in the accompanying consolidated statements of comprehensive (loss) income.

For derivatives that did not qualify for hedge accounting, the change in the fair value of our derivatives related to our long-term debt were recorded in interest expense, net, and the change in the fair value of our financial guarantee was recorded in other income, net, in the accompanying consolidated statements of operations.

In 2021, our derivative positions were extinguished in connection with our IPO and full repayment of our long-term debt.

Available-for-sale Debt Securities

At December 31, 2023 and 2022, we held long-term investments of certain privately held companies through the purchase of convertible promissory notes.

These investments are classified as available-for-sale debt securities.

Available-for-sale Debt Security

At December 31, 2024 and 2023, we held a long-term investment in a privately held company through the purchase of a convertible promissory note.

This investment is classified as an available-for-sale debt security.

For available-for-sale debt securities that have the estimated fair values below their amortized cost basis, we evaluate our intent to sell the security or whether we will more likely than not be required to sell the security before recovery of its amortized cost basis.

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If the assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as allowance for credit loss with a corresponding credit loss expense, included in the consolidated statement of operations.

If the assessment indicates a credit loss does not exist, impairment is recognized in other comprehensive (loss) income, net of applicable taxes.

If the assessment indicates a credit loss does not exist, impairment is recognized in other comprehensive income (loss), net of applicable taxes.

Investments in Other Equity Securities

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We classify long-lived assets or asset groups we plan to sell as held for sale on our consolidated balance sheets only after certain criteria have been met including:

management has the authority and commits to a plan to sell the asset, the asset is available for immediate sale in its present condition, an active program to locate a buyer and the plan to sell the asset have been initiated, the sale of the asset is probable within twelve months, the asset is being actively marketed at a reasonable sales price relative to its current fair value, and it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

We record assets or asset groups held for sale at the lower of their carrying value or fair value less costs to sell.

management has the authority and commits to a plan to sell the asset, the asset is available for immediate sale in its present condition, an active program to locate a buyer and the plan to sell the asset have been initiated, the sale of the asset is probable within twelve months (subject to events and circumstances outside our control which may extend the period required to complete the sale beyond one year), the asset is being actively marketed at a reasonable sales price relative to its current fair value, and it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

We record assets or asset groups held for sale at the lower of

their carrying value or fair value less costs to sell.

Once classified as held for sale, depreciation and amortization is not recorded for any long-lived assets.

On January 1, 2022, we adopted Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, No.

842, Leases, and related amendments, using the modified retrospective method.

Financial information related to periods prior to adoption is as originally reported under the FASB, ASC No.

840, Leases .

On January 1, 2022, we recorded operating lease ROU assets of $ 5.7 million and operating lease liabilities of $ 5.9 million.

The difference between the leased assets and lease liabilities represents the existing deferred rent liabilities balance at adoption, resulting from historical straight-line recognition of operating leases, which was reclassified upon adoption to reduce the measurement of the leased assets.

The adoption of the standard did not have a material impact on our stockholders’ equity, results of operations, or cash flows.

The new standard provides several optional practical expedients in transition.

We elected the package of practical expedients permitted under the transition guidance, which eliminates the requirement to reassess whether a contract contains a lease and lease classification.

We have also made accounting policy elections, including a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases, which are leases with expected terms of twelve months or less, and an accounting policy to account for lease and certain non-lease components as a single component for certain classes of assets.

Additionally, we used the portfolio approach when applying the discount rate selected based on the dollar amount and term of the obligation.

We determined whether an arrangement is a lease, or contains a lease, at inception if we are able to identify an asset and can conclude we have the right to control the identified asset for a period of time.

Leases are included in operating lease ROU assets and operating lease liabilities in the accompanying consolidated balance sheets.

We determine whether an arrangement is a lease, or contains a lease, at inception if we are able to identify an asset and can conclude we have the right to control the identified asset for a period of time.

Leases are included in operating lease right-of-use, or ROU, assets and operating lease liabilities in the accompanying consolidated balance sheets.

Leases with an initial term of twelve months or less are not recorded in our accompanying consolidated balance sheet.

We made accounting policy elections, including a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases, which are leases with expected terms of twelve months or less, and an accounting policy to account for lease and certain non-lease components as a single component for certain classes of assets.

Additionally, we use the portfolio approach when applying the discount rate selected based on the dollar amount and term of the obligation.

ROU assets represent our right to control an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

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As our leases do not provide an implicit rate, we use the incremental borrowing rate based on the information available at commencement date in determining the discount rate used to present value lease payments.

We used the incremental borrowing rate on January 1, 2022 for operating leases that commenced on or prior to that date.

The incremental borrowing rate used is estimated based on what we would be required to pay for a collateralized loan over a similar term.

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We include variable lease payments that depend on an index or a rate and exclude those which depend on facts or circumstances occurring after the commencement date, other than the passage of time.

Debt Issuance Costs

Debt issuance costs associated with our term loans are deducted from the carrying value of current and long-term debt in the accompanying consolidated balance sheets and are amortized over the term of the loan using the effective interest method.

Debt issuance costs associated with revolving facilities are classified as other assets in the accompanying consolidated balance sheets and are amortized over the term of the respective facility on a straight-line basis over the term of the revolving facilities.

Debt issuance costs are amortized to interest expense, net in the accompanying consolidated statements of operations.

In 2021, upon the full repayment of our long-term debt in connection with our IPO, we recorded a loss on debt extinguishment of $ 7.7 million, which mainly consisted of unamortized debt issuance costs.

Deferred Offering Costs

We record certain legal, accounting, and other third-party fees in other assets that are directly associated with in-process equity financings until such financings are consummated.

After consummation, these costs are recorded in stockholders’ equity as a reduction from the proceeds of the offering.

Should the equity financing no longer be considered probable of being consummated, the deferred offering costs are expensed in the consolidated statements of operations within income from operations.

In 2021, we incurred $ 5.6 million related to our IPO, which is included in additional-paid in capital in the accompanying consolidated statements of redeemable convertible preferred stock and stockholders’ equity.

There were no deferred stock issuance costs recognized in other assets as of December 31, 2023 or 2022.

Revenue Recognition

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We also earn fees from third-party providers from leads generated to such providers through our online legal platform.

Subscription revenue —Subscription revenue is generated primarily from subscriptions to our registered agent, compliance packages, attorney advice, legal forms, tax and accounting, virtual mail and e-signature services, and software-as-a-service, or SaaS, accounting solution subscriptions and SaaS subscriptions in the

We generally recognize revenue from our subscriptions ratably over the subscription term.

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The total fees collected by us for our services include, as applicable, expedited services fees, government filing fees and shipping fees.

Subscription services are generally paid monthly or annually in advance of the subscription period except for SaaS services in the U.K., which are invoiced monthly in arrears.

Subscription services are generally paid monthly or annually in advance of the subscription period except for SaaS services in the U.K.

and virtual mail subscriptions, which are invoiced monthly in arrears.

Amounts collected in advance of revenue recognition are recorded in deferred revenue.

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Services we offer can generally either be purchased on a stand-alone basis or bundled together as part of a package of services.

Accordingly, a significant number of our arrangements include multiple performance obligations, such as the preparation of legal documents combined with related document revision, registered agent services, and free trial periods of our legal plans.

At contract inception, we assess the services promised in our contracts with customers and identify performance obligations for each promise to transfer to the customer a service or bundle of services that is distinct.

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For the services we sell on a standalone basis, we use the sales price of these services in the allocation of the transaction price in bundled arrangements.

Where we do not sell the service on a standalone basis, we estimate the standalone selling price based on the adjusted market assessment approach or the expected cost plus a margin approach when market information is not observable.

do not sell the service on a standalone basis, we estimate the standalone selling price based on the adjusted market assessment approach or the expected cost plus a margin approach when market information is not observable.

In these cases, the determination of the standalone selling price may require significant judgment.

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For these services, revenue includes filing and similar fees.

Our alternative business structures, or ABS, offer legal advisory services that are marketed through our websites.

Our alternative business structure, or ABS, offers legal advisory services that are marketed through our websites.

Our ABS provides independent legal advice to our customers and is directly responsible for, and control the fulfillment of, the legal services.

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In arrangements in which we are not the principal, we record revenue on a net basis, which is equal to the amount billed to our customer, net of sales allowances and the fee payable to the third party or partner that is primarily responsible for performing the services for the customer.

Except for our Arizona ABS, we are not a law firm in the U.S.

Except for our ABS, we are not a law firm in the U.S.

and cannot provide legal advice through our U.S.

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For these arrangements, we recognize revenue on a net basis as an agent.

For other services provided by third-parties, including deed transfer, accounting, tax, business data protection, revenue is recognized net of fees payable to third-parties.

For other services provided by third parties, including deed transfer, accounting, business data protection, revenue is recognized net of fees payable to third parties.

For revenue earned from leads generated to third party providers, we receive a fee for the referral of our customer to a third party provider or we retain a portion of the fee paid by the customer and share the remainder with a third-party.

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Cost of revenue includes all costs of providing and fulfilling our services.

amortization of acquired developed technology, depreciation and amortization of network computers, equipment and internal-use software, printing, shipping and handling charges, credit and debit card fees, allocated overhead, legal document kit expenses, and sales and use taxes.

Cost of revenue primarily includes government filing fees, costs of fulfillment, customer care, including the cost of credentialed professionals for tax, and payroll services, and related benefits, including stock-based compensation, and costs of independent contractors for document preparation, telecommunications and data center costs, amortization of acquired developed technology, depreciation and amortization of network computers, equipment and internal-use software, printing, shipping and handling charges, credit and debit card fees, allocated overhead, legal document kit expenses, and sales and use taxes.

We defer direct and incremental costs primarily related to government filing fees incurred prior to the associated service meeting the criteria for revenue recognition.

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At December 31, 2024 and 2023, there was $ 1.7 million and $ 1.7 million, respectively, in deferred cost of revenue included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

Filing fees of $ 88.1 million, $ 74.1 million and $ 79.8 million were recorded in cost of revenue in the accompanying consolidated statements of operations for years ended December 31, 2023, 2022, and 2021, respectively.

Filing fees of $ 83.3 million, $ 88.1 million and $ 74.1 million were

recorded in cost of revenue in the accompanying consolidated statements of operations for years ended December 31, 2024, 2023, and 2022, respectively.

Sales and Marketing Expenses

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Technology and Development Expenses

Technology and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, expenses for outside consultants, an allocation of depreciation and amortization and allocated overhead.

Technology and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation for technology and development personnel, expenses for outside consultants, an allocation of depreciation and amortization and allocated overhead.

These expenses include costs incurred in the development and implementation of our products, websites, mobile applications, online legal platform, research and development and related infrastructure.

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Awards with performance or market conditions are recognized using graded vesting.

The Black-Scholes option pricing model and the Monte Carlo simulation model requires us to make certain assumptions including the fair value of the underlying common stock, the expected term, the expected volatility, the risk-free interest rate and the dividend yield.

The Black-Scholes option pricing model and the Monte Carlo simulation model requires us to make certain assumptions including the fair value of the underlying common stock, the expected term, the expected stock price volatility, the risk-free interest rates and the dividend yield.

The fair value of the shares of common stock underlying stock options and RSUs is based upon our publicly listed share price on the date of grant.

Prior to our IPO, the fair value of the shares of common stock was determined by the board of directors.

Because there was no public market for our common stock, the board of directors determined the fair value of the common stock at the time of the grant of options and RSUs by considering a number of objective and subjective factors including valuation of comparable companies, sales of common stock to unrelated third-parties, operating and financial performance and general and industry-specific economic outlook, amongst other factors.

The fair value was determined in accordance

with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants titled Valuation of Privately Held Company Equity Securities Issued as Compensation .

The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding.

The expected term of options granted is estimated based upon actual historical exercise and post-vesting cancellations, adjusted for expected future exercise behavior.

The expected term of restricted stock units is defined as the remaining term from the grant date to the end of the performance period.

Because our common stock has limited publicly traded history, we estimate the expected volatility from the historical volatility of selected public companies with comparable characteristics to us, including similarity in size, lines of business, market capitalization and revenue and financial leverage.

We determine the expected volatility assumption using the frequency of daily historical prices of comparable public company’s common stock for a period equal to the expected term of the options.

We periodically assess the comparable companies and other relevant factors used to measure expected volatility for future stock option grants.

We determine the expected volatility assumption using the frequency of daily historical prices of comparable public companies’ common stock for a period equal to the expected term of the options.

We periodically assess the comparable companies and other relevant factors used to measure expected volatility for future stock option and restricted stock units with market conditions grants.

The risk-free interest rate assumption is based upon observed interest rates on the U.S.

government securities appropriate for the expected term of our stock options.

government securities appropriate for the expected term of our stock options and restricted stock units with market conditions.

The dividend yield assumption is based on our history and expectation of dividend payouts.

Other than the special dividends declared in 2021 and 2020, which resulted in corresponding reductions in the exercise price of the stock options, we have not declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

We have not declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

Stock-based compensation expense is recognized based on awards that are ultimately expected to vest.

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If this threshold is met, we measure the tax benefit as the largest amount of the benefit that is greater than fifty percent likely to be realized upon ultimate settlement.

We recognize penalties and interest accrued with respect to uncertain

tax positions as a component of the income tax provision.

We recognize penalties and interest accrued with respect to uncertain tax positions as a component of the income tax provision.

At December 31, 2024 and 2023, accrued penalties and interest related to uncertain tax positions were not material.

Net Income (Loss) Per Share Attributable to Common Stockholders

We apply the two-class method for calculating net income per share.

Under the two-class method, in periods where we generate net income, net income is allocated between common stock and other participating securities based on their participation rights.

Prior to our IPO, our participating securities consisted of redeemable convertible preferred stock, which participated in dividends, if declared.

For periods in which we report a net loss, the participating securities are not contractually obligated to share in our losses, and accordingly, no loss is allocated to the participating securities.

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding, net of unvested restricted stock, if any, during the period.

We compute diluted net income (loss) per share under the two-class method where income is reallocated between common stock, potential common stock and participating securities.

Potential common stock includes stock options, restricted stock units, restricted stock awards and employee stock purchase plans, or ESPPs and RSUs computed using the treasury stock method.

Recent Accounting Pronouncements

Prior to December 31, 2022, we qualified as an emerging growth company, or EGC, and were allowed by the Jumpstart Our Business Startups Act to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements were made applicable to private companies.

We became a large accelerated filer and no longer qualified as an EGC at the conclusion of the year ended December 31, 2022.

The adoption dates discussed below for recently adopted accounting pronouncements reflect the transition periods required as a result of becoming a large accelerated filer as of December 31, 2022.

We are required to adopt all future new or revised accounting pronouncements in accordance with public company timelines.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding, net of unvested restricted stock, if any, during the period.

We compute diluted net income (loss) per share by dividing net income (loss) by the weighted-average number of shares of common stock outstanding, including dilutive common shares outstanding during the period.

Dilutive shares outstanding include stock options, restricted stock units, and employee stock purchase plans, or ESPPs, computed using the treasury stock method.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments—Credit losses:

Measurement of Credit Losses on Financial Instruments (Topic 326) , which revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which results in more timely recognition of losses on financial instruments, including, but not limited to, available-for-sale debt securities and accounts receivable.

In June 2016, the Financial Standards Accounting Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments—Credit losses:

Measurement of Credit Losses on Financial Instruments (Topic 326) , which revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, and which results in more timely recognition of losses on financial instruments, including, but not limited to, available-for-sale debt securities and accounts receivable.

We adopted ASU 2016-13 effective January 1, 2022.

The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting , or Topic 848, that provides optional relief to applying reference rate reform to contracts, hedging relationships, and other transactions that reference the LIBOR.

Also, in January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848) — Scope, to clarify that cash flow hedges are eligible for certain optional expedients and exceptions for the application of subsequent assessment methods to assume perfect effectiveness as previously presented in ASU No.

We adopted the provisions of Topic 848 upon issuance of this accounting standard and the adoption did not have a material impact to our consolidated financial statements.

In August 2020, the FASB issued ASU 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):

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Disclosure of Supplier Finance Program Obligations , which requires that a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs.

ASU 2022-04 effective January 1, 2023.

We adopted ASU 2022-04 effective January 1, 2023.

The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

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Consequently, the adoption of this accounting standard did not have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Entities must adopt the changes to the segment reporting guidance on a retrospective basis, and early adoption is permitted.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

We adopted ASU 2023-07 in 2024.

Refer to Note 21 to our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, which clarifies how an entity determines whether a profits interest or similar award is a share-based payment arrangement that is within the scope of ASC 718, Compensation - Stock Compensation.

This accounting standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those years, and early adoption is permitted.

ASU 2024-01 can be applied retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies this accounting standard.

We early adopted ASU 2024-01 effective January 1, 2024 and will apply the amendments prospectively to profits interest and similar awards granted or modified on or after January 1,

The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements to amend a variety of topics in the accounting codification by removing references to various FASB concepts statements.

This accounting standard is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted.

ASU 2024-02 can be applied retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied or prospectively to all new transactions recognized on or after the date that the entity first applies the amendments.

We early adopted ASU 2024-02 effective January 1, 2024 and will apply the amendments prospectively to all new transactions recognized on or after January 1, 2024.

The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate.

This accounting standard is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025.

This accounting standard is effective for fiscal years beginning after December 15, 2024.

ASU 2023-09 will be applied prospectively with an option for retroactive application to each period in the financial statements, and early adoption is permitted.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires public business entities to disaggregate certain expense captions into specific categories in disclosures within the notes to the financial statements.

As further clarified by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), issued by FASB in January 2025, this accounting standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The amendments in ASU 2024-03 should be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements, and early adoption is permitted.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

In November 2024, FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period.

Entities may apply the new guidance prospectively to settlements of convertible debt instruments that take place during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the effective date of ASU 2024-04.

Retrospective application may be elected as of the beginning of the first comparative reporting period in which the entity has also applied ASU 2020-06.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

Other Financial Statement Information

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The allowance recognized as a reduction of revenue primarily relates to our installment plan receivables for which we expect we will not be entitled to a portion of the transaction price based on our historical experience with similar transactions.

The allowance recognized against general and administrative expense represents an allowance relating to receivables from third-party providers that are no longer considered collectible.

The allowance recognized against general and administrative expense represents an allowance relating to receivables from partners that are no longer considered collectible.

Prepaid Expenses and Other Current Assets

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We ceased recording depreciation on these assets upon meeting the held for sale criteria.

At December 31, 2023, the total carrying value of the assets held for sale remains at $ 22.7 million as follows:

At December 31, 2024, the total carrying value of the assets held for sale remains at $ 22.7 million as follows (in thousands):

December 31, 2024

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Separate from the asset acquisition, up to $ 2.6 million was payable to certain of the sellers on the first and second anniversaries of the asset acquisition date as compensation for maintaining an assembled workforce.

During the year ended December 31, 2023 a payment of $ 1.3 million was made to these sellers pursuant to the foregoing compensation arrangement.

During each of the years ended December 31, 2024 and 2023, payments of $ 1.3 million were made to these sellers pursuant to the foregoing compensation arrangement.

United Agency Services, Corp.

In August 2022, we acquired certain assets and liabilities of UA Services, a company providing registered agent services and corporate compliance solutions for $ 3.5 million, of which $ 2.6 million was paid in cash on the acquisition date and up to $ 1.0 million was payable in cash within twelve months from the acquisition date based upon the achievement of certain earnout metrics.

In August 2022, we acquired certain assets and liabilities of United Agency Services, Corp., or UA Services, a company providing registered agent services and corporate compliance solutions for $ 3.5 million, of which $ 2.6 million was paid in cash on the acquisition date and up to $ 1.0 million was payable in cash within twelve months from the acquisition date based upon the achievement of certain earnout metrics.

During the year ended December 31, 2023, we recorded a $ 0.8 million reduction in fair value of contingent consideration as a component of cost of revenue because the earnout metrics were not achieved.

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The purchase price was allocated to the assets acquired and liabilities assumed.

Goodwill of $ 3.3 million arising from the acquisition consisted largely of the assembled workforce and synergies expected from combining our operations.

Goodwill of $ 3.3 million arising from the acquisition consisted largely of the assembled

workforce and synergies expected from combining our operations.

The acquired goodwill was deductible for tax purposes.

There were no intangible assets acquired in connection with this acquisition.

Acquisition costs

related to this transaction of approximately $ 0.4 million were expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations during the year ended December 31, 2022.

The revenue and earnings of the acquired business were included in our results of operations since the acquisition date and were not material to the consolidated financial results for the year ended December 31, 2022.

Pro forma revenues and results of operations for this acquisition are not presented as the impact on our consolidated financial statements for the year ended December 31, 2022 was immaterial.

Earth Class Mail, Inc.

In November 2021, we acquired all of the outstanding equity interests in Earth Class Mail, Inc., or Earth Class Mail, a company that provides virtual mailbox solutions for small businesses, in line with our strategy to scale our existing business through building in-house adjacencies, for $ 61.2 million.

The purchase price was reduced during the year ended December 31, 2022 due to a working capital adjustment of $ 0.3 million and immaterial measurement period adjustments.

Estimated useful life

(in thousands)

Goodwill $ 48,617 —

Customer relationships 10,603 6 years

Developed technology 5,418 5 years

Trade names 179 26 months

Property and equipment 267 3 - 5 years

Deferred tax liability ( 3,087 ) —

Other liabilities ( 787 ) —

Total purchase consideration $ 61,210

Intangible assets acquired from Earth Class Mail included customer relationships of $ 10.6 million, developed technology of $ 5.4 million and trade names of $ 0.2 million, which are being amortized over their estimated useful life using the straight-line method.

The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill.

The resulting goodwill of $ 48.6 million arising from the acquisition consisted largely of the assembled workforce and synergies expected from combining Earth Class Mail into our operations.

The acquired goodwill was deductible for tax purposes.

Acquisition-related costs, including legal, regulatory, and consulting costs amounted to $ 1.4 million and were included within general and administrative expenses in our consolidated statement of operations during the year ended December 31, 2021.

Acquisition costs related to this transaction of approximately $ 0.4 million were expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations during the year ended December 31, 2022.

Pro forma revenues and results of operations for this acquisition are not presented as the impact on our consolidated financial statements for the year ended December 31, 2022 was immaterial.

Available-for-sale Debt Securities

In 2019, we invested in Legal Vision Pty Ltd., or Legal Vision, an Australian proprietary limited company that provides online legal services to small and medium size businesses, through the purchase of a convertible promissory note for a total of Australian Dollar, or AUD, $ 1.0 million ($ 0.7 million).

Available-for-sale Debt Security

The convertible promissory note has a maturity term of ten years , which is convertible into Legal Vision’s common stock.

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We determined that the conversion option on the Legal Vision convertible promissory note will not have material value until Legal Vision executes on its business plans to drive growth, which consequently will drive the fair value of the associated conversion option in excess of the carrying value of the convertible promissory note.

Accordingly, the fair value of the convertible debt approximated its

carrying value as of December 31, 2023 and 2022.

At December 31, 2023 and 2022, the fair value of our available-for-sale debt security in Legal Vision was AUD $ 1.7 million ($ 1.2 million) and AUD $ 1.5 million ($ 1.0 million), respectively, with the change due to fair value adjustments during the period.

Accordingly, the fair value of the convertible debt approximated its carrying value as of December 31, 2024 and 2023.

At December 31, 2024 and 2023, the fair value of our available-for-sale debt security in Legal Vision was AUD $ 2.2 million (USD $ 1.4 million) and AUD $ 1.7 million (USD $ 1.2 million), respectively, with the change due to fair value adjustments during the period.

In 2024, key assumptions used in the Monte Carlo simulation model to determine the fair value of the convertible promissory note in Legal Vision were:

expected term of 4.3 years, risk-free rate of 3.9 % and volatility of 55 %.

The increase in fair value was recognized in other comprehensive (loss) income for the year ended December 31, 2023.

The increase in fair value was recognized in other comprehensive income for the year ended December 31, 2024.

Since the Legal Vision convertible promissory note has a contractual maturity date that exceeds one year and we do not intend to liquidate in the next twelve months, we have classified the convertible promissory note as a noncurrent available-for-sale debt security in the accompanying consolidated balance sheets as of December 31, 2024 and 2023.

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We hold an equity investment in LawPath, Pty Ltd, or LawPath, an Australian proprietary limited company that provides an online legal platform to individuals and small and medium size businesses.

In October 2021, we invested an additional AUD $ 1.5 million ($ 1.1 million).

In October 2021, we invested an additional AUD $ 1.5 million (USD $ 1.1 million).

The change in fair value, due to an orderly transaction, in our other equity securities was $ 1.8 million for the year ended December 31, 2021, which was recognized in other income (expense), net in our consolidated statements of operations.

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Leasehold improvements

Software development in-progress

Total cost of property and equipment

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In 2024, 2023 and 2022, we recorded amortization expense of $ 27.6 million, $ 17.6 million and $ 14.6 million, respectively, in connection with these costs.

Software development in-progress consists primarily of internal-use software projects, which when placed in service, will provide enhancements and improvements to the operational and functional capabilities to our online platforms and our customer-facing website.

In 2024, 2023 and 2022 we capitalized internal-use software development costs of $ 40.4 million, $ 35.0 million and $ 21.4 million respectively.

In 2024, 2023 and 2022, no software development costs were impaired.

In 2021, we impaired $ 0.9 million of capitalized software development costs related primarily to internal-use software projects that no longer met our business requirements or were no longer expected to be placed in service.

We conduct operations from certain leased facilities in various locations.

At December 31, 2023, we had various non-cancelable operating leases for office space and equipment, which expire between January 2024, and November 2029, and which represent the non-cancelable periods of the leases and include extension options that we determined are reasonably certain to be exercised.

At December 31, 2024, we had various non-cancelable operating leases for office space and equipment, which expire between June 2025, and February 2033, and which represent the non-cancelable periods of the leases and include extension options that we determined are reasonably certain to be exercised.

We exclude extension options that are not reasonably certain to be exercised from our lease terms.

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$ 7,882 $ 9,046

At December 31, 2023, the maturities of our remaining operating lease and finance lease liabilities were as follows (in thousands, except years and percentages):

Operating leases Finance leases Total leases liabilities

2024 $ 2,392 $ 27 $ 2,419

2025 1,828 2 1,830

2026 1,744 — 1,744

2027 1,677 — 1,677

2028 1,312 — 1,312

At December 31, 2024, the maturities of our remaining operating lease were as follows (in thousands, except years and percentages):

Operating leases

Thereafter 186

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Weighted-average remaining lease term as of December 31, 2023 (in years) 5.0

Operating leases Finance leases Total leases liabilities

Weighted-average incremental borrowing rate as of December 31, 2023 4.51 %

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Balance as of December 31, 2022 $ 63,229

Acquisition 3,409

Foreign currency translation 89

Balance as of December 31, 2023 63,318

Foreign currency translation 89

Balance as of December 31, 2024 $ 63,318

As discussed in Note 5, we acquired UA Services in August 2022.

During the year ended December 31, 2024, there were no changes to the goodwill balance.

Intangible Assets, net

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$ 26,852 $ 13,117 $ 13,735

As discussed in Note 5, we acquired Revv in October 2022, UA Services in August 2022 and Earth Class Mail in November 2021.

In 2024, 2023 and 2022, we recorded amortization expense of $ 5.1 million, $ 5.2 million and $ 3.5 million, respectively.

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Long-term Debt

In November 2018, we entered into an amended first lien credit and guaranty agreement, or 2018 Credit Facility, which consisted of a first lien term loan facility, or 2018 Term Loan, with a principal amount of $ 535.0 million and a 2018 Revolving Facility of $ 40.0 million, or 2018 Revolving Facility.

In July 2021, upon the completion of our IPO, we repaid the then outstanding principal of $ 521.6 million of our 2018 Term Loan in full.

We incurred a loss on debt extinguishment of $ 7.7 million related to unamortized debt issuance costs.

On July 2, 2021, we entered into an amended and restated credit and guaranty agreement, or 2021 Revolving Facility, providing for revolving borrowings of up to $ 150.0 million with an availability period of five years .

Under the 2021 Revolving Facility, we can use up to $ 20.0 million in letters of credit as well as borrowings on same-day notice, referred to as swingline loans, in an amount of up to $ 10.0 million.

Under the 2021 Revolving Facility, we can use up to $ 20.0 million in letters of credit and up to $ 10.0 million in borrowings on same-day notice, referred to as swingline loans.

Additional debt issuance costs of $ 0.8 million were allocated to the 2021 Revolving Facility.

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and enter into certain transactions with affiliates.

The 2021 Revolving Facility requires compliance with a total net first lien leverage ratio of 4.50 to 1.00, or Financial Covenant.

The 2021 Revolving Facility requires compliance with a total net first lien leverage ratio not to exceed 4.50 to 1.00, or the Financial Covenant.

The Financial Covenant will be tested at quarter-end only if the total principal amount of all revolving loans, swingline loans and drawn letters of credit that have not been reimbursed exceeds 35 % of the total commitments under the 2021 Revolving Facility on the last day of such fiscal quarter.

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We were in compliance with all financial covenants as of December 31, 2024 and 2023 .

Derivative Financial Instruments

Interest Rate Swaps

In April 2019, we entered into two interest rate swaps, or initial swaps, to manage cash flow exposure and exposure to interest rate fluctuations under our 2018 Term Loan.

The initial swaps would have matured in April 2022.

Under the swap agreements, we were required to pay interest at a fixed rate of 2.3 % per annum and receive interest at a variable rate indexed to one-month LIBOR.

The initial notional amount of each initial swap was $ 66.0 million.

The initial swaps were accounted for as cash flow hedges as the transactions were executed to hedge our future interest payments.

At June 30, 2021, the interest rate swap contracts had an aggregate notional amount of $ 394.2 million, which were designated as cash flow hedges.

In July 2021, upon the full repayment of our 2018 Term Loan, our interest rate swaps were discontinued as cash flow hedges and were subsequently extinguished.

We paid $ 13.6 million to extinguish our interest rate swaps and hybrid debt.

Upon discontinuance of the interest rate swaps as cash flow hedges, the unrealized losses of $ 9.2 million for the intervening period were recognized in interest expense, net.

There were no interest rate swaps outstanding as of December 31, 2023 and 2022.

The impact from losses from our interest rate cap, interest rate swaps, and hybrid debt in our consolidated statements of operations were as follows (in thousands):

Year Ended December 31,

Settlement of interest rate swaps $ 1,052

Amortization of prior hedge effectiveness 3,095

Fair value adjustment of interest rate swap 364

Amortization of interest rate cap premium 28

Interest expense on hybrid debt 368

Discontinuance of interest rate swaps and prior hedge effectiveness 9,240

Total, recorded in interest expense, net $ 14,147

Financial Guarantee

In September 2019, we provided a financial guarantee relating to a former executive officer upon their voluntary termination.

The executive officer entered into a personal loan with a financial institution for $ 50.0 million with a three-year term.

The personal loan was collateralized by personal assets, an investment portfolio and our common stock owned by the former executive officer.

We provided a financial guarantee to the financial institution up to $ 25.0 million had the former executive officer defaulted or not met certain collateral requirements throughout the term of the personal loan.

We deposited $ 25.0 million into a money market fund with the financial institution, or restricted cash equivalent, to evidence this financial guarantee.

Had the former executive officer not met certain collateral requirements or defaulted on the personal loan, the financial institution would have had the ability to use our restricted cash equivalent for any shortfall up to $ 25.0 million.

In that event, we would have had full recourse against the former executive officer to recover the amount retained by the financial institution up to $ 25.0 million.

The personal loan was required to be repaid by the former executive officer prior to our making a public filing with the Securities and Exchange Commission, or SEC, for our IPO, or September 2022, whichever came first.

In the event of our IPO, the former executive officer had the option to sell up to $ 25.0 million of his common stock back to us to pay off the personal loan with the financial institution.

The financial guarantee was accounted for as a derivative at fair value with changes in fair value recorded in other income, net in our consolidated statements of operations.

The financial guarantee had a term of three years and matured in September 2022.

In June 2021, the financial guarantee was terminated and we recognized a gain of $ 0.1 million from the cancellation of our financial guarantee derivative in other income (expense), net in the accompanying consolidated statements of operations.

The associated restricted cash equivalent of $ 25.0 million became unrestricted and was reclassified to cash and cash equivalents.

Commitments and Contingencies

We have non-cancelable agreements with various vendors, which require us to pay $ 46.5 million over a four year period, of which $ 32.8 million remains to be paid as of December 31, 2023.

Legal Proceedings

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We are not currently a party to any material legal proceedings, nor are we aware of any pending or threatened litigation that could have a material adverse effect on our results of operations, cash flows, and financial condition, should such litigation be resolved unfavorably.

Indemnifications

Indemnification

Indemnification provisions in our third-party service provider agreements provide that we will indemnify, hold harmless, and reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any claim by any third-party as a result of our website, advertising, marketing, payment processing, collection or customer service activities.

The maximum potential amount of future payments we could be required to make under these indemnification provisions is undeterminable.

The maximum potential amount of future payments we could be required to make under these indemnification provisions is indeterminable.

No amounts have been accrued or have been paid during any period presented as we believe the fair value of these indemnification obligations is immaterial.

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The secondary offering of 16,100,000 shares of our common stock by a selling stockholder was completed at a price to the public of $ 10.00 per share before underwriting discounts and commissions.

All direct and incremental costs incurred in connection with the secondary offering were expensed because we did not receive any proceeds from the sale of shares of common stock in the secondary offering.

All direct and incremental costs incurred in

connection with the secondary offering were expensed because we did not receive any proceeds from the sale of shares of common stock in the secondary offering.

In November 2023, a selling stockholder, who was a related party due to the selling stockholder’s then-ownership in our common stock, sold 15,099,993 shares of our common stock in an underwritten public offering.

2 unchanged sentences

In October 2023, our board of directors approved a new stock repurchase program, or 2023 stock repurchase program, authorizing repurchases of up to $ 100.0 million of our common stock, with no fixed expiration.

Stock repurchases under both 2023 and 2022 programs authorized us to repurchase our common stock through any manner, including open market transactions, accelerated stock repurchase agreements, or privately negotiated transactions with third parties, and in such amounts as management deems appropriate.

In May 2024, our board of directors approved a $ 75.0 million increase in the 2023 stock repurchase program, bringing the aggregate amount authorized to $ 175.0 million.

In November 2024, our board of directors approved an additional $ 40.0 million increase in the stock repurchase program, bringing the aggregate amount authorized to $ 215.0 million.

Both the 2023 stock repurchase program and the 2022 stock repurchase program authorized us to repurchase our common stock through any manner, including open market transactions, accelerated stock repurchase agreements, or in privately negotiated transactions with third parties, and in such amounts as management deems appropriate.

Open market repurchases may be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

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

Neither stock repurchase program obligated us to acquire any particular amount of common stock and each could be modified, suspended or terminated at any time at the discretion of our board of directors.

During the year ended December 31, 2023, we repurchased a total of 5,867,835 shares of our common stock through open market purchases using Rule 10b5-1 plans and in the above private, non-underwritten transaction, at an average per share price of $ 9.35 for a total repurchase of $ 54.9 million including broker commission.

During the year ended December 31, 2022, using the Rule 10b5-1 plans, we repurchased a total of 9,256,268 shares of our common stock through open market purchases at an average per share price of $ 10.28 for a total repurchase of $ 95.1 million including broker commission.

The repurchases were recorded as a reduction to our accumulated deficit in the accompanying consolidated statements of redeemable convertible preferred stock and stockholders’ equity.

We have made additional open market repurchases under the 2023 stock repurchase program subsequent to December 31, 2023 of 897,385 shares of our common stock, amounting to $ 9.2 million, as of the date of filing.

Neither the 2023 stock repurchase program nor the 2022 stock repurchase program obligated us to acquire any particular amount of common stock and each could be modified, suspended or terminated at any time at the discretion of our board of directors.

During the year ended December 31, 2024, we repurchased a total of 19,228,082 shares of our common stock through open market purchases using Rule 10b5-1 plans at an average per share price of $ 8.58 for a total repurchase of $ 165.0 million including broker commission.

During the year ended December 31, 2023, we repurchased a total of 5,867,835 shares of our common stock through open market purchases and in the above private, non-underwritten transaction, at an average per share price of $ 9.35 for a total repurchase of $ 54.9 million including broker commission.

The repurchases were recorded as a reduction to our accumulated deficit in the accompanying consolidated statements of stockholders’ equity.

The Inflation Reduction Act of 2022, enacted in August 2022, imposed a 1% non-deductible excise tax on net repurchases of shares by domestic corporations whose stock is traded on an established securities market.

Consequently, this excise tax is applicable to our stock repurchase program beginning in 2023 and represents a cost of the repurchases of our common stock.

We have recognized $ 0.2 million excise tax liability as of December 31, 2023 because the fair market value of stock repurchases exceeded the fair market value of stock issuances during the year ended December 31, 2023.

Due to the fair market value of stock repurchases exceeding the fair market value of stock issuances during the years ended December 31, 2024, and 2023, we recognized excise tax liability of $ 1.2 million, and $ 0.2 million, respectively.

Stock-based Compensation

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In June 2021, our board of directors adopted our 2021 Equity Incentive Plan, or 2021 Plan.

All equity-based awards going forward will be granted under the 2021 Plan.

All equity-based awards going forward are granted under the 2021 Plan.

An aggregate of 18,946,871 shares of our common stock were reserved for issuance under our 2021 Plan, as well as any future automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Plan.

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Options granted pursuant to the 2021 Plan will vest at the rate specified in the stock option agreement.

Under the 2021 Plan, if an option holder’s service relationship with us or any of our affiliates ceases for any reason other than

disability, death, or cause, the option holder may generally exercise any vested options for a period of three months following the cessation of service.

If under our 2021 Plan, shares subject to stock awards expire or terminate without being exercised in full or are paid out in cash rather than in shares, such awards will not reduce the number of shares available for issuance under our 2021 Plan.

Shares withheld under a stock award to satisfy the exercise, strike or purchase price of a stock award or to satisfy a tax withholding obligation will not reduce the number of shares available for issuance under our 2021 Plan.

Under the 2021 Plan, RSU awards are granted under RSU award agreements adopted by the administrator.

Under the 2021 Plan, if an option holder’s service relationship with us or any of our affiliates ceases for any reason other than disability, death, or cause, the option holder may generally exercise any vested options for a period of three months following the cessation of service.

If under our 2021 Plan, shares subject to stock option awards expire or terminate without being exercised in full or are paid out in cash rather than in shares, such stock options will not reduce the number of shares available for issuance under our 2021 Plan.

Our policy is to issue new common stock upon the exercise of stock options.

Shares withheld under a stock option award to satisfy the exercise, strike or purchase price of such award or to satisfy a tax withholding obligation will not reduce the number of shares available for issuance under our 2021 Plan.

Under the 2021 Plan, RSU awards are granted under RSU award agreements approved by the administrator.

RSU awards may be granted for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law.

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Contributions under the 2021 ESPP are limited to a maximum of 15 % of an employee’s eligible compensation.

ESPP purchases are settled with common stock from the ESPP’s previously-authorized and available pool of shares.

The stock-based compensation expense incurred in 2023, 2022 and 2021 was $ 0.7 million, $ 0.7 million and $ 0.4 million, respectively.

Our policy is to issue new common stock upon the exercise of stock options.

Purchases under the 2021 ESPP are settled with common stock from the 2021 ESPP’s previously-authorized and available pool of shares.

The stock-based compensation expense incurred in connection with the 2021 ESPP in 2024, 2023 and 2022 was $ 0.4 million, $ 0.7 million and $ 0.7 million, respectively.

2016 Stock Option Plan

Prior to the 2021 Plan, we granted stock options under our 2016 Stock Option Plan, or 2016 Plan.

Prior to the adoption of the 2021 Plan, we granted stock options under our 2016 Stock Incentive Plan, or 2016 Plan.

Under the terms of the 2016 Plan, both incentive and nonqualified stock options were granted with exercise prices not less than the fair value of the underlying common stock on the date of grant.

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20,486 $ 10.69 6.9 $ 34,571

( 2,231 ) 13.00

( 2,672 ) 11.22

Outstanding at December 31, 2024

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The weighted-average grant-date fair value per share of options granted using the Black-Scholes option pricing model for 2023 and 2022 was $ 4.40 and $ 6.61 , respectively.

There was no tax benefit for 2023.

There was a realized tax benefit of $ 2.6 million and $ 12.3 million for tax deductions from stock options exercised in 2022 and 2021, respectively.

We did not grant any stock options in 2024.

There was a $ 3.1 million tax benefit for tax deductions from stock options exercised in 2024.

There was no tax benefit for 2023, and a realized tax benefit of $ 2.6 million for tax deductions from stock options exercised in 2022.

All tax effects related to stock-based compensation have been recorded in our provision for income taxes in the accompanying consolidated statements of operations.

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Year Ended December 31,

2023 2022 2021

Expected life (years)

3 unchanged sentences

Expected dividend yield

In June 2021, we granted 970,970 options to our executive officers that were contingent on the effectiveness of the registration statement of our IPO, which occurred on June 29, 2021, or IPO Options.

Because the number of options and exercise price of the IPO Options were based on the IPO price to the public, the grant date for accounting purposes was not established until the effective date of our IPO.

As the IPO was a performance condition, no stock-based compensation expense was recognized until our IPO registration statement was declared effective.

During the years ended December 31, 2023, 2022, and 2021, the Company recorded stock-based compensation expense for the IPO Options of $ 2.0 million, $ 4.5 million, and $ 3.2 million, respectively.

At December 31, 2023, total remaining stock-based compensation expense for

unvested stock options was $ 1.1 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.6 years.

Restricted and Performance Stock Units

Restricted Stock Units and Performance Stock Units

A summary of RSUs and performance stock units, or PSUs, activity for the year ended December 31, 2024 is as follows (in thousands, except weighted-average grant-date fair value):

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29,722 $ 7.49

The fair value of vested RSUs in 2023, 2022 and 2021, were $ 36.6 million and $ 18.5 million and $ 18.1 million, respectively.

Our RSUs consist of time-based RSUs and RSUs with performance conditions.

(1) Granted shares include RSU awards with a market vesting condition granted in July 2024 and reflected at 200 % of target, and RSU awards with market vesting condition granted in November 2024 reflected at 400 % of target.

The fair value of vested RSUs in 2024, 2023 and 2022, was $ 52.1 million, $ 36.6 million and $ 18.5 million, respectively.

Our RSUs consist of time-based RSUs, RSUs with performance and/or market conditions, and RSUs with market conditions.

For the years ended December 31, 2024, 2023 and 2022, total stock-based compensation expense related to RSUs was $ 71.4 million, $ 47.3 million and $ 41.4 million, respectively.

At December 31, 2023, total remaining stock-based compensation expense for unvested RSU awards is $ 112.1 million, which is expected to be recognized over a weighted-average period of 2.7 years.

At December 31, 2024, total remaining stock-based compensation expense for unvested RSU awards was $ 193.1 million, which is expected to be recognized over a weighted-average period of 2.2 years.

There was no tax benefit for 2024, 2023 and 2022.

There was a realized tax benefit of $ 3.5 million for tax deductions from RSU settlements in 2021.

During the year ended December 31, 2024, we granted 2.5 million RSUs with performance and market conditions, or PSUs, to members of our senior leadership team.

The grant date fair value of the PSUs at 100 % of the target was $ 29.8 million.

The weighted-average grant-date fair value per share of the PSUs granted was $ 12.05 .

The fair value of these PSUs was estimated using the Monte Carlo simulation model on the dates of the grant based on the assumptions shown in the table below.

Vesting of the PSUs is contingent upon the recipients’ continuous employment over the requisite service period and was subject to fulfillment by the Company of a predefined profitability target during the performance period.

The number of PSUs subject to vesting was determined at the end of the performance period and could equal zero percent ( 0 %) to two hundred percent ( 200 %) of the target award.

If the performance criteria was achieved, one third of the PSUs would vest on the date the compensation committee of the board of directors certifies achievement of the performance criteria, and the remaining awards would vest quarterly thereafter through February 2027.

These PSU awards also included a modifier to the total number of shares earned based on the Company’s total shareholder return, or TSR, compared to the TSR of the Nasdaq Composite Index during the performance period.

The total number of shares issued pursuant to the PSU award could be increased, decreased, or remain unchanged based on the TSR modifier.

The TSR modifier applicable to the PSUs was considered a market condition and therefore is reflected in the respective grant-date fair values of the awards.

A Monte Carlo simulation was used to account for this market condition in the grant-date fair value of the awards.

Expense related to the PSUs is recognized over the employee’s requisite service period using graded vesting attribution method to the extent it is probable that the performance conditions will be achieved.

We recognized $ 9.2 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

At December 31, 2024, the remaining stock-based compensation expense for

unvested PSUs is $ 7.8 million which is expected to be recognized over a weighted-average requisite service period of approximately 1.2 years.

The assumptions that were used to calculate the grant-date fair value of our PSU grants using a Monte Carlo simulation model were as follows:

Year Ended December 31,

Expected life (years)

Risk-free interest rate

Expected volatility

47.4 %- 66.1 %

Expected dividend yield

In July 2024, we also granted 2.7 million RSUs with a market vesting condition to a member of our senior leadership team.

The grant date fair value of these RSUs at 100 % of the target was $ 13.1 million.

The weighted-average grant-date fair value per share of the RSUs granted was $ 4.89 .

The fair value of the RSUs was estimated on the date of grant using the Monte Carlo simulation model, based on the assumptions shown in the table below.

Vesting of this award is contingent upon the recipient’s continuous employment over the requisite service period and is subject to achievement of predetermined stock price targets during a five-year performance period.

Achievement of the predetermined stock price targets is measured based on a 45 -trading day volume weighted-average closing price of our common stock, subject to a 44 -day extension in certain circumstances.

The number of RSUs subject to vesting during the performance period may equal zero percent ( 0 %) to two hundred percent ( 200 %) of the target award.

Upon the achievement of a stock price target during the performance period, one-half of the eligible RSUs will vest on the date the compensation committee of the board of directors certifies achievement of the stock price target and the other half will vest one year from such date, subject to the recipient’s continued employment through the vesting date.

We recognized $ 4.9 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

At December 31, 2024, the remaining stock-based compensation expense for unvested RSUs is $ 21.2 million which is expected to be recognized over a weighted-average requisite service period of approximately 2.4 years.

The assumptions that were used to calculate the grant-date fair value of the RSUs with a market vesting condition using a Monte Carlo simulation model were as follows:

Year Ended December 31,

Expected life (years)

Risk-free interest rate

Expected volatility

Expected dividend yield

In November 2024, we also granted 2.4 million RSUs with a market vesting condition to members of our senior leadership team.

The grant date fair value of these RSUs at 100 % of the target was $ 12.6 million.

The weighted-average grant-date fair value per share of the RSUs granted was $ 5.30 .

The fair value of the RSUs was estimated using the Monte Carlo simulation model on the date of the grant based on the assumptions shown in the table below.

Achievement of the predetermined stock price targets is measured based on the trailing 30 -trading day volume weighted average closing stock price of our common stock subject to a 29 -day extension in certain circumstances.

The number of RSUs subject to vesting during the performance period may equal zero percent ( 0 %) to four hundred percent ( 400 %) of the target award.

If the compensation committee of the board of directors certifies achievement of a stock price target prior to November 15, 2025, the eligible shares will vest in full and become non-forfeitable on November 15, 2025.

If the compensation committee of the board of directors certifies achievement of a stock price target on or subsequent to November 15, 2025, 100 % of the eligible shares will vest and become non-forfeitable immediately on the date of certification by the compensation committee of the board of directors.

We recognized $ 5.6 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

At December 31, 2024, the

remaining stock-based compensation expense for unvested RSUs is $ 44.8 million which is expected to be recognized over a weighted-average requisite service period of approximately 1.1 years.

The assumptions that were used to calculate the grant-date fair value of the RSUs with a market vesting condition using a Monte Carlo simulation model were as follows:

Year Ended December 31,

Expected life (years)

Risk-free interest rate

Expected volatility

Expected dividend yield

During the year ended December 31, 2023, we also granted 1.3 million PSUs to members of our senior leadership team.

Vesting of the PSUs is contingent upon the recipient’s continuous employment over the requisite service period and is subject to fulfillment by the Company of predefined performance criteria.

Such awards will be earned only if certain performance targets established by and under the direction of the compensation committee of the board of directors are met during the performance period.

The number of PSUs subject to vesting is determined at the end of the performance period and may equal zero percent ( 0 %) to one hundred and fifty percent ( 150 %) of the target award based upon Company’s achievement of certain revenue, profitability, and market share targets.

If the performance criteria are achieved, 75 % of the PSUs will vest on the date the compensation committee of the board of directors certifies achievement of the performance criteria, and the remaining 25 % of the PSUs will vest on the one year anniversary of such certification date.

PSUs are measured based on the fair market value of the underlying stock on the date of grant and recognized as expense over the employee’s requisite service period using graded vesting attribution method to the extent it is probable that the performance conditions will be achieved.

At December 31, 2023, the awards were not probable of vesting, and, consequently, no stock-based compensation expense related to these PSU awards was recognized during the year ended December 31, 2023.

In the event of a change-in-control (as defined in the employment agreement between the Company and each recipient of the performance award), the vesting conditions of the PSUs will be modified resulting in a vesting of a greater of (i) one hundred percent ( 100 %) of the target award, or (ii) the number of shares commensurate with the Company’s market share for the trailing 12-month period ending on the date that is the end of the nearest month prior to the date of the change of control, provided that 75 % of such PSUs will vest on June 30, 2024 and the remaining 25 % of such PSUs will vest on June 30, 2025, subject to the recipients continuing to be service providers through each such date and accelerated if the acquirer does not assume the awards in an economically equivalent manner.

Vesting of the PSUs was contingent upon the recipient’s continuous employment over the requisite service period and was subject to fulfillment by the Company of predefined performance criteria which were not achieved.

Consequently, no stock-based compensation expense related to these PSU awards was recognized during the year ended December 31, 2024.

In November 2022, we granted 211,864 PSUs with a grant date fair value of $ 2.0 million to certain employees where 25 % and 50 % of the PSUs vest upon the first and second anniversaries, respectively, from the Revv asset acquisition date should certain headcount thresholds be maintained, and 25 % will vest upon the third anniversary from the Revv asset acquisition date.

For the years ended December 31, 2023 and 2022, stock-based compensation expense for these PSUs was $ 0.8 million and $ 0.1 million, respectively, and was recognized on a graded vesting basis.

At December 31, 2023, the remaining stock-based compensation expense for unvested PSUs is $ 0.9 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.4 years.

In June 2021, we granted 388,389 RSUs with a grant date fair value of $ 10.9 million to our executive officers that were contingent on the effectiveness of the registration statement of our IPO, or IPO RSUs.

As the IPO was a performance condition, no stock-based compensation expense for the IPO RSUs was recognized until our IPO registration statement was declared effective.

Stock-based compensation expense for the years

ended December 31, 2023, 2022 and 2021 was $ 1.9 million, $ 4.3 million, and $ 3.1 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense for these PSUs was $ 0.7 million, $ 0.8 million and $ 0.1 million, respectively, and was recognized on a graded vesting basis.

At December 31, 2024, the remaining stock-based compensation expense for unvested PSUs was $ 0.2 million, which is expected to be recognized over a weighted-average requisite service period of approximately 0.9 years.

Upon the effectiveness of our IPO and through December 31, 2021, there were 550,091 RSUs that vested.

Such shares of common stock were settled until after the lock-up period relating to our IPO that ended in the fourth quarter of 2021.

In 2021, we granted 1,338,028 liquidity event RSUs, or LERSUs, to various employees, which only vest upon the achievement of up to four years of service and upon the consummation of a change in control, or CIC event, which included an IPO.

If the recipient employee terminates for any reason other than for cause, the employee shall retain any service-vested LERSUs until 6.5 years from the date of grant or the earlier settlement of the service-vested LERSUs upon the consummation of a CIC event.

For the LERSUs, recognition of expense does not occur until the consummation of a CIC event and expense is recognized thereafter for any remaining service period, as such events are not considered probable of occurring prior to the CIC event for stock-based compensation purposes.

Upon the effective date of our IPO registration statement on June 29, 2021, we commenced recognition of stock-based compensation for all LERSUs, as the CIC performance event and service conditions for vested RSUs were satisfied.

In March 2021, we granted 30,434 RSUs to various employees where the RSUs will vest depending upon the appreciation of the fair value of our common stock compared to the grant-date fair value of our common stock and upon the consummation of a CIC event, which included an IPO, merger, acquisition, or sale of more than 50 % of our assets, or performance RSUs.

The performance RSUs vest on a linear basis, starting at 0 % with a fair value of our common stock equal to $ 19.64 per share and ending at 100 % upon reaching a fair value of our common stock of $ 29.46 per share.

The performance options were subsequently modified in June 2021, prior to the effective date of our IPO registration statement, as discussed below.

Stock-option and RSU activity described above, including total stock-based compensation expense recognized and total remaining stock-based compensation expense, is inclusive of awards modified during the period as discussed below.

Modification of Stock-Based Compensation Awards

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The modification to add the foregoing provisions did not result in an incremental fair value of the impacted awards because the original vesting conditions were expected to be satisfied as of the modification date and the termination of the individual’s employment in the event of change-in-control or as a result of his or her death or disability was not probable as of the date of this filing.

In June 2021, we modified the vesting conditions of certain stock options and RSUs as described below.

We modified the vesting conditions of 4,477,218 outstanding performance options of certain executive officers and employees so that the performance options do not fully vest immediately upon an IPO.

Instead, subject to and contingent upon the effective date of an IPO, the modified performance options for executive officers will vest monthly over a four year period from their original vesting commencement dates and the modified performance options of certain employees will vest 25 % on the first anniversary from the vesting commencement date, and then vest monthly over the remaining service period, subject to continued employment through the applicable vesting dates.

As the modified awards contain a performance condition that is satisfied upon an IPO, we remeasured the fair value of the performance options on the date of modification.

This new fair value of $ 76.6 million will be recognized as stock-based compensation expense using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of our IPO registration statement for the modified performance options for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, and all remaining compensation expense will be recognized thereafter over the remaining service period.

recognized stock-based compensation expense of $ 23.3 million from the effective date of our IPO registration statement through June 30, 2021 and we recognized stock-based compensation of $ 24.1 million during the six months ended December 31, 2021.

Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $ 5.9 million and $ 19.9 million, respectively.

At December 31, 2023, remaining compensation of $ 0.9 million will be recognized over a remaining weighted-average service period of 0.7 years.

We modified the vesting conditions of 3,627,936 outstanding 2019 performance options of an executive officer so that in the event of an IPO, the modified 2019 performance options will vest monthly over a four years period from the original vesting commencement date in 2019, subject to continued employment of the executive officer, rather than vesting upon the fourth anniversary of the original date of grant based on achieving certain stock price thresholds.

Incremental stock-based compensation expense as a result of this modification was $ 11.4 million.

Upon our IPO, we recognized stock-based compensation expense for the modified 2019 performance options for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, and all remaining compensation will be recognized thereafter over the remaining service period using the graded vesting method.

We recognized stock-based compensation expense of $ 6.6 million from the effective date of our IPO registration statement through June 30, 2021 and we recognized stock-based compensation of $ 6.7 million during the six months ended December 31, 2021.

Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $ 0.9 million and $ 5.0 million, respectively.

There is no remaining compensation expense to be recognized as of December 31, 2023.

We modified the vesting conditions of 111,902 outstanding performance RSUs of certain employees so that the modified performance RSUs do not vest immediately upon an IPO.

Instead, subject to and contingent upon the effective date of an IPO registration statement, the modified performance RSUs vest 25 % on the first anniversary from their respective vesting commencement dates, then monthly over the remaining service period, subject to the continued employment through the applicable vesting dates.

As the modified RSUs contain a performance condition that is satisfied upon an IPO, we remeasured the fair value of the performance RSUs on the date of modification.

This new fair value of approximately $ 2.9 million will be recognized as stock-based compensation expense using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of our IPO registration statement for the performance RSUs for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, and all remaining compensation will be recognized thereafter over the remaining service period.

We recognized stock-based compensation expense of $ 0.2 million from the effective date of our IPO registration statement through June 30, 2021 and we recognized stock-based compensation of $ 1.2 million during the six months ended December 31, 2021.

Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $ 0.3 million and $ 0.6 million, respectively.

At December 31, 2023, remaining compensation expense of $ 0.1 million will be recognized over a remaining weighted-average service period of 0.8 years.

We modified the vesting conditions of 1,725,942 outstanding LERSUs and 1,706,888 outstanding time-based options of certain executive officers to amend the severance vesting acceleration benefit applicable for the LERSUs and to remove the CIC event vesting acceleration benefit for the time-based options.

There was no incremental stock-based compensation associated with the modification of the time-based options.

We remeasured the fair value of the LERSUs on the date of modification and this new fair value of approximately $ 43.3 million will be recognized using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of our IPO registration statement for the modified LERSUs that have satisfied the service-vesting condition on or prior to the effective date of our IPO registration statement, and all remaining compensation will be recognized thereafter over the remaining service period.

We recognized stock-based compensation expense of $ 7.4 million from the effective date of our IPO registration statement through June 30, 2021 and we recognized stock-based compensation of $ 15.8 million during the six months ended December 31, 2021.

Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $ 5.0 million and $ 13.0 million, respectively.

At December 31, 2023, remaining compensation expense of $ 1.2 million will be recognized over a remaining weighted-average service period of 0.9 years.

During 2021, we modified 63,235 vested options to extend the exercise period for terminated employees who were not able to exercise their options during the IPO lock-up period.

We recognized $ 1.4 million in incremental stock-based compensation related to this modification during the year ended December 31, 2021.

The fair value of the modified 2020 performance options, 2019 performance option, performance RSUs and LERSUs were remeasured using the fair value of our common stock, as approved by the Pricing Committee of our board of directors, which was $ 25.50 per share, the midpoint of the price range set forth on the cover page of the preliminary prospectus filed with the SEC on June 21, 2021 as part of our registration statement on Form S-1.

Net Income (Loss) Per Share Attributable to Common Stockholders

The following table shows the computation of basic and diluted net (loss) income per share attributable to common stockholders (in thousands, except per share amounts):

Net Income (Loss) Per Share

The following table shows the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Year Ended December 31,

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$ 29,963 $ 13,953 $ ( 48,733 )

Net income (loss) attributable to common stockholders—basic and diluted

Net income (loss) — basic and diluted

$ 29,963 $ 13,953 $ ( 48,733 )

Weighted-average common stock used in computing net (loss) income per share attributable to common stockholders—basic

Weighted-average shares used in computing net income (loss) per share — basic

180,210 190,466 195,829

Effect of potentially dilutive securities:

Options to purchase common stock

Stock options

Restricted stock units

1,893 2,558 —

Employee stock purchase plan

Weighted-average common stock used in computing net (loss) income per share attributable to common stockholders—diluted

Weighted-average shares used in computing net income (loss) per share — diluted

182,865 194,415 195,829

Net (loss) income per share attributable to common stockholders—basic

Net income (loss) per share — basic

$ 0.17 $ 0.07 $ ( 0.25 )

Net (loss) income per share attributable to common stockholders—diluted

Net income (loss) per share — diluted

$ 0.16 $ 0.07 $ ( 0.25 )

The following table presents the number of stock options, RSUs, and PSUs excluded from the calculation of diluted net income (loss) per share attributable to common stockholders because they are anti-dilutive (in thousands):

The following table presents the number of stock options, RSUs, and PSUs excluded from the calculation of diluted net income (loss) per share because they are anti-dilutive (in thousands):

As of December 31,

2024 2023 2022

Options to purchase common stock

Stock options

11,512 10,714 17,155

Restricted stock units

13,932 7,426 8,879

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$ 208,970 $ — $ 1,159

Contingent consideration — — 836

Total liabilities

$ — $ — $ 836

During the year ended December 31, 2023, we recorded a $ 0.8 million reduction in fair value of contingent consideration from our acquisition of UAS as a component of cost of revenue because the earnout metrics were not achieved.

There was no change in the fair value of the contingent consideration from our acquisition of UAS for the year ended December 31, 2022.

Restructuring

From time to time, we initiate cost reduction activities to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations.

In August 2024, we

committed to a restructuring plan resulting in a reduction of our global workforce.

This restructuring plan was substantially completed by September 30, 2024.

During the year ended December 31, 2024 , we recognized $ 4.8 million in severance and other termination benefits in conjunction with the foregoing restructuring plan.

In 2023 and 2022, we incurred $ 3.7 million and $ 1.9 million, respectively, in severance and related termination benefits costs related to a reduction in headcount in our U.S.

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Total income (loss) before income taxes $ 43,083 $ 31,494 $ ( 47,673 )

The details for the provision for (benefit from) for income taxes by jurisdiction are as follows (in thousands):

The details for the provision for income taxes by jurisdiction are as follows (in thousands):

Year Ended December 31,

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State ( 736 ) ( 769 ) ( 1,935 )

Total deferred provision 4,712 ( 793 ) ( 11,595 )

Total provision for (benefit from) income tax $ 17,541 $ 1,060 $ ( 10,951 )

The provision for income taxes for the year ended December 31, 2023 and 2022 reflected the impact of a change in U.S.

tax law effective January 1, 2022, which requires the capitalization and amortization of research and development expenditures incurred after December 31, 2021.

Total deferred (benefit from) provision for income taxes ( 4,552 ) 4,712 ( 793 )

Total provision for income tax $ 13,120 $ 17,541 $ 1,060

In August 2022, the Inflation Reduction Act of 2022, or IRA, was enacted.

The IRA introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations, effective for tax years beginning after December 31, 2022.

The Company considered the applicable tax law changes concluding there is no impact to the Company’s tax provision for the twelve months ended December 31, 2023.

The Company considered the applicable tax law changes concluding there is no impact to the Company’s tax provision for the twelve months ended December 31, 2024 and 2023.

The provision for (benefit from) income taxes for December 31, 2024, 2023, and 2022, differed from the amounts computed by applying the U.S.

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Other ( 330 ) ( 98 ) 4

Total provision for (benefit from) income taxes $ 17,541 $ 1,060 $ ( 10,951 )

Total provision for income taxes $ 13,120 $ 17,541 $ 1,060

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities consisted of the following as of December 31, 2024 and 2023, (in thousands):

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Impairment on investment — 1,445

As of December 31,

Net operating loss carryforwards 14,918 14,492

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Net deferred tax assets and liabilities $ 34,696 $ 29,015

We evaluated the realizability of net deferred tax assets and determined it is more likely than not that separate state net operating losses, state net operating losses from the acquisition of LegalInc, capital loss carryovers from the acquisition of Earth Class Mail, the deferred tax assets for Pulse IP, LLC and Pulse Business, LLC, and foreign deferred tax assets will not be realized based on the available objective evidence and have recorded a valuation allowance on such deferred tax assets.

We evaluated the realizability of net deferred tax assets and determined it is more likely than not that separate state net operating losses, state net operating losses from the acquisition of LegalInc, the deferred tax assets for Pulse IP, LLC and Pulse Business, LLC, and foreign deferred tax assets, excluding Poland, will not

be realized based on the available objective evidence and have recorded a valuation allowance on such deferred tax assets.

The following table summarizes the valuation allowance:

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$ 16,320 $ 14,644 $ 14,170

Net increase in current year 799 91 1,312

Net increase (decrease) in valuation prior period 877 383 ( 14 )

Net decrease in valuation allowance from acquisitions — — ( 78 )

Net (decrease) increase in current year ( 654 ) 799 91

Net increase in valuation prior period 1,210 877 383

Ending balance

$ 16,876 $ 16,320 $ 14,644

Net changes in the valuation allowance in the years ended December 31, 2023, 2022, and 2021 include changes recorded through earnings relating to losses primarily from foreign operations and to a lesser extent valuation allowances established relating to acquired businesses.

Net changes in the valuation allowance in the years ended December 31, 2024, 2023, and 2022 include changes recorded through earnings relating to losses primarily from foreign operations and the current year release of the valuation allowance on the capital loss carryover from the acquisition of Earth Class Mail, Inc.

and the release of the valuation allowance on one of the foreign entities.

At December 31, 2024 and 2023, we had federal net operating loss, or NOL, carryforwards of $ 16.6 million and $ 17.2 million, respectively, which will begin to expire in 2036.

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At December 31, 2024 and 2023, we had foreign NOL carryforwards of $ 35.1 million and $ 30.3 million, respectively, which can be carried forward indefinitely and are not subject to expiration.

At December 31, 2023, our federal tax credit carryforwards were immaterial.

At December 31, 2022, we had federal tax credit carryforwards of $ 7.1 million, which will begin to expire in 2039.

At December 31, 2024,and 2023, our federal tax credit carryforwards were immaterial.

At December 31, 2024 and 2023, we had state tax credit carryforwards of $ 13.9 million and $ 12.6 million, respectively, which carry forward indefinitely.

Our domestic entities may be subject to an annual limitation on the utilization of NOL and credit carryforwards based on changes in ownership as defined by Section 382 of the Internal Revenue Code of 1986 .

In 2021 we acquired Earth Class Mail and in 2022 we acquired Revvsales Inc.

Both were structured as stock acquisitions.

Since there was a change in ownership, the acquired NOL carryforwards are subject to an annual Section 382 limitation on the utilization of the NOL carryforwards.

In 2022 we acquired Revvsales Inc.

as a stock acquisition, since there was a change in ownership, the acquired NOL carryforwards are subject to an annual Section 382 limitation on the utilization of the NOL carryforwards.

We have had foreign operations since 2013.

We have not provided for U.S.

income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries as they are considered

indefinitely reinvested outside the U.S.

income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries as they are considered indefinitely reinvested outside the U.S.

At December 31, 2024, 2023, and 2022, the amount of temporary differences related to undistributed earnings and other outside temporary differences upon which U.S.

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Additions for tax positions related to the current year 999

Reductions for tax positions related to prior years ( 245 )

Additions for tax positions related to prior years 48

Balance at December 31, 2022 $ 8,920

3 unchanged sentences

Additions for tax positions related to the current year 2,854

Additions for tax positions related to prior years 418

Reductions for tax positions related to prior years ( 966 )

Balance at December 31, 2024 $ 13,407

3 unchanged sentences

Our policy is to recognize interest and penalties related to income tax matters in income tax expense.

At December 31, 2023 and 2022, accrued interest and penalties related to income tax positions were not material to our consolidated financial statements.

At December 31, 2024 and 2023, accrued interest and penalties related to income tax

positions were not material to our consolidated financial statements.

We do not anticipate that unrecognized tax benefits will materially change within the next twelve months.

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federal, state, and foreign jurisdictions.

The federal income tax returns for the years 2020 through 2022 and state income tax returns for the tax years 2008 through 2022 remain open to examination.

We are under examination in one state which is not expected to have an impact on our results of operations, cash flows and financial condition.

Related Party Transactions

In addition to related party transactions disclosed in Note 14, in 2021, we incurred software and software maintenance fees of $ 0.9 million, from two software vendors controlled by our then-largest stockholder.

The federal income tax returns for the years 2021 and forward and state income tax returns for the tax years 2008 and forward remain open to examination.

We are under examination in two states which are not expected to have an impact on our results of operations, cash flows and financial condition.

401(k) Savings Plan

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We contributed $ 4.0 million, $ 4.0 million, and $ 3.7 million to the 401(k) plan in 2024, 2023, and 2022, respectively.

Accumulated Other Comprehensive (Loss) Income

Changes in accumulated other comprehensive (loss) income consisted of the following:

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) consisted of the following:

Year Ended December 31, 2024

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Available-for-sale debt securities:

Year Ended December 31, 2023

(in thousands) Before Tax

Amount Tax Effect Net of Tax

Beginning balance $ 324 $ ( 80 ) $ 244

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Beginning balance $ 312 $ ( 80 ) $ 232

Other comprehensive loss ( 1,230 ) ( 35 ) ( 1,265 )

Other comprehensive income 681 ( 52 ) 629

Ending balance $ 993 $ ( 132 ) $ 861

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Beginning balance $ 184 $ ( 45 ) $ 139

Unrealized loss ( 147 ) 3 ( 144 )

Unrealized gains 140 ( 35 ) 105

Ending balance $ 324 $ ( 80 ) $ 244

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Beginning balance $ 1,542 $ ( 45 ) $ 1,497

Other comprehensive income 3,289 3 3,292

Other comprehensive loss ( 1,230 ) ( 35 ) ( 1,265 )

Ending balance $ 312 $ ( 80 ) $ 232

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Beginning balance $ 331 $ ( 48 ) $ 283

Unrealized gains 50 ( 12 ) 38

Ending balance $ 331 $ ( 48 ) $ 283

Cash flow hedges:

Beginning balance $ ( 14,708 ) $ 3,650 $ ( 11,058 )

Unrealized gain on interest rate swaps and cap 2,897 ( 1,449 ) 1,448

Reclassification of losses from interest rate cap to net loss 28 ( 8 ) 20

Reclassification of prior hedge effectiveness to net loss 3,076 ( 781 ) 2,295

Reclassification to net loss upon extinguishment of interest rate swaps $ 8,707 $ ( 1,412 ) 7,295

Unrealized loss ( 147 ) 3 ( 144 )

Ending balance $ 184 $ ( 45 ) $ 139

Accumulated other comprehensive loss:

Year Ended December 31, 2021

(in thousands) Before Tax

Amount Tax Effect Net of Tax

Beginning balance $ ( 1,747 ) $ ( 48 ) $ ( 1,795 )

1 unchanged sentence

Ending balance $ 1,542 $ ( 45 ) $ 1,497

Segment Information

Our Chief Executive Officer, as the Chief Operating Decision Maker, or CODM, organizes our company, manages resource allocations, and measures performance on the basis of one operating segment on a consolidated basis.

The accounting policies of our operating segment are the same as those described in Note 2, Summary of Significant Accounting Policies .

The CODM assesses performance for the segment and decides how to allocate resources based on net income (loss) that also is reported on the accompanying consolidated statements of operations as consolidated net income (loss).

The measure of segment assets is reported on the accompanying consolidated balance sheets as total assets.

The CODM uses net income (loss) to evaluate income generated from segment assets in making key operating and segment resource allocation decisions, such as investments in new product development.

Net income (loss) is also used to monitor budget versus actual results and to establish management’s compensation.

The Company has one reportable segment which provides online platform for business formation in the United States, or U.S., and, as described in Note 2, Summary of Significant Accounting Policies, generates revenue from customized legal document services and subscriptions offered to our customers.

Revenue outside of the U.S., based on the location of the customer, represented less than 1 % of our revenue for the years ended December 31, 2024, 2023 and 2022.

Our property and equipment and right-of-use, or ROU, assets located outside of the U.S.

were immaterial as of December 31, 2024 and 2023.

The following table summarizes financial information by reportable segment regularly provided to the CODM (in thousands):

Year Ended December 31,

2024 2023 2022

Transaction Revenue $ 245,692 $ 247,780 $ 260,781

Subscription Revenue $ 436,189 $ 412,947 $ 359,198

Total revenue $ 681,881 $ 660,727 $ 619,979

Filings fees $ 83,269 $ 88,103 $ 74,059

Other cost of revenue, excluding depreciation, amortization and stock-based compensation $ 132,089 $ 134,070 $ 125,524

Customer acquisition marketing $ 157,578 $ 145,338 $ 174,636

Other sales and marketing, excluding depreciation, amortization and stock-based compensation $ 38,293 $ 54,152 $ 72,090

Year Ended December 31,

2024 2023 2022

Technology and development, excluding depreciation, amortization and stock-based compensation $ 62,323 $ 60,098 $ 51,026

General and administrative, excluding depreciation, amortization, stock-based compensation, and restructuring $ 60,215 $ 61,843 $ 60,126

Stock-based compensation $ 71,510 $ 66,015 $ 80,469

Depreciation and amortization $ 34,927 $ 25,383 $ 21,745

Interest income $ ( 7,850 ) $ ( 9,307 ) $ ( 1,803 )

Interest expense $ 446 $ 493 $ 260

Restructuring (1)

$ 6,096 $ 4,666 $ 1,795

Other segment items (2)

$ ( 98 ) $ ( 1,621 ) $ 4,477

Provision for income taxes $ 13,120 $ 17,541 $ 1,060

Impairment of long-lived assets $ — $ — $ 248

Impairment of other equity security $ — $ — $ 3,000

Segment net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

Reconciliation of profit or loss

Adjustments and reconciling items $ — $ — $ —

Consolidated net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

(1) For 2024, restructuring costs related to the reduction of our global workforce.

For 2023, restructuring costs related to the reduction of our U.S.

For 2022, restructuring expenses related to a phased severance event to reduce the U.S.

headcount in June and August 2022.

Restructuring expenses include salary and benefits for the impacted employees and are included in general and administrative expenses in the consolidated statements of operations.

(2) Other segment items included in segment net income (loss) primarily consist of foreign currency gains or losses related to our intercompany loans which were denominated in British Pound Sterling, or GBP, and included in other income (expense), net on the consolidated statements of operations.

Subsequent Events

On February 10, 2025, we acquired all of the outstanding equity interests of Formation Nation, Inc., or Formation Nation, a small business service company that provides business formation and compliance services, for total cash consideration of $ 64.8 million and 2,205,445 restricted shares of our common stock.

The shares are subject to a lock-up and voting agreement, and a portion of the cash consideration is subject to a one year holdback and customary adjustments.

This acquisition is intended to accelerate our strategy of attracting higher value customers by leveraging Formation Nation’s established customer service teams.

We are currently in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of 2025.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

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 8. Financial Statements and Supplementary Data