What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 138 added, 99 removed, 295 unchanged (45% of the section changed)

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We have built four principal software platforms, Gotham, Foundry, Apollo, and our Artificial Intelligence Platform (“AIP”).

Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside large language models (“LLMs”) directly within Gotham and/or Foundry to help connect AI to enterprise data.

Gotham and Foundry enable institutions to transform massive amounts of information into an integrated data asset that reflects their operations, and AIP leverages the power of our existing machine learning technologies alongside generative AI models, including large language models (“LLMs”), directly within Gotham and/or Foundry to help operationalize AI on enterprise data.

For over a decade, Gotham has surfaced insights for global defense agencies, the intelligence community, disaster relief organizations and beyond.

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Apollo allows our customers to run their software in virtually any environment.

In 2023, we began deploying our newest offering, AIP, which is designed for customers across the commercial and government sectors, enabling them to derive value from recent breakthroughs in artificial intelligence via the combination of our existing software platforms with LLMs.

We believe AIP uniquely allows users to connect LLMs and other AI with their data and operations to facilitate decision-making within the legal, ethical, and security constraints that they require.

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Many of our customer contracts contain termination for convenience provisions.

For the three months ended March 31, 2024, we generated $634.3 million in revenue, reflecting a 21% growth rate from the three months ended March 31, 2023, when we generated $525.2 million in revenue.

In the three months ended March 31, 2024, we generated income from operations of $80.9 million, or adjusted income from operations of $226.5 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended March 31, 2023, we generated income from operations of $4.1 million, or adjusted income from operations of $125.1 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended March 31, 2024, our gross profit was $518.1 million, reflecting a gross margin of 82%, or 83% when excluding stock-based compensation.

In the three months ended March 31, 2023, our gross profit was $417.5 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation.

For the three months ended June 30, 2024, we generated $678.1 million in revenue, reflecting a 27% growth rate from the three months ended June 30, 2023 when we generated $533.3 million in revenue.

For the six months ended June 30, 2024, we generated $1.3 billion in revenue, reflecting a 24% growth rate from the six months ended June 30, 2023 when we generated $1.1 billion in revenue.

In the three months ended June 30, 2024, we generated income from operations of $105.3 million, or adjusted income from operations of $253.6 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended June 30, 2023, we generated income from operations of $10.1 million, or adjusted income from operations of $135.0

million when excluding stock-based compensation and related employer payroll taxes.

In the six months ended June 30, 2024, we generated income from operations of $186.2 million, or adjusted income from operations of $480.0 million when excluding stock-based compensation and related employer payroll taxes.

In the six months ended June 30, 2023, we generated income from operations of $14.2 million, or adjusted income from operations of $260.1 million when excluding stock-based compensation and related employer payroll taxes.

In the three months ended June 30, 2024, our gross profit was $549.6 million, reflecting a gross margin of 81%, or 83% when excluding stock-based compensation.

In the three months ended June 30, 2023, our gross profit was $426.4 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation.

In the six months ended June 30, 2024, our gross profit was $1.1 billion, reflecting a gross margin of 81%, or 83% when excluding stock-based compensation.

In the six months ended June 30, 2023, our gross profit was $844.0 million, reflecting a gross margin of 80%, or 81% when excluding stock-based compensation.

For more information about our adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes;

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We define a customer as an organization from which we have recognized revenue during the trailing twelve-month period.

During the period ended March 31, 2024, we had 554 customers, including companies in various commercial sectors and government agencies around the world.

During the period ended March 31, 2023, we had 391 customers.

During the period ended June 30, 2024, we had 593 customers, including companies in various commercial sectors and government agencies around the world.

During the period ended June 30, 2023, we had 421 customers.

For large government agencies, where a single institution has multiple divisions, units, or subsidiary agencies, each such division, unit, or subsidiary agency that enters into a separate contract with us and is invoiced as a separate entity is treated as a separate customer.

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We have built lasting and significant customer relationships and partnerships with some of the world’s leading government institutions and companies.

Our average revenue for the top twenty customers during the trailing twelve months ended March 31, 2024 was $55.5 million, which grew 9% from an average of $50.9 million in revenue from the top twenty customers during the trailing twelve months ended March 31, 2023, demonstrating our expanding relationships with existing customers.

Our average revenue for the top twenty customers during the trailing twelve months ended June 30, 2024 was $57.3 million, which grew 9% from an average of $52.6 million in revenue from the top twenty customers during the trailing twelve months ended June 30, 2023, demonstrating our expanding relationships with existing customers.

Organizations in the commercial and government sectors face similar challenges when it comes to managing data, and we intend to expand our reach in both markets moving forward.

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We manage customers at the account level, not by industry or sector, so that we can optimize on the specific growth opportunities for each customer.

In the three months ended March 31, 2024, 53% of our revenue came from government customers and 47% came from commercial customers.

In the six months ended June 30, 2024, 54% of our revenue came from government customers and 46% came from commercial customers.

customers have been a meaningful source of revenue growth for our business.

In the three months ended March 31, 2024, we generated 64% of our revenue from customers in the United States and the remaining 36% from non-U.S.

In the six months ended June 30, 2024, we generated 64% of our revenue from customers in the United States and the remaining 36% from non-U.S.

Revenue from our U.S.

customers during the trailing twelve months ended March 31, 2024 was $1.4 billion, which grew 18% from the prior twelve-month period.

customers during the trailing twelve months ended June 30, 2024 was $1.6 billion, which grew 23% from the prior twelve-month period.

We expect that U.S.

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The speed with which our platforms can be deployed has significantly expanded the range of potential customers with which we plan on partnering over the long term.

We anticipate that our reach among an increasingly broad set of customers, in both the commercial and government sectors, will accelerate moving forward.

We anticipate that our reach among an increasingly broad set of customers, in both

the commercial and government sectors, will accelerate moving forward.

We believe that, as these new partners grow, we will grow with them.

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subsidiaries may hold monetary assets and liabilities in currencies other than their functional currency (primarily the Japanese Yen (“JPY”), Euro, and GBP), which could subject our results of operations and cash flows to adverse fluctuations due to changes in such foreign currency exchange rates as compared to the U.S.

For the three months ended March 31, 2024 such impacts were not material to our financial position or results of operations.

For the six months ended June 30, 2024 such impacts were not material to our financial position or results of operations.

Customer Impacts

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Contribution Margin

The following table provides a reconciliation of contribution margin for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

Three Months Ended March 31,

The following table provides a reconciliation of contribution margin for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Income from operations $ 105,339 $ 10,074 $ 186,220 $ 14,189

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Gross Profit and Gross Margin, Excluding Stock-Based Compensation

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

Three Months Ended March 31,

The following table provides a reconciliation of gross profit and gross margin, excluding stock-based compensation for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Gross profit $ 549,572 $ 426,418 $ 1,067,654 $ 843,959

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Adjusted Income from Operations

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following table provides a reconciliation of adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Income from operations $ 105,339 $ 10,074 $ 186,220 $ 14,189

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We agree to provide continuous access to our hosted software throughout the contract term.

Revenue associated with Palantir Cloud subscriptions is generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.

Revenue associated with Palantir Cloud subscriptions is

generally recognized over the contract term on a ratable basis, which is consistent with the transfer of control of the Palantir services to the customer.

On-Premises Software

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Cost of Revenue

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as field-service representatives, third-party cloud hosting services, hardware costs, travel costs, allocated overhead, and other direct costs.

Cost of revenue primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing O&M and professional services, as well as subcontractor expenses, field-service representatives, third-party cloud hosting services, hardware costs, travel costs, allocated overhead, and other direct costs.

We expect that cost of revenue will increase in absolute dollars as our revenue grows and will vary from period to period as a percentage of revenue.

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The following table summarizes our condensed consolidated statements of operations data (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Revenue $ 678,134 $ 533,317 $ 1,312,472 $ 1,058,503

Cost of revenue 128,562 106,899 244,818 214,544

116,256 107,645

Gross profit 549,572 426,418 1,067,654 843,959

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Sales and marketing 196,809 184,163 389,986 371,256

193,177 187,093

Research and development 108,781 99,533 218,821 189,633

110,040 90,100

General and administrative 138,643 132,648 272,627 268,881

133,984 136,233

Total operating expenses 444,233 416,344 881,434 829,770

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Income before provision for income taxes 140,759 30,043 251,485 50,875

110,726 20,832

Provision for income taxes 5,189 2,171 9,844 3,852

106,071 19,151

Net income attributable to noncontrolling interests 541 2,349

Net income 135,570 27,872 241,641 47,023

Net income (loss) attributable to noncontrolling interests 1,444 (255) 1,985 2,094

Net income attributable to common stockholders $ 134,126 $ 28,127 $ 239,656 $ 44,929

$ 105,530 $ 16,802

The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Revenue 100 % 100 % 100 % 100 %

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Net income 20 5 18 4

Net income attributable to noncontrolling interests — 1

Net income (loss) attributable to common stockholders 17 % 3 %

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Change

2024 2023 Amount %

Net income (loss) attributable to noncontrolling interests — — — —

Net income attributable to common stockholders 20 % 5 % 18 % 4 %

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount % 2024 2023 Amount %

Government $ 370,767 $ 301,505 $ 69,262 23 % $ 706,140 $ 590,575 $ 115,565 20 %

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Total revenue $ 678,134 $ 533,317 $ 144,817 27 % $ 1,312,472 $ 1,058,503 $ 253,969 24 %

Revenue increased by $109.2 million, or 21%, for the three months ended March 31, 2024 compared to the same period in 2023.

Revenue from government customers increased by $46.3 million, or 16%, for the three months ended March 31, 2024 compared to the same period in 2023.

Of the increase, $41.9 million was from existing government customers as of December 31, 2023.

Generally, increases in revenue from our existing customers are related to increased adoption of our products and services within their organizations.

Revenue increased by $144.8 million, or 27%, for the three months ended June 30, 2024 compared to the same period in 2023.

Revenue from government customers increased by $69.3 million, or 23%, for the three months ended June 30, 2024 compared to the same period in 2023.

Of the increase, $58.5 million was from government customers existing as of December 31, 2023.

Revenue from U.S.

government customers was $256.7 million for the three months ended March 31, 2024 compared to $229.8 million for the same period in 2023.

Revenue from commercial customers increased by $62.8 million, or 27%, for the three months ended March 31, 2024 compared to the same period in 2023.

Of the increase, $49.5 million was from existing customers as of December 31, 2023, which includes an offsetting decrease of $9.5 million of revenue from Strategic Commercial Contracts.

For additional information, see Note 4.

Investments and Fair Value Measurements in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

government customers was $278.0 million for the three months ended June 30, 2024 compared to $225.0 million for the same period in 2023.

Revenue from commercial customers increased by $75.6 million, or 33%, for the three months ended June 30, 2024 compared to the same period in 2023.

Of the increase, $56.8 million was from commercial customers existing as of December 31, 2023, including a decrease of $10.2 million of revenue from Strategic Commercial Contracts.

Revenue from U.S.

commercial customers was $149.7 million for the three months ended March 31, 2024 compared to $107.1 million for the same period in 2023, a 40% increase.

commercial customers was $159.2 million for the three months ended June 30, 2024 compared to $103.0 million for the same period in 2023, a 55% increase.

Revenue increased by $254.0 million, or 24%, for the six months ended June 30, 2024 compared to the same period in 2023.

Revenue from government customers increased by $115.6 million, or 20%, for the six months ended June 30, 2024 compared to the same period in 2023.

Of the increase, $100.4 million was from government customers existing as of December 31, 2023.

Revenue from U.S.

government customers was $534.7 million for the six months ended June 30, 2024 compared to $454.8 million for the same period in 2023.

Revenue from commercial customers increased by $138.4 million, or 30%, for the six months ended June 30, 2024 compared to the same period in 2023.

Of the increase, $106.2 million was from commercial customers existing as of December 31, 2023, including a decrease of $19.7 million of revenue from Strategic Commercial Contracts.

Revenue from U.S.

commercial customers was $308.9 million for the six months ended June 30, 2024 compared to $210.1 million for the same period in 2023, a 47% increase.

Generally, increases in revenue from our existing customers are related to increased adoption of our products and services within their organizations.

For additional information on Strategic Commercial Contracts, see Note 4.

Investments and Fair Value Measurements in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Cost of Revenue and Gross Profit

Three Months Ended March 31, Change

2024 2023 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount % 2024 2023 Amount %

Cost of revenue $ 128,562 $ 106,899 $ 21,663 20 % $ 244,818 $ 214,544 $ 30,274 14 %

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Gross margin 81 % 80 % 1 % 81 % 80 % 1 %

Cost of revenue for the three months ended March 31, 2024 increased by $8.6 million, or 8%, compared to the same period in 2023.

The increase was primarily due to increases of $6.5 million in third-party cloud hosting services, $3.7 million in field service representatives and other direct costs, and $3.2 million for stock-based compensation expense and related expenses.

These increases were partially offset by a decrease of $4.2 million in hardware.

Cost of revenue for the three months ended June 30, 2024 increased by $21.7 million, or 20%, compared to the same period in 2023.

The increase was primarily due to increases of $14.4 million in third-party cloud hosting services and $10.8 million in subcontractor expenses.

These increases were partially offset by a decrease of $7.8 million in field service representatives and hardware costs.

Our gross margin for the three months ended June 30, 2024 increased to 81% from 80% for the same period in 2023 as a result of revenue growth outpacing costs of revenue.

This growth rate variation was primarily due to the decreases in field service representatives and hardware costs in cost of revenue relative to revenue growth as compared to the prior year.

Cost of revenue for the six months ended June 30, 2024 increased by $30.3 million, or 14%, compared to the same period in 2023.

The increase was primarily due to increases of $20.9 million in third-party cloud hosting services, $19.6 million in

subcontractor expenses, and $7.3 million in stock-based compensation and related expenses.

These increases were partially offset by decreases of $10.3 million in field service representatives and $7.0 million in hardware costs.

Our gross margin for the six months ended June 30, 2024 increased to 81% from 80% for the same period in 2023 as a result of revenue growth outpacing costs of revenue.

This growth rate variation was primarily due to the decreases in field service representatives and hardware costs in costs of revenue relative to total expense growth as compared to the prior year.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Our gross margin for the three months ended March 31, 2024 increased from 80% for the same period in 2023 to 82% as a result of revenue growth outpacing costs of revenue.

The primary cause of this growth rate variation was due to decreases in hardware in cost of revenue and lower growth in third-party cloud hosting relative to revenue growth as compared to the prior year.

Operating Expenses

Three Months Ended March 31, Change

2024 2023 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount % 2024 2023 Amount %

Sales and marketing $ 196,809 $ 184,163 $ 12,646 7 % $ 389,986 $ 371,256 $ 18,730 5 %

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Sales and Marketing

Sales and marketing expenses increased by $6.1 million, or 3%, for the three months ended March 31, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $7.5 million in stock-based compensation expense and related expenses and $4.8 million in variable compensation, including commissions.

These increases were partially offset by decreases of $5.9 million in payroll and other payroll-related costs driven by a decrease in headcount attributable to our sales and marketing function.

Sales and marketing expenses increased by $12.6 million, or 7%, for the three months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $6.9 million in third-party cloud hosting services and $7.7 million in stock-based compensation and related expenses.

Sales and marketing expenses increased by $18.7 million, or 5%, for the six months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $15.2 million in stock-based compensation and related expenses and $6.1 million in third-party cloud hosting services.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Research and Development

Research and development expenses increased by $19.9 million, or 22%, for the three months ended March 31, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $11.1 million in stock-based compensation expense and related expenses, $4.7 million in third-party cloud hosting services, and $4.4 million in payroll and other payroll-related costs driven by an increase in headcount attributable to our research and development function.

Research and development expenses increased by $9.2 million, or 9%, for the three months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $5.4 million in stock-based compensation and related expenses and $5.0 million in third-party cloud hosting services.

Research and development expenses increased by $29.2 million, or 15%, for the six months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to increases of $16.5 million in stock-based compensation and related expenses and $8.6 million in third-party cloud hosting services.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

General and Administrative

General and administrative expenses decreased by $2.2 million, or 2%, for the three months ended March 31, 2024 compared to the same period in 2023.

The decrease was primarily due to a decrease of $2.7 million in professional services and $2.6 million in payroll and other payroll-related costs driven by a decrease in headcount attributable to our general and administrative functions.

The decrease was partially offset by an increase of $2.8 million in stock-based compensation expense and related expenses.

General and administrative expenses increased by $6.0 million, or 5%, for the three months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $6.0 million in stock-based compensation and related expenses.

General and administrative expenses increased by $3.7 million, or 1%, for the six months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $8.8 million in stock-based compensation and related expenses partially offset by a decrease of $5.7 million to our allowance for credit losses.

For additional information related to stock-based compensation expense, see the section titled “Stock-Based Compensation” below.

Stock-Based Compensation

Three Months Ended March 31, Change

2024 2023 Amount %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount % 2024 2023 Amount %

Cost of revenue $ 12,402 $ 8,004 $ 4,398 55 % $ 22,818 $ 17,181 $ 5,637 33 %

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Total stock-based compensation expense $ 141,764 $ 114,201 $ 27,563 24 % $ 267,415 $ 228,915 $ 38,500 17 %

Stock-based compensation expenses increased by $10.9 million, or 10%, for the three months ended March 31, 2024 compared to the same period in 2023.

The increase was driven by expense from new grants awarded since March 31, 2023, including RSUs, P-RSUs, and SARs, partially offset by lower expense under the accelerated attribution method for restricted stock units (“RSUs”) granted prior to September 30, 2020, the date of our direct listing, and the vesting and cancellation of options and RSUs.

Stock-based compensation expenses increased by $27.6 million, or 24%, and $38.5 million, or 17%, for the three and six months ended June 30, 2024 compared to the same periods in 2023, respectively.

The increase was driven by expense from new grants awarded since June 30, 2023, including restricted stock units (“RSUs”), performance-based RSUs (“P-RSUs”), and stock appreciation rights (“SARs”), partially offset by a reduction in expense from awards that became fully vested and lower expense under the accelerated attribution method for RSUs granted prior to September 30, 2020, the date we completed the direct listing of our Class A common stock on the New York Stock Exchange (“NYSE”).

Interest Income

Three Months Ended March 31, Change

2024 2023 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount 2024 2023 Amount

Interest income $ 46,593 $ 30,310 $ 16,283 $ 89,945 $ 51,163 $ 38,782

Interest income increased by $22.5 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher U.S.

interest rates and increases in our interest-bearing cash and cash equivalents, and our investments in short-term U.S.

Interest income increased by $16.3 million and $38.8 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in our interest-bearing cash, cash equivalents, and our investments in short-term U.S.

treasury securities.

Other Income (Expense), Net

Three Months Ended March 31, Change

2024 2023 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount 2024 2023 Amount

Other income (expense), net $ (11,173) $ (10,341) $ (832) $ (24,680) $ (14,477) $ (10,203)

Other income (expense), net changed by $9.4 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Other income (expense), net changed by $0.8 million and $10.2 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to an increase in net realized and unrealized losses from our shares held in equity securities.

Provision for Income Taxes

Three Months Ended March 31, Change

2024 2023 Amount

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2024 2023 Amount 2024 2023 Amount

Provision for income taxes $ 5,189 $ 2,171 $ 3,018 $ 9,844 $ 3,852 $ 5,992

Provision for income taxes increased by $3.0 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily related to higher foreign income taxes as the result of higher foreign taxable income.

Provision for income taxes increased by $3.0 million and $6.0 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to increased foreign tax expense as a result of higher foreign taxable income and withholding taxes, as well as increases in state taxes.

Liquidity and Capital Resources

We generated positive cash flow from operations for the three months ended March 31, 2024.

We had cash, cash equivalents, and short-term U.S.

treasury securities totaling $3.9 billion available as of March 31, 2024.

We believe that cash flows generated from operations, cash, cash equivalents, marketable securities, available funds, and access to financing sources, including our credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.

We generated positive cash flow from operations for the six months ended June 30, 2024.

We had cash and cash equivalents and short-term U.S.

treasury securities totaling $4.0 billion available as of June 30, 2024.

We believe that cash flows generated from operations, cash, cash equivalents, marketable securities, available funds, and access to financing sources, including our

undrawn credit facility, will be sufficient to meet our anticipated operating cash needs for at least the next twelve months.

However, any projections of future cash needs and cash flows are subject to substantial uncertainty.

While we have generated income from operations and positive cash flows from operations for the three months ended March 31, 2024, the amounts may fluctuate for the foreseeable future.

As of March 31, 2024, our accumulated deficit balance was $5.5 billion, and our principal sources of liquidity were cash, cash equivalents, and short-term U.S.

While we have generated income from operations and positive cash flows from operations for the six months ended June 30, 2024, the amounts may fluctuate for the foreseeable future.

As of June 30, 2024, our accumulated deficit balance was $5.4 billion, and our principal sources of liquidity were cash and cash equivalents and short-term U.S.

treasury securities totaling $4.0 billion.

As of March 31, 2024, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500.0 million under our credit facility.

As of June 30, 2024, we had no outstanding debt balances and additional available and undrawn revolving commitments of $500 million under our credit facility.

For more information, see Note 6.

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In August 2023, the Company’s Board of Directors authorized a stock repurchase program of up to $1.0 billion of the Company’s outstanding shares of Class A common stock (the “Share Repurchase Program”).

The Company has and may continue to repurchase shares of its Class A common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act in accordance with applicable securities laws and other restrictions.

The timing and the amount of stock repurchases under the Share Repurchase Program will be determined by the Company’s management, based on its evaluation of factors including business and market conditions, corporate and regulatory requirements, and other considerations.

The Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be discontinued at any time.

During the three months ended March 31, 2024, the Company repurchased and subsequently retired 0.4 million shares of its Class A common stock for an aggregate amount, including commissions, of $9.0 million under the Share Repurchase Program.

For additional information on our Share Repurchase Program, see Note 8.

Stockholders’ Equity in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2024, the Company repurchased and subsequently retired 1.2 million shares of its Class A common stock for an aggregate amount, including commissions, of $26.7 million under the Share Repurchase Program.

As of June 30, 2024, approximately $973.3 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to attract and retain customers and their willingness and ability to pay for our products and services, and the timing and extent of spending to support our efforts to market and develop our products.

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The following table summarizes our cash flows for the periods indicated (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by (used in):

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Effect of foreign exchange on cash, cash equivalents, and restricted cash (4,948) (1,855)

(4,024) 2,676

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

Net decrease in cash, cash equivalents, and restricted cash

$ (318,032) $ (1,553,310)

Operating Activities

Net cash provided by operating activities was $129.6 million and $187.4 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease was primarily driven by timing of payments to vendors and timing of the receipt of payments from our customers, partially offset by an increase in interest income.

Net cash provided by operating activities was $273.8 million and $277.6 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease was primarily driven by timing of the receipt of payments from our customers and timing of payments to vendors.

Investing Activities

Net cash used in investing activities was $0.5 billion and $1.6 billion for the three months ended March 31, 2024 and 2023, respectively.

The decrease in cash used in investing activities was primarily due to purchases of marketable securities, primarily comprised of short-term U.S.

treasury securities, partially offset by proceeds from sales and redemptions of marketable securities.

Net cash used in investing activities was $660.1 million and $1.9 billion for the six months ended June 30, 2024 and 2023, respectively.

The decrease in cash used in investing activities was primarily due to fewer purchases of marketable securities, primarily comprised of short-term U.S.

treasury securities compared to the prior year.

Financing Activities

Net cash provided by financing activities was $75.2 million and $26.0 million for the three months ended March 31, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options partially offset by share repurchases of $9.0 million.

Net cash provided by financing activities was $73.3 million and $116.7 million for the six months ended June 30, 2024 and 2023, respectively, each of which primarily consisted of proceeds from the exercise of common stock options, partially offset by share repurchases of $26.7 million during the six months ended June 30, 2024.

Contractual Obligations and Commitments

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What changed 10-Q

Item 2. Management’s Discussion and Analysis