What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 136 added, 77 removed, 434 unchanged (33% of the section changed)

2 unchanged sentences

(in thousands, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets:

1 unchanged sentence

Short-term investments 205,671 169,544

Accounts receivable, net of allowance for credit losses of $ 970 and $ 951 at March 31, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 1,380 and $ 951 at June 30, 2024 and December 31, 2023, respectively

143,671 164,862

14 unchanged sentences

Accrued expenses and other current liabilities 67,242 85,025

Convertible senior notes, current portion, net 45,737 —

Operating lease liabilities, current portion 15,592 13,452

1 unchanged sentence

Total current liabilities 578,613 569,792

Convertible senior notes, net 931,001 929,996

Convertible senior notes non-current portion, net 886,272 929,996

Operating lease liabilities, non-current portion 73,425 81,130

4 unchanged sentences

Preferred stock, $ 0.01 par value per share;

100,000,000 shares authorized at March 31, 2024 and December 31, 2023;

0 shares issued and outstanding at March 31, 2024 and December 31, 2023

100,000,000 shares authorized at June 30, 2024 and December 31, 2023;

0 shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value per share;

100,000,000 shares authorized at March 31, 2024 and December 31, 2023;

62,838,127 and 62,283,630 shares issued at March 31, 2024 and December 31, 2023, respectively;

62,268,548 and 61,714,051 shares outstanding at March 31, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 569,579 shares at March 31, 2024 and December 31, 2023

100,000,000 shares authorized at June 30, 2024 and December 31, 2023;

63,271,273 and 62,283,630 shares issued at June 30, 2024 and December 31, 2023, respectively;

62,701,694 and 61,714,051 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 569,579 shares at June 30, 2024 and December 31, 2023

( 4,765 ) ( 4,765 )

7 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

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

2024 2023 2024 2023

Product subscriptions $ 200,067 $ 181,701 $ 396,985 $ 355,473

10 unchanged sentences

General and administrative 22,412 22,888 42,247 47,095

Impairment of long-lived assets — 27,231 — 27,231

Total operating expenses 140,263 183,917 273,893 335,057

3 unchanged sentences

Interest expense ( 2,673 ) ( 2,773 ) ( 5,343 ) ( 5,490 )

Other income (expense), net ( 1,435 ) ( 307 )

Other expense, net ( 695 ) ( 13,268 ) ( 2,130 ) ( 13,575 )

Income (loss) before income taxes 8,733 ( 65,913 ) 19,916 ( 91,234 )

8 unchanged sentences

(in thousands)

Three Months Ended March 31,

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

2024 2023 2024 2023

Net income (loss) $ 8,195 $ ( 66,782 ) $ 10,453 $ ( 92,697 )

1 unchanged sentence

Change in fair value of cash flow hedges ( 329 ) 447 ( 958 ) 639

Adjustment for net losses realized on cash flow hedges and included in net income (loss), net of taxes ( 381 ) 641

Adjustment for net (gains)/losses realized on cash flow hedges and included in net income (loss), net of taxes ( 92 ) ( 61 ) ( 473 ) 580

Total change in unrealized (losses) gains on cash flow hedges ( 421 ) 386 ( 1,431 ) 1,219

Change unrealized (losses) gains on investments ( 555 ) 378

Change in unrealized (losses) gains on investments ( 209 ) 64 ( 764 ) 442

Total other comprehensive (loss) income ( 630 ) 450 ( 2,195 ) 1,661

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited)

Three Months Ended March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

(in thousands)

6 unchanged sentences

Shares Amount Shares Amount

Balance, March 31, 2024 62,269 $ 623 570 $ ( 4,765 ) $ 925,661 $ ( 221 ) $ ( 1,007,747 ) $ ( 86,449 )

Stock-based compensation expense — — — — 27,155 — — 27,155

Vesting of restricted stock units 457 5 — — ( 5 ) — — —

Shares withheld for employee taxes ( 33 ) — — — ( 1,326 ) — — ( 1,326 )

Issuance of common stock upon exercise of stock options 9 — — — 135 — — 135

Other comprehensive loss — — — — — ( 630 ) — ( 630 )

Net income — — — — — — 8,195 8,195

Balance, June 30, 2024 62,702 $ 628 570 $ ( 4,765 ) $ 951,620 $ ( 851 ) $ ( 999,552 ) $ ( 52,920 )

Common stock Treasury stock Additional

paid-in-capital Accumulated

comprehensive

loss Accumulated

deficit Total

stockholders’

Shares Amount Shares Amount

Balance, March 31, 2023 60,322 $ 603 570 $ ( 4,765 ) $ 780,850 $ ( 200 ) $ ( 886,660 ) $ ( 110,172 )

Stock-based compensation expense — — — — 31,276 — — 31,276

Vesting of restricted stock units 442 4 — — ( 4 ) — — —

Shares withheld for employee taxes ( 28 ) — — — ( 1,324 ) — — ( 1,324 )

Issuance of common stock upon exercise of stock options 171 2 — — 2,499 — — 2,501

Issuance of common stock in relation to an acquisition 33 — — — — — — —

Reclassification of 2023 capped calls from equity to derivative asset — — — — 33,029 — — 33,029

Other comprehensive gain — — — — — 450 — 450

Net loss — — — — — — ( 66,782 ) ( 66,782 )

Balance, June 30, 2023 60,940 $ 609 570 $ ( 4,765 ) $ 846,326 $ 250 $ ( 953,442 ) $ ( 111,022 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited)

Six Months Ended June 30, 2024 and 2023

(in thousands)

Common stock Treasury stock Additional

paid-in-capital Accumulated

comprehensive

loss Accumulated

deficit Total

stockholders’

Shares Amount Shares Amount

Balance, December 31, 2023 61,714 $ 617 570 $ ( 4,765 ) $ 894,630 $ 1,344 $ ( 1,010,005 ) $ ( 118,179 )

6 unchanged sentences

Net income — — — — — — 10,453 10,453

Balance, March 31, 2024 62,269 $ 623 570 $ ( 4,765 ) $ 925,661 $ ( 221 ) $ ( 1,007,747 ) $ ( 86,449 )

Balance, June 30, 2024 62,702 $ 628 570 $ ( 4,765 ) $ 951,620 $ ( 851 ) $ ( 999,552 ) $ ( 52,920 )

Common stock Treasury stock Additional

12 unchanged sentences

Issuance of common stock in relation to an acquisition 107 1 — — ( 1 ) — — —

Repurchase of common stock issued in relation to acquisition — — 83 ( 1 ) 1 — — —

Repurchase of common stock in relation to acquisition — — 83 ( 1 ) 1 — — —

Reclassification of 2023 capped calls from equity to derivative asset — — — — 33,029 — — 33,029

Other comprehensive gain — — — — — 1,661 — 1,661

Net loss — — — — — — ( 92,697 ) ( 92,697 )

Balance, March 31, 2023 60,322 $ 603 570 $ ( 4,765 ) $ 780,850 $ ( 200 ) $ ( 886,660 ) $ ( 110,172 )

Balance, June 30, 2023 60,940 $ 609 570 $ ( 4,765 ) $ 846,326 $ 250 $ ( 953,442 ) $ ( 111,022 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Stock-based compensation expense 52,302 61,068

Impairment of long-lived assets — 27,231

Change in fair value of derivative assets — 12,660

Deferred income taxes 1,840 —

15 unchanged sentences

Sales and maturities of investments 130,001 65,700

Other investing activities 360 —

Net cash used in investing activities ( 34,795 ) ( 62,183 )

6 unchanged sentences

Effect of exchange rate changes on cash ,cash equivalents and restricted cash ( 2,076 ) ( 337 )

Net decrease in cash, cash equivalents and restricted cash ( 7,755 ) ( 1,530 )

Net increase (decrease) in cash, cash equivalents and restricted cash 30,418 ( 21,358 )

Cash, cash equivalents and restricted cash, beginning of period 214,130 207,804

19 unchanged sentences

All intercompany transactions and balances have been eliminated in consolidation.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

Use of Estimates

6 unchanged sentences

Restricted Cash

As of March 31, 2024, we had $ 7.7 million of restricted cash recorded on our condensed consolidated balance sheet in prepaid expenses and other current assets and other assets in letters of credit outstanding as collateral for certain office space leases.

As of June 30, 2024, we had $ 7.6 million of restricted cash recorded on our condensed consolidated balance sheet in prepaid expenses and other current assets and other assets in letters of credit outstanding as collateral for certain office space leases.

Recent Accounting Pronouncements

23 unchanged sentences

Such amounts are recognized as revenue over the contractual period consistent with the above methodology.

For the three months ended March 31, 2024 and 2023, we recognized revenue of $ 179.3 million and $ 163.4 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

For the three months ended June 30, 2024 and 2023, we recognized revenue of $ 179.0 million and $ 164.9 million, respectively, and for the six months ended June 30, 2024 and 2023, we recognized $ 310.8 million and $ 288.3 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

3 unchanged sentences

If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset.

As of March 31, 2024 and December 31, 2023, unbilled receivables of $ 2.5 million and $ 1.1 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet.

As of March 31, 2024 and December 31, 2023, we had no contract assets recorded on our condensed consolidated balance sheet.

As of June 30, 2024 and December 31, 2023, unbilled receivables of $ 2.4 million and $ 1.1 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet.

As of June 30, 2024 and December 31, 2023, we had no contract assets recorded on our condensed consolidated balance sheet.

Transaction Price Allocated to the Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2024.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2024.

The estimated revenues do not include unexercised contract renewals.

14 unchanged sentences

The acquired goodwill and intangible assets were not deductible for tax purposes.

In the first quarter of 2024, we sold acquired intellectual property through a non-cash intercompany transaction, which resulted in $ 4.6 million of current tax expense and $ 1.8 million of deferred tax expense in Israel.

In the first quarter of 2024, we sold acquired intellectual property through a non-cash intercompany transaction, which for the three and six months ended June 30, 2024 resulted in $ 4.6 million of current tax expense and $ 1.8 million of deferred tax expense in Israel.

Our investments, which are all classified as available-for-sale, consisted of the following:

As of March 31, 2024

As of June 30, 2024

Losses Fair Value

8 unchanged sentences

Total $ 225,320 $ 467 $ ( 72 ) $ 225,715

As of March 31, 2024, our available-for-sale investments had maturities ranging from 1 to 16 months.

As of June 30, 2024, our available-for-sale investments had maturities ranging fro m 1 to 15 months.

As of December 31, 2023, our available-for-sale investments had maturities ranging from 1 to 18 months.

For all of our investments for which the amortized cost basis was greater than the fair value at March 31, 2024 and December 31, 2023, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity.

For all of our investments for which the amortized cost basis was greater than the fair value at June 30, 2024 and December 31, 2023, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity.

In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

10 unchanged sentences

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:

As of March 31, 2024

As of June 30, 2024

Level 1 Level 2 Level 3 Total

(in thousands)

Money market funds $ 116,710 $ — $ — $ 116,710

government agencies $ 257,105 $ — $ — $ 257,105

6 unchanged sentences

(in thousands)

Money market funds $ 124,506 $ — $ — $ 124,506

government agencies $ 223,222 $ — $ — $ 223,222

4 unchanged sentences

Total liabilities $ — $ 55 $ — $ 55

As of March 31, 2024, the fair value of our 2.25 %, 0.25 % and 1.25 % convertible senior notes due 2025, 2027 and 2029, as further described in Note 10, Debt , was $ 47.1 million, $ 525.3 million and $ 304.2 million, respectively, based upon quoted market prices.

Cash and cash equivalents are excluded from the table above as carrying amounts reported in our condensed consolidated balance sheet equal or approximate fair value.

As of June 30, 2024, the fair value of our 2.25 %, 0.25 % and 1.25 % convertible senior notes due 2025, 2027 and 2029, as further described in Note 10, Debt , was $ 45.1 million, $ 536.2 million and $ 282.9 million, respectively, based upon quoted market prices.

We consider the fair value of the Notes (as defined in Note 10, Debt) to be a Level 2 measurement due to limited trading activity of the Notes.

1 unchanged sentence

Property and equipment are recorded at cost and consist of the following:

March 31, December 31,

June 30, December 31,

(in thousands)

5 unchanged sentences

Property and equipment, net $ 34,884 $ 39,642

We recorded depreciation expense of $ 2.9 million and $ 3.8 million for the three months ended March 31, 2024 and 2023, respectively.

Depreciation expense was $ 2.8 million and $ 3.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 5.7 million and $ 7.6 million for the six months ended June 30, 2024 and 2023, respectively.

Goodwill and Intangibles

Goodwill was $ 536.4 million as of March 31, 2024 and December 31, 2023.

Goodwill was $ 536.4 million as of June 30, 2024 and December 31, 2023.

The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs:

Average Estimated Useful Life (years) As of March 31, 2024 As of December 31, 2023

Average Estimated Useful Life (years) As of June 30, 2024 As of December 31, 2023

Gross Carrying

11 unchanged sentences

Total intangible assets $ 211,354 $ ( 127,335 ) $ 84,019 $ 205,345 $ ( 110,799 ) $ 94,546

Amortization expense was $ 8.4 million and $ 7.2 million and for the three months ended March 31, 2024 and 2023, respectively.

Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of March 31, 2024 was as follows (in thousands):

2024 (for the remaining nine months) $ 23,643

Amortization expense was $ 8.1 million and $ 8.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 16.5 million and $ 15.3 million for the six months ended June 30, 2024 and 2023, respectively.

Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of June 30, 2024 was as follows (in thousands):

2024 (for the remaining six months) $ 19,373

2029 and thereafter 3,531

Total $ 79,096

The table above excludes the impact of $ 7.0 million of capitalized internal-use software costs for projects that have not been completed as of March 31, 2024, and therefore, all the costs associated with these projects have not been incurred.

The table above excludes the impact of $ 4.9 million of capitalized internal-use software costs for projects that have not been completed as of June 30, 2024, and therefore, all the costs associated with these projects have not been incurred.

Deferred Contract Acquisitions and Fulfillment Costs

The following table summarizes the activity of the deferred contract acquisition and fulfillment costs for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table summarizes the activity of the deferred contract acquisition and fulfillment costs for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

5 unchanged sentences

To mitigate our exposure to foreign currency fluctuations resulting from certain expenses denominated in certain foreign currencies, we enter into forward contracts that are designated as cash flow hedging instruments.

These forward contracts have contractual maturities of seventeen months or less, and as of March 31, 2024 and December 31, 2023, outstanding forward contracts had a total notional value of $ 46.8 million and $ 44.9 million, respectively.

These forward contracts have contractual maturities of eighteen months or less, and as of June 30, 2024 and December 31, 2023, outstanding forward contracts had a total notional value of $ 42.7 million and $ 44.9 million, respectively.

The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract.

During the three months ended March 31, 2024, all cash flow hedges were considered effective.

During the three and six months ended June 30, 2024, all cash flow hedges were considered effective.

Refer to Note 5, Fair Value Measurements , for the fair values of our outstanding derivative instruments.

11 unchanged sentences

For additional details on the terms of our Notes, see Note 11, Debt , to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of March 31, 2024, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders.

As of June 30, 2024, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders.

The holders may convert the 2025 Notes, the 2027 Notes and the 2029 Notes at any time on or after November 1, 2024, December 15, 2026 and December 15, 2028, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the circumstances set forth above.

6 unchanged sentences

The debt issuance costs are amortized to interest expense using the effective interest method over the contractual term of the Notes.

The net carrying amount of the Notes as of March 31, 2024 and December 31, 2023 was as follows (in thousands):

The net carrying amount of the Notes as of June 30, 2024 and December 31, 2023 was as follows (in thousands):

2025 Notes 2027 Notes 2029 Notes

2 unchanged sentences

Amortization of debt issuance costs — 148 148 — 1,244 1,244 — 621 621

Balance at March 31, 2024 $ 45,992 $ ( 329 ) $ 45,663 $ 600,000 $ ( 7,457 ) $ 592,543 $ 300,000 $ ( 7,205 ) $ 292,795

Balance at June 30, 2024 $ 45,992 $ ( 256 ) $ 45,736 $ 600,000 $ ( 6,833 ) $ 593,167 $ 300,000 $ ( 6,894 ) $ 293,106

Interest expense related to the Notes was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes Total

2 unchanged sentences

Total interest expense $ 332 $ 999 $ 1,248 $ 2,579 $ 1,655 $ 994 $ 2,649

Six Months Ended June 30,

2025 Notes 2027 Notes 2029 Notes Total 2025 Notes 2027 Notes Total

Contractual interest expense $ 518 $ 750 $ 1,874 $ 3,142 $ 2,588 $ 750 $ 3,338

Amortization of debt issuance costs 148 1,244 621 2,013 701 1,224 1,925

Total interest expense $ 666 $ 1,994 $ 2,495 $ 5,155 $ 3,289 $ 1,974 $ 5,263

In connection with the offering of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into privately negotiated capped call transactions with certain counterparties (the “2025 Capped Calls”, “2027 Capped Calls” and “2029 Capped Calls”) (collectively, the “Capped Calls”).

17 unchanged sentences

The borrowings under the Credit Agreement bear interest, at our option, at a rate equal to either (i) term SOFR plus a credit spread adjustment of 0.10 % per annum plus a margin of 2.50 % per annum or (ii) the alternate base rate (subject to a floor), plus an applicable margin equal to 0 % per annum.

As of March 31, 2024, we did not have any outstanding borrowings under the Credit Agreement.

As of March 31, 2024, we had a total of $ 7.4 million in letters of credit outstanding as collateral for certain office space leases which reduce the amount of borrowing available under our Credit Agreement.

Stock-Based Compensation Expense

As of June 30, 2024, we did not have any outstanding borrowings under the Credit Agreement.

Stock-Based Compensation

Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options and purchase rights issued under our employee stock purchase plan was classified in the accompanying condensed consolidated statements of operations as follows:

Three Months Ended March 31,

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

2024 2023 2024 2023

(in thousands)

7 unchanged sentences

Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2024 and 2023 bonus plans, including permitting our executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash).

During the three months ended March 31, 2024 and 2023, we recognized stock-based compensation expense related to such bonuses in the amount of

$ 0.1 million, and $ 0.7 million, based on the probable expected performance against the pre-established corporate financial objectives as of March 31, 2024 and 2023.

For employees, including executive officers, who elect to receive their bonuses in the form of common stock (in lieu of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended.

During each of the three months ended June 30, 2024 and 2023, we recognized stock-based compensation expense related to such bonuses in the amount of $ 0.4 million, and during the six months ended June 30, 2024 and 2023, we recognized stock-based compensation expense in the amount of $ 0.5 million a nd $ 1.1 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of June 30, 2024 and 2023.

For employees,

including executive officers, who elect to receive their bonuses in the form of common stock (in lieu of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended.

The number of shares underlying such awards is determined by dividing the dollar value of the actual bonus award payment by the closing price per share of our common stock on the date of grant.

(b) Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

RSUs and PSUs activity during the three months ended March 31, 2024 was as follows:

RSUs and PSUs activity during the six months ended June 30, 2024 was as follows:

Shares Weighted-

4 unchanged sentences

Forfeited ( 389,590 ) $ 61.04

Unvested balance as of March 31, 2024 3,984,134 $ 59.52

As of March 31, 2024, the unrecognized compensation expense related to our unvested RSUs and PSUs was $ 214.7 million.

Unvested balance as of June 30, 2024 3,644,982 $ 58.42

As of June 30, 2024, the unrecognized compensation expense related to our unvested RSUs and PSUs was $ 188.9 million.

This unrecognized compensation expense will be recognized over an estimated weighted-average amortization period of 2.2 years.

3 unchanged sentences

The PSUs have a performance period of one year and the earned PSUs will vest in three equal installments following each of the first, second and third anniversary of the vesting commencement date, subject to the participant’s continuous service as of each such date.

In the three months ended March 31, 2024, we recorded $ 0.9 million of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

In the three and six months ended June 30, 2024, we recorded $ 0.9 million and $ 1.8 million, respectively, of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

The following tables summarizes information about stock option activity during the reporting periods:

Stock option activity during the six months ended June 30, 2024 was as follows:

Shares Weighted

6 unchanged sentences

Forfeited/cancelled ( 450 ) $ 7.73

Outstanding as of March 31, 2024 604,786 12.42 1.95 $ 22,146

Vested and exercisable as of March 31, 2024 604,786 12.42 1.95 $ 22,146

Outstanding as of June 30, 2024 595,498 $ 12.39 1.69 $ 18,367

Vested and exercisable as of June 30, 2024 595,498 $ 12.39 1.69 $ 22,146

(d) Employee Stock Purchase Plan

4 unchanged sentences

Net Income (Loss) per Share

The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the three months March 31, 2024 and 2023:

Three Months Ended March 31,

The following table summarizes the computation of basic and diluted net income (loss) per share of our common stock for the three months June 30, 2024 and 2023:

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

2024 2023 2024 2023

(in thousands, except share and per share data)

6 unchanged sentences

The dilutive impact of the Notes for our calculation of diluted net income (loss) per share is considered using the if-converted method.

For the three months ended March 31, 2024 and 2023, the shares underlying the Notes were not considered in the calculation of diluted net income (loss) per share as the effect would have been anti-dilutive.

In connection with the issuance of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls, which were not included for the purpose of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

As further described in Note 10, Debt , the 2025 Capped Calls were not redeemed with the partial repurchase of the 2025 Notes and remain outstanding.

As of March 31, 2024 and 2023, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder.

For the three and six months ended June 30, 2024 and 2023, the shares underlying the Notes were not considered in the calculation of diluted net income (loss) per share as the effect would have been anti-dilutive.

In connection with the issuance of the 2025 Notes, the 2027 Notes and the 2029 Notes, we entered into the 2025 Capped Calls, 2027 Capped Calls and 2029 Capped Calls, which were not included for the purpose of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

As of June 30, 2024 and 2023, the 2025 Notes, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder.

We had not received any conversion notices through the issuance date of our unaudited condensed consolidated financial statements.

1 unchanged sentence

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding for the respective periods below because they would have been anti-dilutive:

Three Months Ended March 31,

Three and Six Months Ended June 30,

Options to purchase common stock 595,498 744,262

19 unchanged sentences

As permitted under Delaware law, we have entered into indemnification agreements with our officers and directors, indemnifying them for certain events or occurrences while they serve as officers or directors of the company.

(d) Income Taxes

From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed by the Company.

During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $ 87 million, based upon current exchange rates between the Israeli New Shekel and the US Dollar) related to fiscal year 2021.

Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means.

As such, we have not recorded any impact of the ITA assessment in our condensed consolidated financial statements as of, and for the three and six months ended June 30, 2024.

We are continuing to monitor developments related to this matter and its impact on our existing income tax reserves for all open years.

If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected.

Segment Information and Information about Geographic Areas

2 unchanged sentences

Net revenues by geographic area presented based upon the location of the customer are as follows:

Three Months Ended March 31,

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

2024 2023 2024 2023

(in thousands)

3 unchanged sentences

Property and equipment, net by geographic area was as follows:

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

(in thousands)

5 unchanged sentences

The Restructuring Plan included a reduction of the Company’s workforce by approximately 16 %.

In the three months ended March 31, 2024, the execution of the Restructuring Plan was completed and we recorded $( 0.2 ) million of restructuring charges within general and administrative expense in the condensed consolidated statements of operations.

As of March 31, 2024, the restructuring liability accrued but not paid totaled $ 0.1 million, which is included within accrued expenses in the condensed consolidated balance sheets.

The following table presents the activity of the restructuring liability for the year ended March 31, 2024:

During the first quarter of 2024, the execution of the Restructuring Plan was completed and we recorded $( 0.2 ) million of restructuring charges within general and administrative expense in the condensed consolidated statements of operations.

The following table presents the activity of the restructuring liability for the six months ended June 30, 2024:

Restructuring Liability

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Payments ( 3,574 )

Balance at March 31, 2024 $ 133

Balance at June 30, 2024 $ —

Subsequent Event

On July 3, 2024, we acquired Noetic Cyber, Inc, (“Noetic”) a provider of cyber asset attack surface management, for consideration of approximately $ 39.2 million, subject to customary working capital adjustments as set forth in the merger agreement, including an aggregate value of $ 2.3 million of our common stock to be issued to two key employees of Noetic in three installments over a 36 -month period following the closing date of the transaction, subject to continued employment requirements (the “Closing Consideration”).

In addition, subject to the terms of the merger agreement, we may also be required to pay additional contingent consideration of up to $ 20.0 million based on the achievement of certain performance targets (the “Earnout Consideration”), measured annually upon the first, second and third anniversaries of the closing date of the transaction (the “Earnout Period”).

If the full $ 20.0 million is realized, approximately $ 6.9 million of the Earnout Consideration will be issued in the form of shares of our common stock subject to continued employment requirements over the Earnout Period, and the remainder will be paid in cash.

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

What changed 10-Q

Item 1. Financial Statements