What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 84 added, 105 removed, 516 unchanged (27% of the section changed)

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You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report.

This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties, including the potential impact of the COVID-19 pandemic on our business.

This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this Annual Report.

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Introduced in 2011, our cloud software brings together social messaging, data and workflows in a unified system of record, intelligence and action.

Operating across major networks, including Twitter, Facebook, Instagram, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, and commerce platforms Facebook Shops and Shopify, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Operating across major networks, including Twitter, Facebook, Instagram, TikTok, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, and commerce platforms Facebook Shops, Shopify and WooCommerce, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Virtually every aspect of business has been impacted by social media, from marketing, sales, commerce and public relations to customer service, product and strategy, creating a need for an entirely new category of software.

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• 2019 — Completed our IPO resulting in $134.3 million of net proceeds (excluding $10.0 million of additional net proceeds from the underwriters’ exercise of their over-allotment option in January 2020), surpassed $100 million in ARR and awarded one of Glassdoor’s “Top CEOs, companies under 1,000 employees, 2019”;

• 2020 — Completed our follow-on offering resulting in $42.1 million in net proceeds, awarded one of Glassdoor’s “Best Place to Work” in 2020, recognized as one of Fortune’s 100 Best

Small and Medium Workplaces, one of Fortune’s 25 Best Small and Medium Workplaces for Women, and selected as a recipient of the 2020 Tech Cares Award from TrustRadius, awarded to tech companies that went above and beyond to support their clients and communities during the COVID-19 Pandemic;

• 2021 — Surpassed 31,000 customers and $220 million in ARR, awarded one of Glassdoor’s “Best Place to Work” in 2022, ranked #3 on Battery Venture’s 25 Highest Rated Public Cloud Computing Companies to Work For, added a new level of transparency to its Environmental, Social and Governance (ESG) commitments, announced a first-of-its kind social commerce solution, and recognized by G2 as one of the 2021 Best Software Companies.

• 2020 — Completed our follow-on offering resulting in $42.1 million in net proceeds, awarded one of Glassdoor’s “Best Place to Work” in 2020, recognized as one of Fortune’s 100 Best Small and Medium Workplaces, one of Fortune’s 25 Best Small and Medium Workplaces for

Women, and selected as a recipient of the 2020 Tech Cares Award from TrustRadius, awarded to tech companies that went above and beyond to support their clients and communities during the COVID-19 Pandemic;

• 2021 — Surpassed 31,000 customers and $220 million in Annualized Recurring Revenue (ARR), awarded one of Glassdoor’s “Best Place to Work” in 2022, ranked #3 on Battery Venture’s 25 Highest Rated Public Cloud Computing Companies to Work For, added a new level of transparency to its Environmental, Social and Governance (ESG) commitments, announced a first-of-its kind social commerce solution, and recognized by G2 as one of the 2021 Best Software Companies;

• 2022 — Surpassed 34,000 customers and $296 million in ARR, awarded one of Glassdoor’s “Best Place to Work” in 2023, named to the 2022 PEOPLE Companies that Care list, recognized by G2 as one of the 2022 Best Software Companies, integrated with TikTok and announced a new partnership with Salesforce making it easy for Salesforce customers to manage their social media presence through Sprout Social.

We generate revenue primarily from subscriptions to our social media management platform under a software-as-a-service model.

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We expect to continue investing in the growth of our business and, as a result, generate net losses for the foreseeable future.

In December 2019, a novel coronavirus disease (“COVID-19”) was identified.

On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.

The extent of the impact of COVID-19 on our operational and financial performance and financial position will depend on certain developments, including the duration and spread of the outbreak and the governmental responses to address the pandemic and any re-emergence of COVID-19, impact on our customers and sales cycles and impact on our employees, all of which are uncertain and cannot be predicted.

Given the importance of our technology platform and heightened market awareness of social media as a strategic communications channel, our operational and financial performance were not materially impacted by COVID-19 during the years ended December 31, 2021 and 2020.

Our IPO in December 2019 and sale of over-allotment shares to the underwriters in January 2020 resulted in total net proceeds of $144.3 million, which strengthened our liquidity position prior to the pandemic.

The $42.1 million in net proceeds from our equity follow-on offering in August 2020 further strengthened our liquidity position.

We believe that over the long term, we will continue to see strong demand for our technology platform;

however, the duration and spread of the pandemic could impact our customers’ marketing or social media budgets or ability to pay for existing subscriptions, particularly in the industries most impacted by COVID-19.

We will continue to monitor the potential impact of COVID-19;

however, at this

time, the extent to which the pandemic may impact our financial condition or results of operations is uncertain.

Macroeconomic Conditions

As a company with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, the COVID-19 pandemic, the Russia-Ukraine war, global geopolitical tension and more recently, rising inflation and interest rates, volatility in the capital markets and related market uncertainty.

We continuously monitor the direct and indirect impacts, and the potential for future impacts, of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.

Given the importance of our technology platform and heightened market awareness of social media as a strategic communications channel, these factors have not had a material adverse impact on our operational and financial performance to date.

However, the potential implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, introduce additional uncertainty.

Our current and prospective customers are impacted by worsening macroeconomic conditions to varying degrees and as a result, in some cases we are observing slower expansion by existing customers.

We are continuing to evaluate this and other potential future direct and indirect impacts on our business and results of operations.

Key Factors Affecting Our Performance

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Our success is dependent on our ability to sustain product and technology innovation and maintain the competitive advantage of our proprietary technology.

We continue to invest resources to

enhance the capabilities of our platform by introducing new products, features and functionality of existing products.

We continue to invest resources to enhance the capabilities of our platform by introducing new products, features and functionality of existing products.

International expansion

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Professional services revenue is recognized at the time these services are provided to the customer.

This revenue has historically represented less than 1% of our revenue and is expected to be immaterial for the foreseeable future.

This revenue has

historically represented less than 1% of our revenue and is expected to be immaterial for the foreseeable future.

Cost of Revenue

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These costs also include depreciation expense and amortization expense related to acquired developed technologies.

associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount.

Overhead associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount.

Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect our cost of revenue to decrease as a percentage of our revenue over time.

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We expect to increase the size of our general and administrative functions to support the growth of our business.

We also recognized certain non-recurring professional fees and other expenses as part of our transition to becoming a public company and expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with rules and regulations applicable to companies listed on a U.S.

We also expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with rules and regulations applicable to companies listed on a U.S.

securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, investor relations and professional services.

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Other (Expense) Income, Net

Other (expense) income, net consists of sublease rental income from our Seattle, Washington and San Francisco, California offices, and foreign currency transaction gains and losses.

Other (expense) income, net consists foreign currency transaction gains and losses and sublease rental income from the former Seattle, Washington office where our lease terminated in July 2020.

Income Tax Provision

The income tax provision consists of current and deferred taxes for our U.S.

and foreign jurisdictions.

We have historically reported a taxable loss in our most significant jurisdiction, the U.S., and have a full valuation allowance against our deferred tax assets.

The income tax provision consists of current and deferred taxes for our United States and foreign jurisdictions.

We have historically reported a taxable loss in our most significant jurisdiction, the United States, and have a full valuation allowance against our deferred tax assets.

We expect this trend to continue for the foreseeable future.

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Income tax expense 366 211 127

Net loss and comprehensive loss $ (28,702) $ (31,655) $ (46,807)

Net loss $ (50,240) $ (28,702) $ (31,655)

_______________

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Income tax expense — % — % — %

Net loss and comprehensive loss (15) % (24) % (45) %

Net loss (20) % (15) % (24) %

Certain amounts may not sum due to rounding

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The total number of customers grew from 31,762 as of December 31, 2021 to 34,390 as of December 31, 2022.

Customers contributing over $10,000 in ARR grew 35% versus the prior year and customers contributing over $50,000 in ARR grew 59% versus the prior year.

The increase in new customers was primarily driven by our growing sales force capacity to meet market demand.

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Personnel costs increased as a result of increased headcount to grow our research and development teams to drive our technology innovation through the development of new products and features.

Since prior year, we have increased headcount within our engineering team by 28%.

During the year ended December 31, 2022, we increased headcount within our engineering team by 30%.

The increase in stock-based compensation expense was due to the increased headcount.

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Stock-based compensation expense 12,430

Advertising 1,371

Sales and marketing $ 39,513

Personnel costs increased primarily as a result of an 18% increase in headcount as we continue to expand our sales teams to grow our customer base, as well as additional sales commission expense due to the year over year sales growth, which increased the amortization of contract acquisition costs.

The increase in stock-based compensation expense was due to the increased headcount and awards granted to our President.

The increase in other was driven by an increase in general marketing costs.

Personnel costs increased primarily as a result of a 43% increase in headcount as we continue to expand our sales teams to grow our customer base, as well as additional sales commission expense due to the year over year sales growth, which increased the amortization of contract acquisition costs.

The increase in stock-based compensation expense was primarily due to the increased headcount and awards granted to our President.

General and Administrative

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Personnel costs $ 8,087

Charitable contributions 288

Stock-based compensation expense 4,908

Credit losses on accounts receivable 585

Accounting fees 502

General and administrative $ 15,586

Personnel costs increased primarily as a result of a 26% increase in headcount as we continue to grow our business and operate as a publicly traded company.

Credit losses on accounts receivable decreased due to improved collections in 2021 and a reserve taken in the prior year related to the potential impact of COVID-19 on our customers’ ability to pay.

The increase in other was driven by various expenses related to overhead and operating as a publicly traded company.

The increase in stock-based compensation expense was due to the increased headcount.

The increase in credit losses on accounts receivable was primarily driven by higher accounts receivable balances.

The remaining increase was driven by various expenses related to overhead and operating as a publicly traded company.

Interest Income (Expense), Net

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(1) Calculated metric is not meaningful.

The decrease in interest income (expense), net was primarily driven by higher interest rates earned in the prior year on cash deposits related to our IPO proceeds.

The increase in interest income (expense), net was primarily driven by the increased investment in marketable securities and higher interest rates.

Other (Expense) Income, Net

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Percentage of total revenue — % — %

The decrease in other (expense) income, net is due to sublease rental income as our Seattle, Washington office lease expired in July 2020 as well as foreign exchange transaction losses.

The decrease in other (expense) income, net was primarily driven by foreign exchange transaction losses.

Income Tax Expense

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The increase in new customers was primarily driven by our growing sales force capacity to meet market demand.

Expansion within existing customers was driven by our ability to increase the number of users, social profiles and products purchased by

Expansion within existing customers was driven by our ability to increase the number of users, social profiles and products purchased by customers.

This is in part attributable to the expansion of use-cases across various functions within our existing customers’ organizations.

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Personnel costs increased primarily as a result of a 10% increase in headcount as we continued to grow our customer support and customer success teams to support our customer growth.

The decrease in stock-based compensation

was due to the higher expense in 2019 related to employee restricted stock units (“RSUs”) vesting upon the completion of our IPO on December 17, 2019.

The increase in stock-based compensation expense was due to the increased headcount.

Operating Expenses

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Personnel costs increased as a result of increased headcount to grow our research and development teams to drive our technology innovation through the development of new products and features.

Year over year, we have increased headcount within our engineering team by 9%.

The decrease in stock-based compensation was due to the higher expense in 2019 related to employee RSUs vesting upon the completion of our IPO on December 17, 2019.

During the year ended December 31, 2021, we increased headcount within our engineering team by 28%.

The increase in stock-based compensation expense was due to the increased headcount.

Sales and Marketing

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Stock-based compensation expense 8,172

Advertising 1,371

Sales and marketing $ 25,045

Personnel costs increased primarily as a result of a 25% increase in headcount as we continued to expand our sales teams to grow our customer base, as well as additional sales commission expense

due to the year over year sales growth, which increased the amortization of contract acquisition costs.

The decrease in stock-based compensation was due to higher expense in 2019 related to employee RSUs vesting upon the completion of our IPO on December 17, 2019.

Personnel costs increased primarily as a result of an 18% increase in headcount as we continued to expand our sales teams to grow our customer base, as well as additional sales commission expense due to the year over year sales growth, which increased the amortization of contract acquisition costs.

The increase in stock-based compensation expense was due to the increased headcount and awards granted to our President.

The increase in other was driven by an increase in general marketing costs.

General and Administrative

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Personnel costs $ 4,386

Accounting and legal fees 850

Stock-based compensation expense (7,289)

Charitable contributions 288

Credit losses on accounts receivable (1,390)

General and administrative $ 4,523

Personnel costs increased primarily as a result of an 18% increase in headcount as we continued to grow our business and operate as a public company.

Accounting and legal fees increased due to operating as a public company and costs incurred in connection with the follow-on equity offering.

The decrease in stock-based compensation was due to higher expense in 2019 related to a restricted stock award and RSU grants to our Chairman and Chief Executive Officer that immediately vested in June and December 2019, respectively, as well as expense related to employee RSUs vesting upon the completion of our IPO on December 17, 2019.

The increase in other was primarily driven by an increase of $0.3 million in consulting fees, an increase of $0.3 million in charitable contributions, and other expenses related to overhead and operating as a public company.

Personnel costs increased primarily as a result of a 33% increase in headcount as we continued to grow our business and operate as a publicly traded company.

The increase in other was driven by various expenses related to overhead and operating as a publicly traded company.

Interest Income (Expense), Net

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(1) Calculated metric is not meaningful.

The increase in net interest income was primarily driven by interest earned on cash deposits and marketable securities related to the proceeds of our IPO and follow-on equity offering.

The decrease in interest income (expense), net was primarily driven by higher interest rates earned in the prior year on cash deposits related to our IPO proceeds.

Other (Expense) Income, Net

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( dollars in thousands )

Other (expense) income, net $ 223 $ 490 $ (267) (54) %

Other (expense) income, net $ (361) $ 223 $ (584) n/m

Percentage of total revenue — % — %

The decrease in other (expense) income, net is due to sublease rental income declining as the San Francisco office lease expired in June 2019.

The decrease in other (expense) income, net is due to sublease rental income as our Seattle, Washington office lease expired in July 2020 as well as foreign exchange transaction losses.

Income Tax Expense

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Percentage of total revenue — % — %

The increase in income tax expense is due to the provision related to foreign income taxes.

The increase in income tax expense is due to higher earnings in foreign jurisdictions.

Non-GAAP Financial Measures

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Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Year Ended December 31,

2021 2020 2019

( dollars in thousands, except per share data )

Non-GAAP Gross Profit

Non-GAAP operating loss (6,359) (20,923) (21,935)

Non-GAAP net loss (6,972) (20,576) (21,474)

Non-GAAP net loss per share (0.13) (0.40) (1.16)

Free cash flow $ 13,891 $ (15,367) $ (15,174)

Non-GAAP Gross Profit

We define non-GAAP gross profit as GAAP gross profit, excluding stock-based compensation expense.

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We define non-GAAP operating loss as GAAP loss from operations, excluding stock-based compensation expense.

We believe non-GAAP operating loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period

comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.

We believe non-GAAP operating loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.

Year Ended December 31,

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Non-GAAP Net Loss

We define non-GAAP net loss as GAAP net loss and comprehensive loss, excluding stock-based compensation expense.

We define non-GAAP net loss as GAAP net loss, excluding stock-based compensation expense.

We believe non-GAAP net loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.

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Reconciliation of Non-GAAP net loss ( dollars in thousands )

Net loss and comprehensive loss $ (28,702) $ (31,655) $ (46,807)

Net loss $ (50,240) $ (28,702) $ (31,655)

Stock-based compensation expense 47,738 21,730 11,079

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Free Cash Flow

Free cash flow is a non-GAAP financial measure that we define as net cash used in operating activities less purchases of property and equipment.

We believe that free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash used in our core operations that, after the purchases of property and equipment, is not available to be used for

strategic initiatives.

Free cash flow is a non-GAAP financial measure that we define as net cash used in operating activities less expenditures for property and equipment.

We believe that free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash used in our core operations that, after the expenditures for property and equipment, is not available to be used for strategic initiatives.

For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives.

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Net cash provided by (used in) operating activities $ 10,668 $ 14,817 $ (11,352)

Purchases of property and equipment (926) (4,015) (760)

Expenditures for property and equipment (1,824) (926) (4,015)

Free cash flow $ 8,844 $ 13,891 $ (15,367)

Liquidity and Capital Resources

Our liquidity and capital resources were not materially impacted by the COVID-19 pandemic and the governmental responses to address the pandemic and the related economic impact during the years ended December 31, 2021 and 2020.

For further discussion regarding the future potential impacts of COVID-19 and the related economic impacts on our liquidity and capital resources, see “Risk Factors—Risks Related to our Business Model and Operations—The effects of the COVID-19 pandemic are unpredictable and may materially affect our customers and how we operate our business, and the duration and extent to which the pandemic continues (including any reemergence of COVID-19) to threaten our future results of operations and overall financial performance remains uncertain.”

As of December 31, 2022, our principal sources of liquidity were cash and cash equivalents of $79.9 million, marketable securities of $105.9 million, and net accounts receivable of $35.8 million.

Historically, we have generated losses from operations and negative cash flows from operations, as evidenced by our accumulated deficit and statement of cash flows.

However, during the year ended December 31, 2021, we generated positive cash flows from operations.

However, during the years ended December 31, 2022 and 2021, we generated positive cash flows from operations.

We expect to continue to incur operating losses and may have negative operating cash flows for the foreseeable future due to the investments in our business we intend to make as described above.

We may experience greater than anticipated operating losses in the short- and long-term if the COVID-19 pandemic continues to persist for a prolonged period of time.

The impact of the COVID-19 pandemic on our customers and our operations going forward remains uncertain, and we continue to proactively monitor our liquidity position.

We may experience greater than anticipated operating losses in the short- and long-term due to macroeconomic, financial and other factors that are beyond our control, such as rising inflation rates and a potential recession.

The impact of these factors on our customers and our operations going forward remains uncertain, and we continue to proactively monitor our liquidity position.

Prior to our IPO in December 2019, we financed our operations primarily through private issuance of equity securities and line of credit borrowings.

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We believe our existing cash and cash equivalents will be sufficient to meet our operating and capital needs for at least the next 12 months.

Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of the COVID-19 pandemic on our customers and our operations, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the continuing market acceptance of our product.

In the future, we may enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights.

We may be required to seek additional

equity or debt financing.

We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash and investment balances and potential future equity or debt transactions.

Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of macroeconomic conditions on our customers and our operations, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the continuing market acceptance of our product.

We have in the past, and may in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights.

We may be required to seek additional equity or debt financing.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all.

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In November 2019, we amended the SVB Credit Facility to increase the Revolver (including the exercise of the Incremental Revolver, as amended) to $40.0 million and amended, among other terms, levels for the minimum adjusted EBITDA and minimum liquidity covenants, the advance rate and the interest rate.

The November 2019 amendment includes a “streamline period”, or Streamline Period, concept, which occurs when we maintain, for every consecutive day in the immediately preceding fiscal quarter, the sum of (i) unrestricted cash at SVB plus (ii) unused availability under the Revolver in an amount equal to or greater than $75.0 million (the Streamline Balance).

Any Streamline Period terminates on the earlier of the occurrence of an event of default and failure to maintain the Streamline Balance.

The minimum adjusted EBITDA and minimum liquidity covenants do not apply during any Streamline Period.

As of December 31, 2021, we did not have any outstanding principal balance under the SVB Credit Facility.

In connection with the November 2019 amendment, the Revolver now has a floating interest rate equal to the greater of (i) 4.75% and (ii) (x) at any time when the Streamline Period is not in effect, one and one-half of one percent (1.50%) above the prime rate and (y) at any time when the Streamline Period is in effect, the prime rate, which interest is payable monthly.

The SVB Credit Facility contains customary negative covenants that limit our ability to, or require mandatory prepayment in the event that we, among other things, incur additional indebtedness or liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, add new offices or business locations, make certain investments, pay dividends, transfer or dispose of certain assets, liquidate or dissolve and enter into various specified transactions.

The SVB Credit Facility also contains affirmative covenants, including certain financial covenants such as minimum adjusted EBITDA and minimum liquidity covenants and financial reporting requirements.

With limited exceptions, our obligations under the SVB Credit Facility are secured by all of our property other than intellectual property (which is subject to a negative pledge).

As of December 31, 2021, we were in compliance with the covenants in the SVB Credit Facility.

The SVB Credit Facility expired by its terms on January 31, 2022.

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Net cash (used in) provided by financing activities (193) (100) 44,359

Net (decrease) increase in cash and cash equivalents $ (7,401) $ (20,795) $ 109,120

Net decrease in cash and cash equivalents $ (27,197) $ (7,401) $ (20,795)

Operating Activities

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Historically, we have generated negative cash flows from operating activities.

However, for the year ended December 31, 2021, we generated positive cash flows from operations.

However, for the years ended December 31, 2022 and 2021, we generated positive cash flows from operations.

Net cash provided by operating activities during the year ended December 31, 2022 was $10.7 million, which resulted from a net loss of $50.2 million adjusted for non-cash charges of $71.9 million and net cash outflow of $11.0 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $47.7 million of stock-based compensation expense, $3.9 million of depreciation and intangible asset amortization expense, $18.6 million for amortization of deferred contract acquisition costs, which were primarily commissions, $1.2 million for credit losses on accounts receivable and $1.0 million of amortization of right-of-use, or ROU, operating lease assets.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $30.3 million increase in deferred commissions due to the addition of new customers and expansion of the business, an $11.5 million increase in gross accounts receivable and a $2.9 million decrease in operating lease liabilities.

These outflows were partially offset by a $26.9 million increase in deferred revenue and a $7.1 million increase in accounts payable and other accrued liabilities.

Net cash provided by operating activities during the year ended December 31, 2021 was $14.8 million, which resulted from a net loss of $28.7 million adjusted for non-cash charges of $40.2 million and net cash inflow of $3.4 million from changes in operating assets and liabilities.

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Net cash used in operating activities during the year ended December 31, 2020 was $11.4 million, which resulted from a net loss of $31.7 million adjusted for non-cash charges of $26.7 million and net cash outflow of $6.4 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $11.1 million of stock-based compensation expense, $4.2 million of depreciation and intangible asset amortization expense, $7.7 million for amortization of deferred contract acquisition costs, which were primarily commissions, $2.0 million for credit losses on accounts receivable and $1.1 million of amortization of right-of-use, or ROU, operating lease assets.

million of amortization of right-of-use, or ROU, operating lease assets.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $14.0 million increase in deferred commissions due to the addition of new customers and expansion of the business, a $8.1 million increase in gross accounts receivable, a $4.7 million increase in prepaid expenses and a $0.2 million decrease in operating lease liabilities.

These outflows were offset by a $14.0 million increase in deferred revenue and a $6.6 million increase in accounts payable and other accrued liabilities.

Net cash used in operating activities during the year ended December 31, 2019 was $14.4 million, which resulted from a net loss of $46.8 million adjusted for non-cash charges of $37.9 million and net cash outflow of $5.5 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $25.3 million of stock-based compensation expense, $4.3 million of depreciation and intangible asset amortization expense, $4.8 million for amortization of deferred contract acquisition costs, which were primarily commissions, $2.2 million for credit losses on accounts receivable and $1.1 million of amortization of right-of-use, or ROU, operating lease assets.

The net cash outflow from changes in operating assets and liabilities was primarily the result of a $8.2 million increase in deferred commissions due to the addition of new customers and expansion of the business, a $2.8 million increase in gross accounts receivable, a $2.7 million increase in prepaid expenses and a $1.6 million decrease in operating lease liabilities.

These outflows were offset by a $8.2 million increase in deferred revenue.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2022 was $37.7 million, which was primarily due to $190.0 million in purchases of marketable securities, partially offset by $154.1 million in proceeds from maturities of marketable securities.

Net cash used in investing activities for the year ended December 31, 2021 was $22.1 million, which was primarily due to $109.6 million in purchases of marketable securities, partially offset by $88.4 million in proceeds from maturities of marketable securities.

Net cash used in investing activities for the year ended December 31, 2020 was $53.8 million, which was primarily due to the purchase of marketable securities and leasehold improvements for the new Seattle office.

Net cash used in investing activities for the year ended December 31, 2019 was $0.8 million, which was primarily due to purchases of computer equipment and hardware.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2022 was $0.2 million, primarily driven by $1.9 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, offset by $1.7 million of proceeds under our employee stock purchase plan.

Net cash used in financing activities for the year ended December 31, 2021 was $0.1 million, primarily driven by $1.6 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards and other financing related costs, offset by $1.7 million in proceeds from the disgorgement of stockholder short-swing profits under Section 16(b) of the Exchange Act.

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Additionally, we received $1.1 million from the disgorgement of stockholder short-swing profits under Section 16(b) of the Exchange Act.

Net cash provided by financing activities for the year ended December 31, 2019 was $124.3 million, which was the result of $139.5 million of net proceeds from our IPO, offset by $9.9 million in payments related to the employee withholding taxes as a result of the net settlement of stock-based awards and $5.2 million in payments of deferred costs associated with our IPO.

Contractual Obligations

As of December 31, 2021, we have non-cancellable contractual obligations related to operating leases and minimum guaranteed purchase commitments for data and services.

See Note 5 and Note 10 of the notes to our audited consolidated financial statements for more information regarding these obligations.

As of December 31, 2022, we have non-cancellable contractual obligations related primarily to operating leases and minimum guaranteed purchase commitments for data and services.

As of December 31, 2022, the total obligation for operating leases was $25.5 million of which $4.6 million is expected in the next twelve months.

As of December 31, 2022, our purchase commitment for primarily data and services was $21.2 million, of which $18.1 million is expected in the next twelve months.

See Note 5 and Note 10 of our audited consolidated financial statements for more information regarding these obligations.

Recent Accounting Pronouncements

Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 of the notes to our audited consolidated financial statements for more information.

Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 to our audited consolidated financial statements for more information.

Critical Accounting Policies and Estimates

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For each of these awards, the performance condition was considered probable at the grant date and the awards have been recognized as compensation expense over their respective requisite service periods.

In 2021, we recognized $3.1 million of stock-based compensation expense in relation to these awards.

In 2022 and 2021, we recognized $6.4 million and $3.1 million, respectively, of stock-based compensation expense in relation to these awards.

Pursuant to his employment agreement, our Chairman and CEO was eligible to receive awards of fully vested restricted stock units with respect to shares of our Class B common stock under our 2019 Class B Incentive Plan, or the Class B Plan, covering up to 1.0% of our fully diluted common equity determined as of the date of our IPO, or 483,663 shares, following the consummation of our IPO, depending on the valuation of the Company in connection with our IPO and the achievement of market capitalization thresholds thereafter, which we refer to as the Howard IPO Award.

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(i) a valuation between $750,000,000 and $999,999,999, would result in an initial grant under the Howard IPO Award equal to 0.5% of our outstanding fully diluted common equity;

(ii) a valuation at least $1,000,000,000 but less than $2,000,000,000, would result in an initial grant under the Howard IPO Award equal to 0.75% of our fully diluted common equity;

and (iii) a valuation at least $2,000,000,000, would result in an initial grant under the Howard IPO Award equal to 1.0% of our outstanding fully diluted common equity.

(ii) a valuation of at least $1,000,000,000 but less than $2,000,000,000 would result in an initial grant under the Howard IPO Award equal to 0.75% of our fully diluted common equity;

and (iii) a valuation of at least $2,000,000,000 would result in an initial grant under the Howard IPO Award equal to 1.0% of our outstanding fully diluted common equity.

No initial grant under the Howard IPO Award would be made as a result of our IPO if the valuation of the Company calculated as described above was below $750,000,000.

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In October 2020, Mr.

Howard received 120,916 shares upon the Company’s achievement of a market capitalization threshold of $2,000,000,000.

Howard received 120,916 shares

upon the Company’s achievement of a market capitalization threshold of $2,000,000,000.

The Company recognized approximately $2.0 million of stock-based compensation expense during 2020 in relation to these awards.

1 unchanged sentence

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

What changed 10-K

Item 7. Management’s Discussion and Analysis