Palantir Technologies Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) 3 Table of Contents Palantir Technologies Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amounts) (unaudited) As of June 30, As of December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 2,341,156 $ 2,011,323 Restricted cash 36,750 37,285 A c counts receivable 242,998 156,932 Prepaid expenses and other current assets 41,648 51,889 Total current assets 2,662,552 2,257,429 Property and equipment, net 24,824 29,541 Restricted cash, noncurrent 61,914 79,538 Operating lease right-of-use assets 209,243 217,075 Other assets 117,135 106,921 Total assets $ 3,075,668 $ 2,690,504 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 30,914 $ 16,358 Accrued liabilities 166,252 158,546 Deferred revenue (1) 194,511 189,520 Customer deposits 257,747 210,320 Operating lease liabilities 33,162 29,079 Total current liabilities 682,586 603,823 Deferred revenue, noncurrent (1) 40,518 50,525 Customer deposits, noncurrent 62,732 81,513 Debt, noncurrent, net — 197,977 Operating lease liabilities, noncurrent 216,630 229,800 Other noncurrent liabilities 4,239 4,316 Total liabilities 1,006,705 1,167,954 Commitments and Contingencies (Note 8) Stockholders’ equity: Preferred stock, par value $ 0.001 : 2,000,000 shares authorized and 0 issued and outstanding as of June 30, 2021 and December 31, 2020 — — Common stock, $ 0.001 par value: 20,000,000 Class A shares authorized as of June 30, 2021 and December 31, 2020; 1,855,143 shares issued and outstanding as of June 30, 2021, and 1,542,058 shares issued and outstanding as of December 31, 2020; 2,700,000 Class B shares authorized as of June 30, 2021 and December 31, 2020; 80,430 shares issued and outstanding as of June 30, and 249,077 shares issued and outstanding as of December 31, 2020; and 1,005 Class F shares authorized, issued, and outstanding as of June 30, 2021 and December 31, 2020 1,937 1,792 Additional paid-in capital 7,294,369 6,488,857 Accumulated other comprehensive income (loss) 65 ( 2,745 ) Accumulated deficit ( 5,227,408 ) ( 4,965,354 ) Total stockholders’ equity 2,068,963 1,522,550 Total liabilities and stockholders’ equity $ 3,075,668 $ 2,690,504 (1) Deferred revenue as of June 30, 2021 and December 31, 2020 includes $ 53.2 million and $ 68.2 million, respectively, from Palantir Technologies Japan, K.K. See Note 6. Equity Method Investments, for more information. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Palantir Technologies Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenue $ 375,642 $ 251,889 $ 716,876 $ 481,216 Cost of revenue 90,926 68,410 165,037 132,704 Gross profit 284,716 183,479 551,839 348,512 Operating expenses: Sales and marketing 162,379 102,518 298,476 201,171 Research and development 110,524 86,815 208,995 152,615 General and administrative 157,961 93,291 304,530 164,056 Total operating expenses 430,864 282,624 812,001 517,842 Loss from operations ( 146,148 ) ( 99,145 ) ( 260,162 ) ( 169,330 ) Interest income 372 551 748 3,818 Interest expense ( 590 ) ( 5,646 ) ( 2,430 ) ( 10,240 ) Change in fair value of warrants — ( 3,683 ) — 10,012 Other income (expense), net 2,125 ( 1,589 ) ( 2,769 ) 4,511 Loss before provision (benefit) for income taxes ( 144,241 ) ( 109,512 ) ( 264,613 ) ( 161,229 ) Provision (benefit) for income taxes ( 5,661 ) 943 ( 2,559 ) 3,500 Net loss $ ( 138,580 ) $ ( 110,455 ) $ ( 262,054 ) $ ( 164,729 ) Net loss per share attributable to common stockholders, basic $ ( 0.07 ) $ ( 0.17 ) $ ( 0.14 ) $ ( 0.27 ) Net loss per share attributable to common stockholders, diluted $ ( 0.07 ) $ ( 0.17 ) $ ( 0.14 ) $ ( 0.28 ) Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, basic 1,894,606 640,450 1,858,085 616,150 Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, diluted 1,894,606 640,669 1,858,085 618,635 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Palantir Technologies Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net loss $ ( 138,580 ) $ ( 110,455 ) $ ( 262,054 ) $ ( 164,729 ) Other comprehensive income: Foreign currency translation adjustments ( 800 ) 577 2,810 1,603 Comprehensive loss $ ( 139,380 ) $ ( 109,878 ) $ ( 259,244 ) $ ( 163,126 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents Palantir Technologies Inc. Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit) (in thousands) (unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of March 31, 2021 1,860,607 $ 1,860 $ 6,892,046 $ 865 $ ( 5,088,828 ) $ 1,805,943 Issuance of common stock from the exercise of stock options 59,171 59 167,769 — — 167,828 Issuance of common stock upon vesting of restricted stock units (“RSUs”) 12,872 13 ( 13 ) — — — Issuance of common stock upon net exercise of common stock warrants and other 3,928 5 1,707 — — 1,712 Stock-based compensation — — 232,860 — — 232,860 Other comprehensive loss — — — ( 800 ) — ( 800 ) Net loss — — — — ( 138,580 ) ( 138,580 ) Balance as of June 30, 2021 1,936,578 $ 1,937 $ 7,294,369 $ 65 $ ( 5,227,408 ) $ 2,068,963 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2020 1,792,140 $ 1,792 $ 6,488,857 $ ( 2,745 ) $ ( 4,965,354 ) $ 1,522,550 Issuance of common stock from the exercise of stock options 114,471 114 376,574 — — 376,688 Issuance of common stock upon vesting of RSUs 23,832 24 ( 24 ) — — — Issuance of common stock upon vesting of growth units 1,471 1 ( 1 ) — — — Issuance of common stock upon net exercise of common stock warrants and other 4,664 6 1,706 — — 1,712 Stock-based compensation — — 427,257 — — 427,257 Other comprehensive income — — — 2,810 — 2,810 Net loss — — — — ( 262,054 ) ( 262,054 ) Balance as of June 30, 2021 1,936,578 $ 1,937 $ 7,294,369 $ 65 $ ( 5,227,408 ) $ 2,068,963 7 Table of Contents Palantir Technologies Inc. Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit) (in thousands) (unaudited) Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Deficit Shares Amount Shares Amount Shares Amount Shares Amount Balance as of March 31, 2020 4,017 $ 33,569 742,812 $ 2,093,562 588,033 $ 595 $ 1,918,372 7,201 $ ( 42,672 ) $ 323 $ ( 3,853,237 ) $ ( 1,976,619 ) Issuance of Series K convertible preferred stock — — 121 947 — — — — — — — — Issuance of common stock from the exercise of stock options — — — — 30,381 31 22,083 — — — — 22,114 Issuance of common stock, net of issuance costs — — — — 118,221 118 537,731 — — — — 537,849 Retirement of treasury stock — — — — — ( 7 ) ( 42,665 ) ( 7,201 ) 42,672 — — — Stock-based compensation — — — — — — 127,833 — — — — 127,833 Other comprehensive income — — — — — — — — — 577 — 577 Net loss — — — — — — — — — — ( 110,455 ) ( 110,455 ) Balance as of June 30, 2020 4,017 $ 33,569 742,933 $ 2,094,509 736,635 $ 737 $ 2,563,354 — $ — $ 900 $ ( 3,963,692 ) $ ( 1,398,701 ) Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Deficit Shares Amount Shares Amount Shares Amount Shares Amount Balance as of December 31, 2019 4,017 $ 33,569 742,840 $ 2,093,662 581,497 $ 588 $ 1,857,331 6,393 $ ( 38,895 ) $ ( 703 ) $ ( 3,798,963 ) $ ( 1,980,642 ) Conversion of Series H-1 convertible preferred stock to common stock — — ( 28 ) ( 100 ) 28 — 100 — — — — 100 Issuance of Series K convertible preferred stock — — 121 947 — — — — — — — — Repurchase of common stock, held in treasury — — — — ( 808 ) — — 808 ( 3,777 ) — — ( 3,777 ) Issuance of common stock from the exercise of stock options — — — — 37,697 38 28,786 — — — — 28,824 Issuance of common stock, net of issuance costs — — — — 118,221 118 537,731 — — — — 537,849 Retirement of treasury stock — — — — — ( 7 ) ( 42,665 ) ( 7,201 ) 42,672 — — — Stock-based compensation — — — — — — 182,071 — — — — 182,071 Other comprehensive income — — — — — — — — — 1,603 — 1,603 Net loss — — — — — — — — — — ( 164,729 ) ( 164,729 ) Balance as of June 30, 2020 4,017 $ 33,569 742,933 $ 2,094,509 736,635 $ 737 $ 2,563,354 — $ — $ 900 $ ( 3,963,692 ) $ ( 1,398,701 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents Palantir Technologies Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, 2021 2020 Operating activities Net loss $ ( 262,054 ) $ ( 164,729 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 7,999 7,793 Stock-based compensation 426,473 181,955 Change in fair value of warrants — ( 10,012 ) Non-cash operating lease expense 14,435 19,831 Other operating activities 560 3,633 Changes in operating assets and liabilities: Accounts receivable ( 83,883 ) ( 56,583 ) Prepaid expenses and other current assets 12,770 ( 3,220 ) Other assets ( 9,522 ) ( 9,937 ) Accounts payable 14,589 ( 35,012 ) Accrued liabilities 9,070 ( 30,366 ) Deferred revenue, current and noncurrent ( 3,679 ) 19,645 Customer deposits, current and noncurrent 28,668 ( 124,434 ) Operating lease liabilities, current and noncurrent ( 15,795 ) ( 25,815 ) Other noncurrent liabilities — 921 Net cash provided by (used in) operating activities 139,631 ( 226,330 ) Investing activities Purchases of property and equipment ( 1,405 ) ( 5,945 ) Proceeds from the sale of assets held for sale — 250 Net cash used in investing activities ( 1,405 ) ( 5,695 ) Financing activities Proceeds from the issuance of common stock, net of issuance costs — 542,922 Proceeds from issuance of debt, net of issuance costs — 149,683 Principal payments on borrowings ( 200,000 ) ( 250,000 ) Proceeds from the exercise of common stock options 376,688 28,824 Repurchase of common stock — ( 3,777 ) Other financing activities ( 1,744 ) ( 377 ) Net cash provided by financing activities 174,944 467,275 Effect of foreign exchange on cash, cash equivalents, and restricted cash ( 1,496 ) ( 197 ) Net increase in cash, cash equivalents, and restricted cash 311,674 235,053 Cash, cash equivalents, and restricted cash - beginning of period 2,128,146 1,401,962 Cash, cash equivalents, and restricted cash - end of period $ 2,439,820 $ 1,637,015 Supplemental disclosures of cash flow information: Cash paid for income taxes $ 3,425 $ 8,144 Cash paid for interest 2,381 5,644 Supplemental disclosures of non-cash investing and financing information: Common stock issuance costs included in accounts payable and accrued liabilities $ — $ 5,072 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization Palantir Technologies Inc. (including its subsidiaries, “Palantir,” or “the Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms, Palantir Gotham and Palantir Foundry, that serve as the central operating systems for its customers. 2. Significant Accounting Policies Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. genera l ly accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of Palantir Technologies Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminat e d in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over the investee, but d o es not control, are accounted for using the equity method of accounting. For such investments, the share of the investee’s results of operations is included as a component of other income (expense), net in the condensed consolidated statements of operations and the investment balance is included in other assets and classified as noncurrent in the condensed consolidated balance sheets. The Company’s fiscal year ends on December 31. The unaudited condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period. The Company ceased to be an emerging growth company as of December 31, 2020, which accelerated its adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). As a result, certain components of cash flows used in operating activities within the Company’s condensed consolidated statements of cash flows for the six months ended June 30, 2020 have been presented to conform to the new standard. The impact to the presentation of the other statements was not material. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, identification of performance obligations in customer contracts, the valuation of deferred tax assets and uncertain tax positions, collectability of accounts receivable, useful lives of tangible assets, and the incremental borrowing rate for operating leases. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations. Summary of Significant Accounting Policies The Company’s significant accounting policies are discussed in Note 2. Significant Accounting Policies in the notes to consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021. There have been no significant changes to these policies during the six months ended June 30, 2021. 10 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements Cash, Cash Equivalents, and Restricted Cash The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds. Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands): As of June 30, 2021 2020 Cash and cash equivalents $ 2,341,156 $ 1,497,591 Restricted cash 36,750 37,069 Restricted cash, noncurrent 61,914 102,355 Total cash, cash equivalents, and restricted cash $ 2,439,820 $ 1,637,015 Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company generally grants non-collateralized credit terms to its customers. Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing COVID-19 pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. Based upon the Company’s assessment as of June 30, 2021 and December 31, 2020, it did no t record an allowance for credit losses as probable losses are not expected to be material. Concentrations of Credit Risk and Other Concentrations Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts. The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the condensed consolidated balance sheets. The Company’s accounts receivable balances as of June 30, 2021 and December 31, 2020 were $ 243.0 million and $ 156.9 million, respectively. Customer I represented 24 % of total accounts receivable as of June 30, 2021. Customer G represented 13 % of total accounts receivable as of December 31, 2020. No other customer represented more than 10 % of total accounts receivable as of June 30, 2021 and December 31, 2020. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies and regularly monitoring the aging of accounts receivable balances. As of June 30, 2021 and December 31, 2020, the Company had not experienced any significant losses on its accounts receivable. For the three and six months ended June 30, 2021, no customer represented more than 10% of total revenue. For the three and six months ended June 30, 2020, Customer F, which is in the government operating segment, represented 11 % of total revenue and Customer A, which is in the commercial operating segment, represented 10 % of total revenue, respectively. No other customer represented more than 10 % of total revenue for the three and six months ended June 30, 2020. 11 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements The Company relies on the technology, infrastructure, and software applications, including software-as-a-service offerings, of third parties in order to host or operate certain key products and functions of its business. Recently Adopted Accounting Pronouncements I n December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted ASU 2019-12 as of January 1, 2021 using transition methods allowed under each aspect of the guidance. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements. 3. Contract Liabilities and Remaining Performance Obligations Contract Liabilities The Company’s contract liabilities consist of deferred revenue and customer deposits. As of June 30, 2021 and December 31, 2020, the Company’s contract liability balances were $ 555.5 million and $ 531.9 million, respectively. Revenue of $ 285.4 million and $ 301.3 million was recognized during the six months ended June 30, 2021 and 2020, respectively, that was included in the contract liability balances as of December 31, 2020 and 2019, respectively. Remaining Performance Obligations The Company’s arrangements with its customers oft e n have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation. The Company’s remaining performance obligations were $ 671.9 million as of June 30, 2021, of which the Company expects to recognize approximately 49 % as revenue over the next twelve months. Disaggregation of Revenue See Note 13. Segment and Geographic Information , for disaggregated revenue by customer segment and geographic region. 4. Fair Value Measurements Financial instruments consist of money market funds and certificates of deposit included in cash equivalents and restricted cash, accounts receivable, other assets accounted for at fair value, accounts payable, and accrued liabilities. money market funds and certificates of deposit are stated at fair value on a recurring basis. Accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. The following tables present the Company’s assets that are measured at fair value on a recurring and nonrecurring basis and indicates the fair value hierarchy of the valuation (in thousands): As of June 30, 2021 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 963,873 $ 963,873 $ — $ — Certificates of deposit 65,477 — 65,477 — Total $ 1,029,350 $ 963,873 $ 65,477 $ — 12 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements As of December 31, 2020 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 1,075,783 $ 1,075,783 $ — $ — Certificates of deposit 74,097 — 74,097 — Total $ 1,149,880 $ 1,075,783 $ 74,097 $ — Certificates of Deposit The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings. Gross unrealized gains or losses for cash equivalents as of June 30, 2021 and December 31, 2020 were not material. 5. Balance Sheet Components Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of June 30, 2021 As of December 31, 2020 Leasehold improvements $ 81,057 $ 85,196 Computer equipment, software, and other 23,199 22,275 Furniture and fixtures 10,069 9,976 Construction in progress 442 493 Total property and equipment, gross 114,767 117,940 Less: accumulated depreciation and amortization ( 89,943 ) ( 88,399 ) Total property and equipment, net $ 24,824 $ 29,541 Depreciation and amortization expense related to property and equipment, net was $ 3.1 million and $ 3.2 million for the three months ended June 30, 2021 and 2020, respectively, and $ 6.3 million and $ 6.8 million for the s i x months ended June 30, 2021 and 2020, respectively. Accrued Liabilities Accrued liabilities consisted of the following (in thousands): As of June 30, 2021 As of December 31, 2020 Accrued payroll and related expenses $ 95,574 $ 85,466 Accrued other liabilities 70,678 73,080 Total accrued liabilitie s $ 166,252 $ 158,546 6. Equity Method Investments Palantir Technologies Japan, K.K. During November 2019, the Company and SOMPO Holdings, Inc. (“SOMPO”) created a Japanese Kabushiki Kaisha (“K.K.”), Palantir Technologies Japan, K.K. (“Palantir Japan”), to distribute Palantir platforms to the Japanese market. Upon closing of the transaction with SOMPO, the Company purchased a total of 100,000 shares of Palantir Japan common stock for $ 25.0 million. The shares the Company received in exchange represent a 50 % voting interest in Palantir Japan. The remaining 50 % of the voting interest is held by SOMPO. The Company’s investment in Palantir Japan is accounted for as an equity method investment as the Company is able to exercise significant influence over, but does not control, the investee. 13 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements 7. Debt 2014 Credit Facility In October 2014, the Company entered into an unsecured revolving credit facility which has been subsequently amended (the “2014 Credit Facility”). The 2014 Credit Facility incurred interest at the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.75 % per annum, subject to certain adjustments, and incurs a commitment fee of 0.375 % assessed on the daily average undrawn p o rtion of revolving commitments. Interest and commitment fees are payable at the end of an interest period or at each three-month interval if the interest period is longer than three months. The 2014 Credit Facility, as amended, matures on June 4, 2023 . During April 2021, the Company entered into an amendment to the 2014 Credit Facility, which provided for an increase of $ 200.0 million to the revolving commitments of the existing lenders under the 2014 Credit Facility, for total revolving commitments of $ 400.0 million, and which also provided for an incremental loan facility for additional loans in an agg r egate principal amount of up to $ 100.0 million with one or more existing or new lenders upon mutual agreement between the Company and such lenders. Upon entering into the amendment, the Company repaid its outstanding term loans of $ 200.0 million. As of June 30, 2021, the Company had no amounts outstanding under the 2014 Credit Facility and a $ 400.0 million undrawn revolving credit facility. The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $ 50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of June 30, 2021. 8. Commitments and Contingencies Purchase Commitments In December 2019, the Company entered into, and subsequently amended during December 2020, a minimum annual commitment to purchase cloud hosting services of at least $ 1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services. If the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment. If the difference is greater than $30.0 million for each of the first three contract years or $50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract. The Company satisfied its $ 126.0 million commitment for the contract year ended June 30, 2021. The commitment amount for the contract year ended June 30, 2022 is $ 167.0 million. In June 2020, the Company entered into an additional commitment to purchase at least $ 45.0 million of cloud hosting services over a period of five years commencing on June 1, 2020 and ending on May 31, 2025. If the spend commitment is not met at the end of the term, the Company is obligated to pay the full amount of the outstanding balance (“shortfall payment”). The shortfall payment may be applied as a prepayment against consumption during an additional twelve-month coverage period expiring on May 31, 2026, at which time any unused amount would be forfeited. As of June 30, 2021, the Company had satisfied $ 6.0 million of its commitment. 14 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements Investment Commitments The Company approved and entered into certain agreements (“Investment Agreements”) to purchase, or commit to purchase, shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, or commitments to purchase, the “Investments”). As of June 30, 2021, the Company had outstanding commitments, subject to the applicable terms and conditions, to purchase a total of 25.0 million shares for an aggregate purchase price of $ 250.0 million. The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties. As of June 30, 2021, none of such Investments had closed. Additionally, in connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services. The maximum potential revenue from these commercial contracts is $ 428 million, which is inclusive of $ 73 million from contractual options, and the terms of such contracts, including these contractual options, range from three to ten years . The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed. The Company assessed the concurrent agreements under the non-monetary guidance within Accounting Standards Codification (“ASC”) 606 - Revenue from Contracts with Customers and the total revenue recognized from such commercial contracts during the three and six months ended June 30, 2021 was $ 3.0 million. The following table presents details related to the Company’s investment commitments as of June 30, 2021 (in thousands): Entity Investment Agreement Date Committed Share Amount Committed Investment Amount Lilium March 30, 2021 4,100 $ 41,000 Sarcos Robotics (1) April 5, 2021 2,100 21,000 Roivant Sciences May 1, 2021 3,000 30,000 Celularity (1)(2) May 5, 2021 2,000 20,000 Mobility company May 11, 2021 2,000 20,000 Wejo May 28, 2021 3,500 35,000 Babylon Health (1) June 3, 2021 3,500 35,000 Boxed (1) June 13, 2021 2,000 20,000 Pear Therapeutics June 21, 2021 1,000 10,000 Autonomous vehicle company (1) June 22, 2021 1,800 18,000 Total 25,000 $ 250,000 (1) Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed. (2) The Company’s investment closed during July 2021. Litigation and Legal Proceedings From time to time, third parties may assert paten t infringement claims against the Company. In addition, from time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; securities claims; investor claims; corporate claims; class action claims; and general contract, tort, or other claims. The Company may from time to time also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, allegations, or investigations related to warranty; refund; breach of contract; breach, leak, or misuse of personal data or confidential information; employment; government procurement; intellectual property; government regulation or compliance (including but not limited to anti-corruption requirements, export or other trade controls, data privacy or data protection, cybersecurity requirements, or antitrust/competition law requirements); securities; investor; corporate; or other matters. The Company is unable to predict whether or when any such matters may arise, the outcome of these matters, or the ultimate legal and financial liability, and cannot reasonably estimate the possible loss or range of loss at this time and accordingly has not accrued a related liability . On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC. The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party. The KT4 Plaintiffs seek compensatory and punitive damages, interest, fees, and costs . 15 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements The Company believes this lawsuit is without merit and is vigorously defending itself against it. Given the uncertainty of litigation, it may be reasonably possible that the Company will incur a loss with regards to the matter; however, it cannot currently estimate a range of possible losses. Accordingly, the Company is unable, at this time, to estimate the overall effects that may result from the lawsuit on its financial condition, results of operations, or cash flows. As of June 30, 2021, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were expected to have a material adverse impact on its condensed consolidated financial statements. Letters of Credit and Guarantees The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $ 98.7 million and $ 116.8 million as of June 30, 2021 and December 31, 2020, respectively, all of which were fully collateralized. The Company is required to maintain these letters of credit and guarantees primarily for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. As of June 30, 2021, these letters of credit and guarantees had expiration dates through August 2028. Warranties and Indemnification The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its operations and maintenance (“O&M”) services to its customers. The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer; and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software. The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products. In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term). Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant. The Company has not recorded warranty expense or related accruals as of June 30, 2021 and December 31, 2020. The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future. As such, the Company has not recorded a liability for infringement costs as of June 30, 2021 and December 31, 2020. The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation . 9. Stockholders’ Equity The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described below and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel ( the “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999 % of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company’s equity securities as of June 30, 2021. Holders of common stock are entitled to dividends when, as and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of June 30, 2021. In connection with the Company’s direct listing of its Class A common stock on the New York Stock Exchange (“Direct Listing”) in September 2020, all outstanding shares of redeemable convertible preferred stock and convertible preferred stock were converted into 4,017,378 and 793,725,807 shares of Class B common stock, respectively, and 1,005,000 shares of Class B common stock held by the Founders were exchanged for an equal number of shares of Class F common stock. 16 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands): As of June 30, 2021 As of December 31, 2020 Authorized Issued and Outstanding Authorized Issued and Outstanding Common stock: Class A 20,000,000 1,855,143 20,000,000 1,542,058 Class B 2,700,000 80,430 2,700,000 249,077 Class F 1,005 1,005 1,005 1,005 Total 22,701,005 1,936,578 22,701,005 1,792,140 10. Stock-Based Compensation Stock Options The following table summarizes stock option activity for the six months ended June 30, 2021 (in thousands, except per share amounts): Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value Balance as of December 31, 2020 535,767 $ 6.12 7.99 $ 9,340,245 Options exercised ( 114,471 ) 3.29 Options canceled and forfeited ( 3,622 ) 5.17 Balance as of June 30, 2021 417,674 $ 6.90 8.49 $ 8,128,222 Options vested and exercisable as of June 30, 2021 213,423 $ 3.92 6.41 $ 4,788,520 As of June 30, 2021, the unrecognized expense related to options outstanding was $ 1.0 billion, which is expected to be recognized over a weighted-average service period of 8.07 years. RSUs The following table summarizes the RSU activity for the six months ended June 30, 2021 (in thousands, except per share amounts): RSUs Outstanding Weighted Average Grant Date Fair Value per Share Unvested and outstanding as of December 31, 2020 184,870 $ 6.97 RSUs granted 10,131 27.25 RSUs vested ( 23,832 ) 8.41 RSUs canceled ( 4,447 ) 7.21 Unvested and outstanding as of June 30, 2021 166,722 $ 7.98 As of June 30, 2021, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $ 815.0 million, which the Company expects to recognize over 3.20 years. 17 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements Growth Units In May 2019, the Company granted growth units which vest upon the satisfaction of both a performance-based vesting condition, which was satisfied upon the Company’s Direct Listing, and a service-based vesting condition, which was satisfied in March 2021. In March 2021, the 3.6 million outstanding growth units vested and, per the formula applicable to the awards, converted into 1.5 million shares of common stock. During the three months ended March 31, 2021, the Company recognized the remaining stock-based compensation expense related to the growth units of $ 1.2 million. Stock-based Compensation Expense Total stock-based compensation expense was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cost of revenue $ 24,029 $ 17,832 $ 40,006 $ 25,900 Sales and marketing 72,008 39,932 129,294 58,395 Research and development 50,630 37,897 88,504 52,929 General and administrative 86,075 32,187 168,669 44,731 Total stock-based compensation expense $ 232,742 $ 127,848 $ 426,473 $ 181,955 11. Income Taxes The Company recorded a benefit for income taxes of $ 5.7 million and a provision for income taxes of $ 0.9 million for the three months ended June 30, 2021 and 2020, respectively, and a benefit for income taxes of $ 2.6 million and a provision for income taxes of $ 3.5 million for the six months ended June 30, 2021 and 2020, respectively. The Company is subject to income tax in the U.S. as well as other tax jurisdictions in which it conducts business. The Company’s effective rate differs from the U.S. statutory rate primarily due to the valuation allowance recorded on its losses from the U.S. and other jurisdictions, foreign income taxed at different rates, non-deductible of stock-based compensation and the revaluation of its United Kingdom (“UK”) deferred tax assets as a result of a change in the UK corporate tax rate enacted during the current quarter, which increase d the rate from 19 % to 25 % and will be effective April 1, 2023. The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company assesses its ability to realize the deferred tax assets on a quarterly basis, and it establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. For example, due to the weight of objectively verifiable negative evidence, including its history of losses in certain jurisdictions, the Company believes that it is more likely than not that its U.S. federal and state deferred tax assets will not be fully realized. Accordingly, the Company has maintained a valuation allowance on its U.S. federal and state deferred tax assets. 18 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements 12. Net Loss Per Share Attributable to Common Stockholders The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator Net loss attributable to common stockholders $ ( 138,580 ) $ ( 110,455 ) $ ( 262,054 ) $ ( 164,729 ) Less: Change in fair value attributable to participating securities — ( 171 ) — ( 7,479 ) Net loss attributable to common stockholders, for diluted net loss per share $ ( 138,580 ) $ ( 110,626 ) $ ( 262,054 ) $ ( 172,208 ) Denominator Weighted-average shares used in computing net loss per share, basic 1,894,606 640,450 1,858,085 616,150 Weighted-average shares used in computing net loss per share, diluted 1,894,606 640,669 1,858,085 618,635 Net loss per share Net loss per share attributable to common stockholders, basic $ ( 0.07 ) $ ( 0.17 ) $ ( 0.14 ) $ ( 0.27 ) Net loss per share attributable to common stockholders, diluted $ ( 0.07 ) $ ( 0.17 ) $ ( 0.14 ) $ ( 0.28 ) The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented due to their anti-dilutive effect (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Redeemable convertible preferred stock — 4,017 — 4,017 Convertible preferred stock — 791,346 — 791,346 Warrants to purchase redeemable convertible and convertible preferred stock — 20,839 — 18,253 Warrants to purchase common stock 13,042 — 13,042 — Options and SARs issued and outstanding 417,699 459,239 417,699 459,239 RSUs outstanding 166,722 178,685 166,722 178,685 Growth units outstanding — 3,583 — 3,583 Total 597,463 1,457,709 597,463 1,455,123 13. Segment and Geographic Information The following tables reflect the results of the Company’s reportable operating segments consistent with the manner in which the chief operating decision maker (“CODM”) evaluates the performance of each segment and allocates the Company’s resources. The CODM does not evaluate the performance of the Company’s assets on a segment basis for internal management reporting and, therefore, such information is not presented. Contribution is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. A segment’s contribution is calculated as segment revenue less the related costs of revenue and sales and marketing expenses. It excludes certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level. These unallocated costs include stock-based compensation expense, research and development expenses, and general and administrative expenses. 19 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements Financial information for each reportable segment was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenue: Government $ 232,119 $ 139,569 $ 440,539 $ 257,696 Commercial 143,523 112,320 276,337 223,520 Total revenue $ 375,642 $ 251,889 $ 716,876 $ 481,216 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Contribution: Government $ 143,253 $ 80,327 $ 274,999 $ 132,224 Commercial 75,121 58,398 147,664 99,412 Total contribution $ 218,374 $ 138,725 $ 422,663 $ 231,636 The reconciliation of contribution to loss from operations is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Loss from operations $ ( 146,148 ) $ ( 99,145 ) $ ( 260,162 ) $ ( 169,330 ) Research and development expenses (1) 59,894 48,918 120,491 99,686 General and administrative expenses (1) 71,886 61,104 135,861 119,325 Stock-based compensation expense 232,742 127,848 426,473 181,955 Total contribution $ 218,374 $ 138,725 $ 422,663 $ 231,636 ————— (1) Excludes stock-based compensation expense. Geographic Information Revenue by geography is based on the customer’s headquarters or agency location at the time of sale. Revenue is as follows (in thousands, except percentages): Three Months Ended June 30, 2021 2020 Amount % Amount % Revenue: United States $ 199,930 53 % $ 124,993 50 % United Kingdom 39,935 11 % 30,033 12 % France 19,088 5 % 29,629 12 % Rest of world (1) 116,689 31 % 67,234 26 % Total revenue $ 375,642 100 % $ 251,889 100 % (1) No other country represents 10 % or more of total revenue for the three months ended June 30, 2021 or 2020. 20 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements Six Months Ended June 30, 2021 2020 Amount % Amount % Revenue: United States $ 398,377 56 % $ 234,770 49 % United Kingdom 74,320 10 % 59,008 12 % France 40,178 6 % 55,359 12 % Rest of world (1) 204,001 28 % 132,079 27 % Total revenue $ 716,876 100 % $ 481,216 100 % (1) No other country represents 10 % or more of total revenue for the six months ended June 30, 2021 or 2020. 14. Subsequent Events Investment Commitments and Investments The Company approved and entered into additional Investment Agreements from July 1, 202 1 through the date of this filing. As of the date of this filing, the Company had additional outstanding investment commitments, subject to applicable terms and conditions, to purchase a total of 6.0 million shares for an aggregate purchase price of $ 60.0 million. The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties. The following table presents details regarding such additional investment commitments outstanding as of the date of this filing (in thousands): Entity Investment Agreement Date Committed Share Amount Committed Investment Amount Fast Radius (1) July 18, 2021 2,000 $ 20,000 Tritium (1) July 27, 2021 1,500 15,000 AdTheorent (1) July 27, 2021 1,500 15,000 FinAccel August 2, 2021 1,000 10,000 Total 6,000 $ 60,000 (1) Commercial contract contains termination for c onvenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed . Additionally, during July 1, 2021 through the date of this filing, the Company purchased 9.0 million shares for an aggregate purchase price of $ 53.0 million, as set forth in the following table (in thousands): Entity Share Amount Investment Amount Celularity (1) 2,000 $ 20,000 Electric vehicle company 2,500 25,000 Autonomous aerial vehicle company 3,000 3,000 Astrocast 1,518 5,000 Total 9,018 $ 53,000 (1) Reflected as commitment in Footnote 8. Commitments and Contingencies as of June 30, 2021 . 21 Table of Contents Palantir Technologies Inc. Notes to Unaudited Condensed Consolidated Financial Statements In connection with the signing of the Investment Agreements entered into between July 1, 2021 and the date of this filing, each Investee or an associated entity and the Company entered into a commercial contract for the Company’s products and services. The maximum potential revenue from these commercial contracts is $ 162 million, and the terms of such contracts rang e from four to six years . The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed. Investment in Gold During August 2021, the Company purchased $ 50.7 million in 100 -ounce gold bars. Such purchase will initially be kept in a secure third-party facility located in the northeastern United States and the Company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice. 22 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “goal,” “outlook,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: • our expectations regarding financial performance and liquidity, including but not limited to our expectations regarding revenue, cost of revenue, operating expenses, stock-based compensation, our ability to achieve and maintain future profitability, and cash flows; • our ability to successfully execute our business and growth strategy; • the sufficiency of our cash and cash equivalents to meet our liquidity needs; • the demand for our platforms in general; • our ability to increase our number of customers and revenue generated from customers; • our expectations regarding the future contribution margin of our existing and future customers; • our expectations regarding our ability to quickly and effectively integrate our platforms for our existing and future customers; • our ability to develop new platforms, and enhancements to existing platforms, and bring them to market in a timely manner; • our market share, category positions, and market trends, including our ability to grow our business in large government and commercial organizations, including our expectations regarding the impact of Federal Acquisition Streamlining Act of 1994 (“FASA”); • our ability to compete with existing and new competitors in existing and new markets and products; • our expectations regarding anticipated technology needs and developments and our ability to address those needs and developments with our platforms; • our expectations regarding litigation and legal and regulatory matters; • our expectations regarding our ability to meet existing performance obligations and maintain the operability of our products; • our expectations regarding the effects of existing and developing laws and regulations, including with respect to taxation, privacy data protection, and cybersecurity; • our expectations regarding new and evolving markets; • our ability to develop and protect our brand; • our ability to maintain the security and availability of our platforms; • our expectations and management of future growth; • our expectations concerning relationships with third parties, including our customers, equity method investment partners, and vendors; • our expectations regarding our recent investments in, and enterprise agreements with, various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities; • our ability to maintain, protect, and enhance our intellectual property; • our expectations regarding our multi-class stock and governance structure and the benefits thereof; • the impact of the ongoing COVID-19 pandemic, including on our and our customers’, vendors’, and partners’ respective businesses and the markets in which we and our customers, vendors, and partners operate; and • the increased expenses associated with being a public company. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. 23 Table of Contents You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “ Risk Factors ” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on any forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in such forward-looking statements. Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, restructurings, joint ventures, partnerships, channel sales relationships, or investments we may make. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. 24 Table of Contents