10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40817

 

AMPLITUDE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-3937349

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

201 Third Street, Suite 200

San Francisco, California

94103

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 988-5131

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.00001 par value per share

 

AMPL

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of April 28, 2022, there were 59,747,648 shares of the registrant's Class A common stock and 51,772,184 shares of the registrant's Class B common stock, each with a $0.00001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

5

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations

6

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

67

Item 6.

Exhibits

68

Signatures

69

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements about:

our expectations regarding our revenue, expenses, and other operating results;
our ability to acquire new customers;
our ability to increase usage of our Digital Optimization System and upsell and cross sell additional products;
our ability to achieve or sustain profitability;
future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;
the costs and success of our sales and marketing efforts, including our ability to grow and maintain our channel partners, and our ability to promote our brand;
the effects of the coronavirus ("COVID-19") pandemic and other global events on our business and the global economy generally, including as a result of any new strains or variants of the virus as well as the recent and developing war in Ukraine;
our reliance on key personnel and our ability to identify, recruit and retain skilled personnel;
our ability to effectively manage our growth, including any international expansion;
our ability to protect our intellectual property rights and any costs associated therewith;
our ability to compete effectively with existing competitors and new market entrants; and
the increased expenses associated with being a public company.

2


 

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, results of operations, financial condition, and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors discussed in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q as well as other documents that may be filed by us from time to time with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made available. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

 

3


 

 

SUMMARY OF RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. The following is a summary of principal risks and uncertainties that could materially adversely affect our business, financial condition, and results of operations. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks and uncertainties facing our business.

We have a limited operating history and have been growing rapidly over the last several years, which makes it difficult to forecast our future results of operations and increases the risk of your investment.
We have a history of losses. As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability.
Our business depends on our current customers renewing their subscriptions and purchasing additional subscriptions from us, as well as attracting new customers. Any decline in our customer retention or expansion of our commercial relationships with existing customers or an inability to attract new customers would materially adversely affect our business, financial condition, and results of operations.
We expect fluctuations in our financial results, making it difficult to project future results. If we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price could decline.
We expect to continue to focus on sales to larger organizations and may become more dependent on those relationships, which may increase the variability of our sales cycles and our results of operations.
We recognize revenue over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our results of operations and may be difficult to discern.
Our stock price has been, and in the future, may be, volatile, and could decline significantly and rapidly.
Unfavorable conditions in our industry or the global economy, or reductions in information technology spending, could limit our ability to grow our business and materially adversely affect our business, financial condition, and results of operations.
If the market for SaaS applications develops more slowly than we expect or declines, our business would be adversely affected.
Our intellectual property rights may not protect our business or provide us with a competitive advantage, which could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to government regulation, including import, export, economic sanctions, and anti-corruption laws and regulations, that may expose us to liability and increase our costs.
Complying with evolving privacy and other data-related laws as well as contractual and other requirements may be expensive and force us to make adverse changes to our business, and the failure or perceived failure to comply with such laws, contracts, and other requirements could result in adverse reputational and brand damage and significant fines and liability or otherwise materially adversely affect our business and growth prospects.
Our principal stockholders have the ability to influence the outcome of director elections and other matters requiring stockholder approval.
The dual class structure of our common stock has the effect of concentrating voting control with our existing stockholders, executive officers, directors, and their affiliates, which limits your ability to influence the outcome of important transactions and to influence corporate governance matters, such as electing directors, and to approve material mergers, acquisitions, or other business combination transactions that may not be aligned with your interests.

 

4


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

AMPLITUDE, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(unaudited)

 

 

 

As of
March 31,
2022

 

 

As of
December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

300,422

 

 

$

307,445

 

Accounts receivable, net of allowance for doubtful accounts of $258
   and $
85 as of March 31, 2022 and December 31, 2021, respectively

 

 

23,273

 

 

 

20,444

 

Prepaid expenses and other current assets

 

 

21,577

 

 

 

19,116

 

Deferred commissions, current

 

 

8,876

 

 

 

8,112

 

Total current assets

 

 

354,148

 

 

 

355,117

 

Property and equipment, net

 

 

6,235

 

 

 

4,832

 

Intangible assets, net

 

 

3,065

 

 

 

3,554

 

Goodwill

 

 

4,073

 

 

 

4,073

 

Restricted cash, noncurrent

 

 

850

 

 

 

850

 

Deferred commissions, noncurrent

 

 

22,199

 

 

 

20,573

 

Operating lease right-of-use assets

 

 

11,398

 

 

 

 

Other noncurrent assets

 

 

12,225

 

 

 

11,389

 

Total assets

 

$

414,193

 

 

$

400,388

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,035

 

 

$

3,363

 

Accrued expenses

 

 

22,697

 

 

 

17,936

 

Deferred revenue

 

 

75,137

 

 

 

69,294

 

Total current liabilities

 

 

99,869

 

 

 

90,593

 

Operating lease liabilities, noncurrent

 

 

9,632

 

 

 

 

Noncurrent liabilities

 

 

1,843

 

 

 

3,247

 

Total liabilities

 

 

111,344

 

 

 

93,840

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.00001 par value per share; 20,000 shares authorized
   as of March 31, 2022 and December 31, 2021;
zero shares issued and
   outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Class A common stock, $0.00001 par value per share; 600,000 shares
   authorized as of March 31, 2022 and December 31, 2021;
59,712 and 58,725
   shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

1

 

 

 

1

 

Class B common stock, $0.00001 par value per share; 600,000
   shares authorized as of March 31, 2022 and December 31, 2021;
51,795 
   and
51,151 shares issued and outstanding as of March 31, 2022 and
   December 31, 2021, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

504,859

 

 

 

486,354

 

Accumulated deficit

 

 

(202,011

)

 

 

(179,807

)

Total stockholders’ equity

 

 

302,849

 

 

 

306,548

 

Total liabilities and stockholders’ equity

 

$

414,193

 

 

$

400,388

 

 

See accompanying notes to condensed consolidated financial statements.

5


 

AMPLITUDE, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

53,065

 

 

$

33,110

 

 

Cost of revenue

 

 

16,063

 

 

 

10,255

 

 

Gross profit

 

 

37,002

 

 

 

22,855

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

16,501

 

 

 

6,985

 

 

Sales and marketing

 

 

28,130

 

 

 

16,770

 

 

General and administrative

 

 

14,362

 

 

 

5,249

 

 

Total operating expenses

 

 

58,993

 

 

 

29,004

 

 

Other income (expense), net

 

 

86

 

 

 

(12

)

 

Loss before provision for income taxes

 

 

(21,905

)

 

 

(6,161

)

 

Provision for income taxes

 

 

315

 

 

 

278

 

 

Net loss

 

$

(22,220

)

 

$

(6,439

)

 

Net loss per share attributable to Class A and Class B common stockholders:

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.20

)

 

$

(0.23

)

 

Weighted-average shares used in computing net loss per share attributable to Class A
   and Class B common stockholders:

 

 

 

 

 

 

 

Basic and diluted

 

 

109,553

 

 

 

27,926

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

6


 

 

AMPLITUDE, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands)

(unaudited)

 

 

 

Redeemable convertible
preferred stock

 

 

Class A and Class B common stock

 

 

 

Additional
paid-in

 

 

 

Accumulated

 

 

 

Total
stockholders’

 

 

 

Shares

 

 

 

Amount

 

 

Shares

 

 

 

Amount

 

 

 

capital

 

 

 

deficit

 

 

 

equity (deficit)

 

Balance at December 31, 2021

 

 

 

 

 

 

 

 

 

109,876

 

 

$

 

1

 

 

$

 

486,354

 

 

$

 

(179,807

)

 

$

 

306,548

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,785

 

 

 

 

 

 

 

 

13,785

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

1,603

 

 

 

 

 

 

 

 

3,977

 

 

 

 

 

 

 

 

3,977

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

743

 

 

 

 

 

 

 

 

743

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Donation of common stock and repurchase of unvested stock options

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative impact of Topic 842 adoption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

17

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,220

)

 

 

 

(22,220

)

Balance at March 31, 2022

 

 

 

 

 $

 

 

 

 

111,507

 

 

 $

 

1

 

 

 $

 

504,859

 

 

 $

 

(202,011

)

 

 $

 

302,849

 

 

 

 

 

Redeemable convertible
preferred stock

 

 

Class A and Class B common stock

 

 

 

Additional
paid-in

 

 

 

Accumulated

 

 

 

Total
stockholders’

 

 

 

Shares

 

 

 

Amount

 

 

Shares

 

 

 

Amount

 

 

 

capital

 

 

 

deficit

 

 

 

equity (deficit)

 

Balance at December 31, 2020

 

 

61,717

 

 

 $

 

187,811

 

 

 

27,924

 

 

 $

 

-

 

 

 $

 

37,704

 

 

 $

 

(104,824

)

 

 $

 

(67,120

)

Stock-based compensation expense

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

2,628

 

 

 

 

-

 

 

 

 

2,628

 

Exercise of stock options

 

 

-

 

 

 

 

-

 

 

 

1,226

 

 

 

 

-

 

 

 

 

1,488

 

 

 

 

-

 

 

 

 

1,488

 

Vesting of early exercised stock options

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

179

 

 

 

 

-

 

 

 

 

179

 

Net loss

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(6,439

)

 

 

 

(6,439

)

Balance at March 31, 2021

 

 

61,717

 

 

 $

 

187,811

 

 

 

29,150

 

 

 $

 

-

 

 

 $

 

41,999

 

 

 $

 

(111,263

)

 

 $

 

(69,264

)

 

See accompanying notes to condensed consolidated financial statements.

7


 

AMPLITUDE, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(22,220

)

 

$

(6,439

)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

901

 

 

 

541

 

 

Stock-based compensation expense

 

 

13,503

 

 

 

2,577

 

 

Other

 

 

118

 

 

 

231

 

 

Non-cash operating lease costs

 

 

809

 

 

 

-

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,905

)

 

 

2,126

 

 

Prepaid expenses and other current assets

 

 

(2,460

)

 

 

(2,251

)

 

Deferred commissions

 

 

(2,391

)

 

 

(1,269

)

 

Other noncurrent assets

 

 

(836

)

 

 

(1,316

)

 

Accounts payable

 

 

(1,328

)

 

 

(1,555

)

 

Accrued expenses

 

 

2,946

 

 

 

(737

)

 

Deferred revenue

 

 

5,843

 

 

 

7,630

 

 

Operating lease liabilities

 

 

(269

)

 

 

-

 

 

Net cash used in operating activities

 

 

(8,289

)

 

 

(462

)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(713

)

 

 

(250

)

 

Capitalization of internal-use software costs

 

 

(594

)

 

 

(381

)

 

Net cash used in investing activities

 

 

(1,307

)

 

 

(631

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

3,989

 

 

 

2,018

 

 

Cash received for tax withholding obligations on equity award settlements

 

 

7,342

 

 

 

287

 

 

Cash paid for tax withholding obligations on equity award settlements

 

 

(8,758

)

 

 

(287

)

 

Net cash provided by financing activities

 

 

2,573

 

 

 

2,018

 

 

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

 

 

(7,023

)

 

 

925

 

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

308,295

 

 

 

118,863

 

 

Cash, cash equivalents, and restricted cash at end of period

 

$

301,272

 

 

$

119,788

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

112

 

 

$

67

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Vesting of early exercised options

 

$

743

 

 

$

179

 

 

Purchases of property and equipment included in liabilities

 

$

225

 

 

$

10

 

 

Capitalization of internal-use software costs

 

$

282

 

 

$

50

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

8


 

AMPLITUDE, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1)
Summary of Business and Significant Accounting Policies

Description of Business

Amplitude, Inc. (the “Company”) was incorporated in the state of Delaware in 2011 and is headquartered in San Francisco, California. The Company provides a Digital Optimization System that helps companies analyze their customer behavior within digital products. The Company delivers its application over the Internet as a subscription service using a software-as-a-service (“SaaS”) model. The Company’s arrangements with customers do not provide the customer with the right to take possession of the software supporting the cloud-based application service at any time. The Company also offers customer support related to initial implementation setup, ongoing support services, and application training.

Segment Information

The Company has a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. Long-lived assets outside of the United States are immaterial. For information regarding the Company’s revenue by geographic area, see Note 2 below.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP") and include the accounts of Amplitude, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The reporting currency of the Company is the United States dollar. The functional currency of the Company’s foreign subsidiaries is also the United States dollar.

The unaudited condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the balance sheet, statements of operations, statements of redeemable convertible preferred stock and stockholders' equity (deficit), and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K") .

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements and may involve subjective or significant judgment by the Company; therefore, actual results could differ from the Company’s estimates. Items subject to such estimates and assumptions include, but are not limited to the:

expected period of benefit for deferred commissions;
useful lives of long-lived assets;
valuation of the Company’s common stock and stock-based awards for periods prior to the direct listing of the Company's Class A common stock on the Nasdaq Capital Market (the "Direct Listing");
valuation of goodwill and intangible assets;
the recognition, measurement, and valuation of deferred tax assets and income tax uncertainties; and

9


 

incremental borrowing rate used for operating leases.

Risks and Uncertainties

While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. The Company may experience customer losses, including due to bankruptcy or customers ceasing operations, which may result in delays in collections or an inability to collect accounts receivable from these customers. The extent to which COVID-19 may continue to impact the Company’s financial condition, results of operations, or liquidity continues to remain uncertain, and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or an adjustment to the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, which will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.

Concentration of Risk and Significant Customers

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivable. Although the Company deposits its cash with high-quality, credit-rated financial institutions, the deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

No customer accounted for 10% or more of total revenue for the three months ended March 31, 2022 and 2021. As of the quarter ended March 31, 2022, no customer accounted for 10% of accounts receivable. As of the year ended December 31, 2021, one customer represented 10% of accounts receivable.

Significant Accounting Policies

The Company's significant accounting policies are described in the 2021 Form 10-K. There have been no significant changes to these policies that have had a material impact on the Company's condensed consolidated financial statements and related notes for the three months ended March 31, 2022 other than for the adoption of new accounting guidance related to leases effective January 1, 2022 further described below.

Operating Leases

The Company determines if an arrangement is, or contains, a lease at inception. Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines whether an arrangement is or contains a lease at inception, based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. At lease commencement date, the Company determines lease classification between finance and operating, allocates the consideration to the lease and non-lease components and recognizes a right-of-use ("ROU") asset and corresponding lease liability for each lease component. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments based on the lease contracts.

Operating lease ROU assets and liabilities were recognized at adoption date or lease commencement date, if the commencement date was after January 1, 2022, based on the present value of lease payments over the remaining lease term. The Company’s lease contracts do not provide an implicit rate, as such the Company used its incremental borrowing rate based on the information available at adoption date or lease commencement date, if the commencement date was after January 1, 2022, in determining the present value of lease payments. The operating lease ROU assets also include any lease payments made to the lessors at or before the lease commencement date, and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The lease liability is initially measured as the present value of the remaining lease payments over the lease term. The discount rate used to determine the present value is the Company's incremental borrowing rate unless the interest rate implicit in the lease is readily determinable. The Company estimates the incremental borrowing rate based on the information available at lease commencement date for borrowings with a similar term. The ROU asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives. The operating lease right-of-use assets and liabilities recognized at January 1, 2022, the adoption date, were based on the present value of lease payments over the remaining lease term as of that date, using the incremental borrowing rate as of that date.

10


 

The Company elected the practical expedients to not recognize right-of-use assets and liabilities for leases with a term of less than twelve months and to not separate non-lease components from the associated lease components for the Company's office leases and certain other asset classes. The total consideration includes fixed payments and contractual escalation provisions. The Company is responsible for maintenance, insurance, property taxes and other variable payments, which are expensed as incurred. The Company's leases include options to renew or terminate. The Company includes the option to renew or terminate in the determination of the lease term when the option is deemed to be reasonably certain that the Company will exercise that option. The Company accounts for changes in the expected lease term as a modification of the original contract.

Operating leases are classified in "Operating lease right-of-use assets" and "Operating lease liabilities, noncurrent" on the Company's condensed consolidated balance sheets. The current balance of the operating lease liabilities is included within "Accrued expenses" on the Company's condensed consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the expected lease term and included in "Operating expenses" in the Company's condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the balance sheets and to disclose key information about leasing arrangements. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

 

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;
2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;
2018-11, Leases (Topic 842): Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met; and
2019-01, Leases (Topic 842): Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received; ASU No. 2019-01 also clarifies disclosures required in interim periods after adoption of ASU No. 2016-02 in the year of adoption.

The Company adopted the new standard as of January 1, 2022, and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit as of adoption date. The Company elected the optional transition approach to not apply Topic 842 in the comparative periods presented. The Company elected the relief package of practical expedients to not reassess whether existing contracts contain leases, the lease term and classification for existing leases and whether existing initial direct costs meet the new definition. The adoption of Topic 842 resulted in the recognition of total right-of-use of $11.6 million and total lease liabilities of $13.2 million as of the date of adoption. Additionally, the Company has derecognized $1.6 million in deferred rent upon adoption of this standard. The adoption of Topic 842 did not have a material impact to the condensed consolidated statements of operations or statements of cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350), which eliminates Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). This update is effective for annual and interim impairment tests performed in periods beginning after December 15, 2022. The Company early adopted the standard as of January 1, 2022. The adoption of ASC 350 did not have a material impact to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Financial Instruments - Credit Losses: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments (Topic 326). This standard revises current U.S. GAAP methodology by requiring measurement and immediate recognition of expected credit losses on in-scope financial instruments, including trade receivables. ASU No. 2016-13 is effective for annual periods beginning after December 15, 2022, with early adoption permitted in fiscal years beginning after December 31, 2018. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

11


 

(2)
Revenue from Contracts with Customers

Deferred Revenue and Remaining Performance Obligations

The amount of revenue recognized in the three months ended March 31, 2022 that was included in deferred revenue as of December 31, 2021 was $35.7 million.

As of March 31, 2022 and December 31, 2021, unrecognized transaction price related to remaining performance obligations was $194.4 million and $170.1 million, respectively. The Company’s remaining performance obligations as of March 31, 2022 and December 31, 2021 are expected to be recognized as follows (in thousands):

 

 

 

As of
March 31,
2022

 

 

As of
December 31,
2021

 

Less than or equal to 12 months

 

$

149,583

 

 

$

137,266

 

Greater than 12 months

 

 

44,851

 

 

 

32,868

 

Total remaining performance obligations

 

$

194,434

 

 

$

170,134

 

 

Disaggregation of Revenue

The following table shows the Company’s disaggregation of revenue by geographic areas, as determined based on the billing address of its customers (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

2022

 

 

2021

 

 

United States

 

$

33,521

 

 

$

21,028

 

 

International

 

 

19,544

 

 

 

12,082

 

 

Total revenue

 

$

53,065

 

 

$

33,110

 

 

 

12


 

Deferred Commissions

Commissions paid upon the initial acquisition of a contract are deferred and then amortized on a straight-line basis over a period of benefit, determined to be five years. The following table represents a rollforward of the Company’s deferred commissions for the three months ended March 31, 2022 and 2021 (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Beginning balance

 

$

28,685

 

 

$

19,440

 

Additions to deferred commissions

 

 

4,421

 

 

 

2,692

 

Amortization of deferred commissions

 

 

(2,031

)

 

 

(1,423

)

Ending balance

 

 

31,075

 

 

 

20,709

 

Deferred commissions, current portion

 

 

8,876

 

 

 

5,990

 

Deferred commissions, net of current portion

 

 

22,199

 

 

 

14,719

 

Total deferred commissions

 

$

31,075

 

 

$

20,709

 

 

(3)
Balance Sheet Components

The following tables show the Company’s financial statement details as of March 31, 2022 and 2021 and December 31, 2021 and 2020.

Cash, Cash Equivalents and Restricted Cash

The following table represents the Company's cash, cash equivalents, and restricted cash at each period end (in thousands):

 

 

 

As of March 31,

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

300,422

 

 

$

118,708

 

 

$

307,445

 

 

$

117,783

 

Restricted cash, current

 

 

 

 

 

1,080