What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-06 · 147 added, 98 removed, 476 unchanged (34% of the section changed)

36 unchanged sentences

Authorized 1,000,000 shares;

issued and outstanding 224,329 and 220,978 shares at March 31, 2022 and December 31, 2021, respectively

issued and outstanding 224,756 and 220,978 shares at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

8 unchanged sentences

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share amounts)

15 unchanged sentences

Interest expense

Other (expense) income, net

Other income (expense), net

Other comprehensive loss:

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(Loss) Income

For the three months ended March 31, 2022

Balance at December 31, 2021

For the three months ended June 30, 2022

Balance at March 31, 2022

( 1,299,591 )

Other comprehensive income

Other comprehensive loss

Issuance of common stock in conjunction with equity plans

Stock-based compensation expense

Balance at June 30, 2022

( 1,370,985 )

For the three months ended June 30, 2021

Balance at March 31, 2021

( 1,124,304 )

For the three months ended March 31, 2021

Other comprehensive loss

Issuance of common stock in conjunction with equity plans

Stock-based compensation expense

Balance at June 30, 2021

( 1,165,305 )

For the six months ended June 30, 2022

Balance at December 31, 2021

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Stock-based compensation expense

Balance at March 31, 2021

Balance at June 30, 2022

( 1,370,985 )

For the six months ended June 30, 2021

Balance at December 31, 2020

( 1,036,869 )

Other comprehensive loss

Issuance of common stock in conjunction with equity plans

Stock-based compensation expense

Balance at June 30, 2021

( 1,165,305 )

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Maturities of investments

Net cash provided by investing activities

Net cash used in investing activities

Cash flows from financing activities

4 unchanged sentences

Net cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

25 unchanged sentences

On an ongoing basis, we evaluate our significant estimates including, but not limited to, the valuation of inventory, the determination of stand-alone selling prices for revenue recognition, the fair value of contingent consideration, the valuation of acquired intangible assets, the fair value of certain equity awards, the useful lives assigned to long-lived assets, the computation of provisions for income taxes, the borrowing rate used in calculating the operating lease right-of-use assets and operating lease liabilities, the probability associated with variable payments under partnership development agreements, and the valuations related to our convertible senior notes.

While the extent of the potential impact of the ongoing COVID-19 pandemic on our business is highly uncertain, we considered information available related to assumptions and estimates used to determine the results reported and asset valuations as of March 31, 2022.

Actual results could differ materially from these estimates.

1 unchanged sentence

We consider all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.

Cash equivalents may be comprised of money market funds, certificates of deposit, commercial paper, corporate bonds and notes, and government agencies’ securities.

We classify our investments in debt securities as available-for sale and report the investments at fair value in current assets.

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Premium and discount amortization is recorded in other income, net.

Our investment portfolio at any point in time contains investments in cash deposits, money market funds, commercial paper, corporate debt securities and US government and agency securities with high credit ratings.

Our investment portfolio at any point in time contains investments in cash deposits, money market funds, commercial paper, corporate debt securities and U.S.

government and agency securities with high credit ratings.

We have established guidelines regarding diversification and maturities of investments with the objectives of maintaining safety and liquidity, while maximizing yield.

Concentration and Other Risks

For the three months ended March 31, 2022, two customers accounted for approximately 14 % and 11 %, respectively, of total revenue during the period.

For the three months ended March 31, 2021, one customer accounted for approximately 12 % of total revenue during the period.

For the three months ended June 30, 2022, one customer accounted for approximately 11 % of total revenue during the period.

For the six months ended June 30, 2022, no customers exceeded 10%.

For the three and six months ended June 30, 2021, one customer accounted for approximately 17 % and 14 % of total revenue during the period.

No other customers exceeded 10% during those periods.

As of March 31, 2022, 56 % of our accounts receivable were from domestic customers, compared to 53 % as of December 31, 2021.

As of March 31, 2022, one customer represented 17 % of our accounts receivable, while no customer represented 10% or greater of our net accounts receivable as of December 31, 2021.

As of June 30, 2022, 57 % of our accounts receivable were from domestic customers, compared to 53 % as of December 31, 2021.

As of June 30, 2022, one customer represented 11 % of our accounts receivable, while no customer represented 10% or greater of our net accounts receivable as of December 31, 2021.

Recent Accounting Pronouncements

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Significant Accounting Policies

There have been no changes to our significant accounting policies as disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, however, as a result of certain changes to the standard contractual terms and conditions with customers implemented during the quarter ended March 31, 2022, we concluded a change in the application of our accounting policy, in accordance with ASC 606, was appropriate.

Specifically, we modified the standard contractual terms with customers during the current quarter, to reflect transfer of title and risk of loss and right to invoice upon delivery.

There have been no changes to our significant accounting policies as disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, however, as a result of certain changes to the standard contractual terms and conditions with customers implemented during the quarter ended March 31, 2022, we concluded that a change in the application of our accounting policy, in accordance with ASC 606, was appropriate.

Specifically, we modified the standard contractual terms with customers during the first quarter of 2022, to reflect transfer of title and risk of loss and right to invoice upon delivery.

We also updated the terms of the warranty provided with the instrument to remove the service component.

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(“Omniome”), a San Diego-based company developing a highly differentiated, proprietary short-read DNA sequencing platform capable of delivering high accuracy.

In connection with the acquisition, the contingent consideration of $ 200 million (composed of $ 100 million in cash and $ 100 million in shares of our common stock) is due upon the achievement of a milestone, defined as the first commercial shipment to a customer of a nucleotide sequencing platform, comprising both an instrument and related consumables, that utilizes SBB technology.

In connection with the acquisition, contingent consideration of $ 200 million (composed of $ 100 million in cash and $ 100 million in shares of our common stock) is due upon the achievement of a milestone, defined as the first commercial shipment to a customer of a nucleotide sequencing platform, comprising both an instrument and related consumables, that utilizes SBB technology.

The number of shares of stock to be issued will be determined using the volume-weighted average of the trading prices of our common stock for the twenty trading days ending with and including the trading day that is two days immediately prior to the achievement of the milestone.

Of the $ 100 million in shares of our common stock to be issued as part of the milestone, $ 4.1 million was attributable to stock options issued by PacBio in replacement of Omniome’s unvested options as part of the transaction.

Upon achievement of the milestone, shares will be issued not in excess of an amount equal to 19.9 % of our outstanding shares of common stock on the date of closing (prior to the issuance of any shares issued in connection with the transaction or the related private placement), less 11,500,000 shares.

The contingent consideration is accounted for as a liability at fair value, with changes during each reporting period recognized in our Consolidated Statements of Operations and Comprehensive Loss.

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Total consideration transferred

We expect to finalize the purchase price allocation within 12 months of the acquisition date.

We will record adjustments to the fair value of the assets acquired, liabilities assumed and goodwill within the twelve-month measurement period, if necessary, which we expect to be primarily due to the review of certain tax attributes.

INVITAE COLLABORATIO N

On January 12, 2021 we entered into a multi-year Development and Commercialization Agreement (the “Development Agreement”) with Invitae Corporation (“Invitae”).

Pursuant to the Development Agreement, Invitae is providing certain funding to us to develop products relating to production-scale high-throughput sequencing (“Program Products”).

If Program Products become commercially available, Invitae may purchase the Program Products.

We are currently renegotiating the terms of the Development Agreement.

As of March 31, 2022 and December 31, 2021, we have recognized payments received from Invitae of $ 23.5 million in deferred revenue, non-current, on the Consolidated Balance Sheet.

On June 24, 2022, we entered into an Amended and Restated Development and Commercialization Agreement (the “Amended and Restated Agreement”) with Invitae Corporation (“Invitae”).

The Amended and Restated Agreement amended and restated the existing Development and Commercialization Agreement, effective as of January 12, 2021, as amended by Amendment No.

1 to Development and Commercialization Agreement, entered into on June 3, 2021, by and between us and Invitae (together, the “Original Agreement”).

Unless otherwise agreed in writing or terminated in accordance with the Amended and Restated Agreement, the term of the Amended and Restated Agreement shall continue until June 30, 2028 (“Term”).

Pursuant to the Original Agreement, Invitae provided certain funding to us to develop products relating to production-scale high-throughput sequencing (“Program Products”).

If Program Products were to become commercially available, Invitae had the right to purchase the Program Products at preferred pricing.

Under the Amended and Restated Agreement, we will continue to receive feedback, input and insight from Invitae in connection with the intended development of our new sequencing systems;

however, such feedback will not be contractually required, and Invitae has no contractual right to participate in decisions regarding the development program for such new sequencing systems.

Our development plans for such new sequencing systems will be at our discretion and pursuant to our own internal processes and programs.

Invitae will not be contractually obligated to reimburse us for development costs under the Amended and Restated Agreement.

There can be no assurances that the in-development sequencing systems will continue to be developed, be successfully developed or become available for commercial sale.

In consideration of the non-refundable payments received from Invitae pursuant to the Original Agreement of $ 23.5 million, we will provide Invitae with credits in connection with Invitae’s anticipated purchase of certain currently available and in-development sequencing systems (instruments and consumables).

The credits will expire on June 30, 2025 (“Credit Expiration Date”).

Subject to certain conditions, Invitae will also be entitled to most favored pricing for the Company’s Sequel IIe systems and certain in-development systems through the Term.

We and Invitae may terminate the Amended and Restated Agreement if the other party remains in material breach of the Amended and Restated Agreement following a cure period to remedy the material breach.

The Amended and Restated Agreement is deemed a contract modification and accounted for on a prospective basis in accordance with ASC Topic 606.

We will recognize proportionate amounts of the transaction price, including payments made by Invitae to us pursuant to the Original Agreement, in revenue as the remaining performance obligations are satisfied, which is when Invitae places purchase orders for certain currently available and in-development sequencing platforms and the associated goods are delivered.

Any remaining unused credits will be recognized when they expire.

During the three months ended June 30, 2022, Invitae purchased certain currently available instruments, for which $ 3.7 million of revenue was recognized as Product Revenue on the Condensed Consolidated Statements of Operations and Comprehensive Loss under the terms of the Amended and Restated Agreement.

As of December 31, 2021, we have recognized payments received from Invitae of $ 23.5 million in deferred revenue, non-current, on the Consolidated Balance Sheet.

As of June 30, 2022, $ 21.4 million of deferred revenue, current, is recorded on the Condensed Consolidated Balance Sheet relating to all future performance obligations under the Amended and Restated Agreement.

TERMINATION OF MERGER WITH ILLUMINA

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of March 31, 2022 and December 31, 2021 respectively:

March 31, 2022

The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of June 30, 2022 and December 31, 2021 respectively:

June 30, 2022

December 31, 2021

1 unchanged sentence

Cash and cash equivalents

Cash and money market funds

Commercial paper

government & agency securities

Treasury securities

Total cash and cash equivalents

Commercial paper

Corporate debt securities

7 unchanged sentences

We classify contingent consideration, which was incurred in connection with the acquisition of Omniome, within Level 3 as factors used to develop the estimate of fair value include unobservable inputs that are not supported by market activity and are significant to the fair value.

On a quarterly basis, we estimate the fair value of the contingent consideration liability by discounting the probability-weighted outcomes to present value using an estimate of our borrowing rate and the risk-free rate.

We estimate the fair value of the contingent consideration liability by discounting the probability-weighted outcomes to present value using an estimate of our borrowing rate and the risk-free rate.

The potential outcomes of milestone achievement dates are within the period from December 31, 2022 to June 30, 2025.

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risk-free rate and the estimated subordinated credit spread for B- and B credit rating, which range from 10.0 % to 10.2 %.

An increase in the discount rates used can also result in the decrease in the fair value of liability, which was the primary factor in the $ 1.1 million decrease in liability at March 31, 2022.

An increase in the discount rates used can also result in the decrease in the fair value of liability, which was the primary factor in the $ 6.5 million decrease in liability at June 30, 2022.

Changes in our estimated subordinated credit spread can result in changes in the fair value of the contingent consideration liability, where a lower credit spread may result in an increased liability valuation.

Changes in the estimated fair value of the contingent consideration liability for the three months ended March 31, 2022 were as follows:

Changes in the estimated fair value of the contingent consideration liability for the six months ended June 30, 2022 were as follows:

(in thousands)

1 unchanged sentence

Change in estimated fair value

Ending balance as of March 31, 2022

Ending balance as of June 30, 2022

Changes to the fair value are recorded as the Change in fair value of contingent consideration in the Condensed Consolidated Statement of Operations and Comprehensive Loss.

For the three months ended March 31, 2022, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis, and our valuation techniques did not change compared to the prior year.

The following tables summarize our cash, cash equivalents and investments as of March 31, 2022 and December 31, 2021 (in thousands):

As of March 31, 2022

For the six months ended June 30, 2022, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis, and our valuation techniques did not change compared to the prior year.

The following tables summarize our cash, cash equivalents and investments as of June 30, 2022 and December 31, 2021:

As of June 30, 2022

(in thousands)

Cash and cash equivalents

Cash and money market funds

Commercial paper

government & agency securities

Treasury securities

Total cash and cash equivalents

Commercial paper

Corporate debt securities

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Cash and cash equivalents

Cash and money market funds

Commercial paper

government & agency securities

Total cash and cash equivalents

Commercial paper

Corporate debt securities

4 unchanged sentences

Long-term restricted cash

The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of March 31, 2022:

The following table summarizes the contractual maturities of our cash equivalents and available-for-sale investments, excluding money market funds, as of June 30, 2022:

(in thousands)

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Short-term Restricted Cash

As of March 31, 2022 and December 31, 2021, the short-term restricted cash balance was $ 0.5 million, which was comprised of security deposits for the credit cards of employees.

As of June 30, 2022 and December 31, 2021, the short-term restricted cash balance was $ 0.3 million and $ 0.5 million, respectively, which was comprised of security deposits for the credit cards of employees.

Inventory, net

As of March 31, 2022 and December 31, 2021, our inventory, net, consisted of the following components:

As of June 30, 2022 and December 31, 2021, our inventory, net, consisted of the following components:

(in thousands)

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Subsequently, pursuant to the terms of the O’Brien Lease, beginning on May 1, 2019, the amount of the letter of credit was reduced by $ 0.5 million each year thereafter on May 1.

As such, $ 3.0 million was recorded in long-term restricted cash related to the O’Brien Lease in the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

As such, $ 2.5 million and $ 3.0 million was recorded in long-term restricted cash related to the O’Brien Lease in the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively.

In connection with the acquisition of Omniome in September 2021, we acquired $ 1.6 million of long-term restricted cash related to a letter of credit established for a facility lease.

At March 31, 2022, we had an additional $ 0.4 million in long-term restricted cash primarily related to lease deposits.

Long-term restricted cash related to this facility was $ 0 and $ 1.6 million in the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, we had an additional $ 0.4 million in long-term restricted cash primarily related to a letter of credit established for a facility lease.

Intangible Assets and Goodwill

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In addition to IPR&D, we had the following definite-lived intangible assets from business acquisitions (in thousands, except years):

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

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Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment.

We had no indicators of impairment related to goodwill during the three months ended March 31, 2022.

We performed our annual assessment for goodwill impairment in the second quarter of 2022, noting no impairment.

Deferred revenue

As of March 31, 2022, we had a total of $ 38.0 million of deferred revenue, $ 12.7 million of which was recorded as deferred revenue, current and primarily relates to deferred service contract revenues to be recognized over the next year and the remaining $ 25.2 million was recorded as deferred revenue, non-current.

Of the deferred revenue, non-current balance, $ 23.5 million relates to payments received under the Invitae collaboration described in Note 3.

Invitae Collaboration in Part I, Item 1 of this Quarterly Report on Form 10-Q and $ 1.7 million primarily relates to deferred service contract revenues and is scheduled to be recognized in the next 5 years.

Revenue recorded in the three months ended March 31, 2022 includes $ 4.0 million of previously deferred revenue that was included in deferred

revenue, current as of December 31, 2021.

Contract assets as of March 31, 2022 and December 31, 2021 were not material.

As of March 31, 2022, we had a total of $ 0.6 million of deferred commissions included in prepaid expenses and other current assets which is recognized as sales, general and administrative expense as the related revenue is recognized.

As of June 30, 2022, we had a total of $ 33.9 million of deferred revenue, $ 32.1 million of which was recorded as deferred revenue, current, and primarily relates to future performance obligations under the Amended and Restated Agreement with Invitae as described in Note 3.

Invitae Collaboration in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The deferred revenue, non-current balance of $ 1.8 million primarily relates to deferred service contract revenues and is scheduled to be recognized in the next 5 years.

Revenue recorded in the six months ended June 30, 2022 includes $ 9.2 million of previously deferred revenue that was included in deferred revenue as of December 31, 2021.

Contract assets as of June 30, 2022 and December 31, 2021 were not material.

As of June 30, 2022, we had a total of $ 0.6 million of deferred commissions included in prepaid expenses and other current assets which is recognized as sales, general and administrative expense as the related revenue is recognized.

Costs to obtain a contract are expensed as incurred if the amortization period would have been a year or less.

Product Warranties

We generally provide a one-year warranty on instruments.

In addition, we provide a limited warranty on consumables.

At the time revenue is recognized, an accrual is established for estimated warranty costs based on historical experience as well as anticipated product performance.

We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred.

Warranty expense is recorded as a component of cost of product revenue.

There were no material changes in estimates for the periods presented below.

Changes in the reserve for product warranties were as follows for the periods indicated (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Balance at beginning of period

Additions charged to cost of product revenue

Repairs and replacements

Balance at end of period

In connection with the acquisition of Omniome, we acquired $ 1.3 million in short-term debt and $ 3.0 million in long-term debt relating to a term loan facility that Omniome obtained in April 2020.

Borrowings on the term loan facility were used to fund Omniome’s purchases of equipment, which serves as collateral.

Each term loan has a term of 43 months and bears a fixed interest rate of approximately 17 % annually.

Each term loan has a term of 43

months and bears a fixed interest rate of approximately 17 % annually.

The fee for the elective option to prepay all, but not less than all, of the borrowed amounts at any time after the 24 th month and before the 43 rd month after the commencement date, is 4 % of the outstanding loan balance.

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We incurred issuance costs related to the Notes of approximately $ 4.5 million, which were recorded as debt issuance cost and are presented as a reduction to the Notes on our Consolidated Balance Sheets and are amortized to interest expense using the effective interest method over the term of the Notes, resulting in an effective interest rate of 1.6 %.

As of March 31, 2022 and December 31, 2021, the net carrying amount of the liability for the Notes is recorded as convertible senior notes, net, in the Condensed Consolidated Balance Sheets as follows (in thousands):

As of June 30, 2022 and December 31, 2021, the net carrying amount of the liability for the Notes is recorded as convertible senior notes, net, in the Condensed Consolidated Balance Sheets as follows:

(in thousands)

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Net carrying amount

For the three months ended March 31, 2022, interest expense for the Notes was as follows (in thousands):

Three Months Ended March 31,

For the three and six months ended June 30, 2022, interest expense for the Notes was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2 unchanged sentences

Total interest expense

As of March 31, 2022, the estimated fair value (Level 2) of the Notes was $ 654.3 million.

As of June 30, 2022, the estimated fair value (Level 2) of the Notes was $ 559.8 million.

The fair value of the Notes is estimated using a pricing model that is primarily affected by the trading price of our common stock and market interest rates.

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CN101743321B (the “CN321 Patent”), which is related to the ‘441 Patent.

We were served on January 20, 2021 and plan to vigorously defend in this matter.

On November 23, 2020 we filed an Invalidation Petition at the China National Intellectual Property Administration (CNIPA) demonstrating the invalidity of the claims in the CN321 Patent on grounds of insufficient disclosure, and the lack of support, essential technical features, clarity, novelty, and inventiveness.

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On September 2, 2021, the CNIPA issued its decision on the Invalidation Petition and determined that all claims (1-61) of the CN321 patent were invalid.

We have filed a petition with the Wuhan Intermediate People’s court requesting dismissal of the infringement action.

On December 1, 2021, PGI filed an appeal with the Beijing IP Court, contesting the CNIPA decision.

We filed a petition with the Wuhan Intermediate People’s court requesting dismissal of the infringement action based on the CNIPA invalidation decision, and PGI filed a petition to withdraw its complaint.

The Wuhan Intermediate People’s court granted PGI’s petition and dismissed the infringement action in May 2022.

Other Proceedings

From time to time, we may also be involved in a variety of other claims, lawsuits, investigations and proceedings relating to securities laws, product liability, patent infringement, contract disputes, employment and other matters that arise in the normal course of our business.

arise in the normal course of our business.

In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications.

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To the extent that any such indemnification obligations apply to the lawsuits described above, any associated expenses incurred are included within the related accrued litigation expense amounts.

No additional liability associated with such indemnification obligations has been recorded as of March 31, 2022 and December 31, 2021.

No additional liability associated with such indemnification obligations has been recorded as of June 30, 2022 and December 31, 2021.

STOCKHOLDERS’ EQUITY

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We reserved 2,494,128 shares of our common stock for issuance pursuant to equity awards under the Omniome Plan.

As of March 31, 2022, we had 1.2 million shares remaining and available for future issuance under the 2020 Plan, Inducement Plan, and the Omniome Plan.

On May 25, 2022, stockholders approved an amendment to the 2020 Plan and we reserved an additional 18,000,000 shares of our common stock for issuance pursuant to equity awards granted under the 2020 Plan.

As of June 30, 2022, we had 19.5 million shares remaining and available for future issuance under the 2020 Plan, Inducement Plan, and the Omniome Plan.

Stock Options

Time-based Stock Options

The following table summarizes stock option activity for time-based awards under all our stock option plans for the three months ended March 31, 2022 (in thousands, except per share amounts):

The following table summarizes stock option activity for time-based awards for the six months ended June 30, 2022 (in thousands, except per share amounts):

Stock Options Outstanding

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Outstanding at December 31, 2021

10.18 – 16.58

Outstanding at March 31, 2022

Outstanding at June 30, 2022

Performance-based Stock Options

The following table summarizes stock option activity for performance-based awards under all our stock option plans for the three months ended March 31, 2022 (in thousands, except per share amounts):

The following table summarizes stock option activity for performance-based awards for the six months ended June 30, 2022 (in thousands, except per share amounts):

Stock Options Outstanding

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Outstanding at December 31, 2021

Outstanding at March 31, 2022

For the three months ended March 31, 2022, we recognized stock-based compensation expense of $ 7.5 million related to time-based and performance-based options.

Outstanding at June 30, 2022

For the three and six months ended June 30, 2022, we recognized stock-based compensation expense of $ 7.0 million and $ 14.5 million, respectively, related to time-based and performance-based options.

Restricted Stock Units (“RSUs”)

The following table summarizes the time-based RSU activity for the three months ended March 31, 2022 (in thousands, except per share amounts):

The following table summarizes the time-based RSU activity for the six months ended June 30, 2022 (in thousands, except per share amounts):

Weighted average

Outstanding at December 31, 2021

Outstanding at March 31, 2022

For the three months ended March 31, 2022, we recognized stock-based compensation expense of $ 11.9 million related to restricted stock units.

Outstanding at June 30, 2022

For the three and six months ended June 30, 2022, we recognized stock-based compensation expense of $ 9.7 million and $ 21.6 million, respectively, related to restricted stock units.

Employee Stock Purchase Plan (“ESPP”)

Shares issued under our ESPP were 1,316,923 and 983,180 during the three months ended March 31, 2022 and 2021, respectively.

Shares issued under our ESPP were 1,316,923 and 983,180 during the six months ended June 30, 2022 and 2021, respectively.

In February 2022, an additional 4.0 million shares were reserved under the ESPP.

As of March 31, 2022, 10,493,750 shares of our common stock remain available for issuance under our ESPP.

For the three months ended March 31, 2022, we recognized stock-based compensation expense of $ 3.3 million related to our ESPP.

As of June 30, 2022, 10,493,750 shares of our common stock remain available for issuance under our ESPP.

For the three and six months ended June 30, 2022, we recognized stock-based compensation expense of $ 2.3 million and $ 5.6 million, respectively, related to our ESPP.

Stock-Based Compensation

The following table summarizes stock-based compensation expense (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

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When determining the current share prices underlying the stock options for calculating the grant-date fair value, we reference the observable market prices of our stock.

For three months ended March 31, 2022 and 2021, the fair value of employee stock options was estimated using the following weighted average assumptions:

Three Months Ended March 31,

For the three and six months ended June 30, 2022 and 2021, the fair value of employee stock options was estimated using the following weighted average assumptions:

Three Months Ended June 30,

Six Months Ended June 30,

Expected term in years

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Risk-free interest rate

1.76 % - 2.77 %

0.50 % - 0.74 %

Dividend yield

1 unchanged sentence

We estimate the fair value of shares to be issued under the ESPP using the Black-Scholes option pricing model.

For three months ended March 31, 2022 and 2021, the fair value of shares to be issued under the ESPP was estimated using the following assumptions:

Three Months Ended March 31,

For the three and six months ended June 30, 2022 and 2021, the fair value of shares to be issued under the ESPP was estimated using the following assumptions:

Six Months Ended June 30,

Expected term in years

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The following table presents the calculation of the basic and diluted net loss per share amounts presented in the Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share amounts):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted average shares used in computing basic net loss

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Stockholders’ Equity in Part I, Item 1 of this Quarterly Report on Form 10-Q for detailed information on RSUs with time-based vesting and RSUs with performance-based vesting.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

A summary of our revenue by geographic location for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

Three Months Ended March, 31

As described in Note 2.

Business Acquisition s in Part I, Item 1 of this Quarterly Report on Form 10-Q, the contingently issuable shares would be due upon the achievement of a milestone.

A summary of our revenue by geographic location for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Europe (including the Middle East and Africa)

A summary of our revenue by category for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

Three Months Ended March 31,

Europe, Middle East and Africa

A summary of our revenue by category for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements