Restatement

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

As previously disclosed on February 17 and February 27, 2023, in connection with the preparation of our consolidated financial statements for the year ended December 31, 2022, we identified tax errors within our previously issued unaudited condensed consolidated financial statements as of and for the quarterly and year to date periods ended March 31, 2022, or Q1 2022, June 30, 2022, or Q2 2022, and September 30, 2022, or Q3 2022, as included in our previously filed Quarterly Reports on Form 10-Q. Specifically, within our income tax provision there was an error relating to the identification of named executive officers subject to limitation on the deductibility of executive compensation under Internal Revenue Code Section 162(m), or Section 162(m).

As a result of this error, Q1 2022 deferred tax assets were understated and the provision for income taxes was overstated by $3.9 million, reflecting a discrete impact of $2.4 million and a $1.5 million impact resulting from the error in the annual effective tax rate. The Section 162(m) error also had the impact of a $0.2 million understatement of the benefit for income taxes and a $4.1 million overstatement of the provision for income taxes for the three and six months ended June 30, 2022, respectively, and a $1.2 million overstatement of the benefit for income taxes and a $2.8 million overstatement of the provision for income taxes for the three and nine months ended September 30, 2022, respectively, and the associated impacts on deferred tax assets. Management concluded that such errors resulted in the previously issued Q1 2022, Q2 2022, and Q3 2022 unaudited condensed consolidated financial statements, including the respective year-to-date periods, being materially misstated and therefore require restatement.

In connection with the tax errors noted above, we are also correcting other previously identified immaterial errors related to: i) $1.2 million of revenue and $0.2 million of associated costs of revenue that should have been recognized in Q1 2022, and which were initially corrected for as an out of period correction in Q2 2022; ii) $1.2 million of a late customer acquisition marketing, or CAM credit, that should have been recognized as a reduction to sales and marketing expense in Q2 2022, and which was initially corrected for as an out of period adjustment in Q3 2022; and iii) $0.9 million of revenue and $0.3 million of associated costs of revenue that should have been recognized in Q3 2022.

Description of Restatement of Financial Information

In the following tables, we have presented a reconciliation of our unaudited condensed consolidated financial information as originally reported, to the as restated amounts as of and for the three months ended March 31, 2022. The restatements for the three and six months ended June 30, 2022, and the three and nine months ended September 30, 2022 will be effected in future filings of our 2023 unaudited condensed consolidated financial statements within our Quarterly Reports on Form 10-Q.

The table below sets forth the unaudited condensed consolidated balance sheet information, including the balances as reported, adjustments and the balances as restated (in thousands, except per share amounts):


	March 31, 2022
		As Reported		Adjustments		As Restated
Assets
Current assets:
Cash and cash equivalents		$	247,504	$	—	$	247,504
Accounts receivable, net of allowances of $3,633		12,784		605		13,389
Prepaid expenses and other current assets		23,172		(242)		22,930

Total current assets		283,460		363		283,823
Property and equipment, net		47,769		—		47,769


	March 31, 2022
		As Reported		Adjustments		As Restated
Goodwill		59,994		—		59,994
Intangible assets, net		15,361		—		15,361
Operating lease right-of-use assets		5,292		—		5,292
Deferred income taxes		24,849		3,877		28,726
Available-for-sale debt securities		1,182		—		1,182
Other assets		13,157		—		13,157
Total assets		$	451,064	$	4,240	$	455,304
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		31,747		—		31,747
Accrued expenses and other current liabilities		56,509		97		56,606
Deferred revenue		163,729		(713)		163,016
Operating lease liabilities		1,607		—		1,607
Total current liabilities		253,592		(616)		252,976
Operating lease liabilities, non-current		3,505		—		3,505
Deferred revenue		1,283		—		1,283
Other liabilities		2,833		—		2,833
Total liabilities		261,213		(616)		260,597
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 100,000 shares authorized; 0 issued or outstanding at March 31, 2022		—		—		—
Common stock, $0.001 par value; 1,000,000 shares authorized; 198,599 shares issued and outstanding at March 31, 2022		198		—		198
Additional paid-in capital		969,731		—		969,731
Accumulated deficit		(779,723)		4,856		(774,867)
Accumulated other comprehensive income (loss)		(355)		—		(355)
Total stockholders’ equity		189,851		4,856		194,707
Total liabilities and stockholders’ equity		$	451,064	$	4,240	$	455,304

The table below sets forth the unaudited condensed consolidated statement of operations, including the balances as reported, adjustments and the as restated balances (in thousands, except per share amounts):


		Three Months Ended
	March 31, 2022
			As Reported		Adjustments		As Restated
Revenue			$	154,209	$	1,218	$	155,427
Cost of revenue			55,940		242		56,182
Gross profit			98,269		976		99,245
Operating expenses:
Sales and marketing			76,874		—		76,874
Technology and development			17,959		—		17,959
General and administrative			29,488		—		29,488

Total operating expenses			124,321		—		124,321
Loss from operations			(26,052)		976		(25,076)
Interest (expense) income, net			(53)		—		(53)
Other expense, net			(1,544)		—		(1,544)
Loss before income taxes			(27,649)		976		(26,673)
(Benefit from) provision for income taxes			2,960		(3,880)		(920)
Net loss			$	(30,609)	$	4,856	$	(25,753)


		Three Months Ended
	March 31, 2022
Net loss per share attributable to common stockholders—basic and diluted:			$	(0.15)	$	—	$	(0.13)
Weighted-average shares used to compute net loss per share attributable to common stockholders—basic and diluted:			198,265		—		198,265

The tables below sets forth the unaudited condensed consolidated statement of comprehensive (loss) income, including balances as reported, adjustments and balances as restated amounts (in thousands):


		Three Months Ended
	March 31, 2022
			As Reported		Adjustments		As Restated
Net Loss			$	(30,609)	$	4,856	$	(25,753)
Total other comprehensive income			1,440		—		1,440
Total comprehensive loss			$	(29,169)	$	4,856	$	(24,313)

The table below sets forth the unaudited condensed consolidated statement of stockholders’ equity, including balances as reported, adjustments and balances as restated amounts (in thousands):


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) income		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2022 as reported	198,599	$	198	$	969,731	$	(779,723)	$	(355)	$	189,851
Cumulative adjustments to net loss	—	—		—		4,856		—		4,856
Balance at March 31, 2022 as restated	198,599	$	198	$	969,731	$	(774,867)	$	(355)	$	194,707

The table below sets forth the unaudited condensed consolidated statement of cash flows, including balances as reported, adjustments and balances as restated amounts (in thousands):


	Three Months Ended March 31, 2022
		As Reported		Adjustments		As Restated
Cash flows from operating activities
Net loss		$	(30,609)	$	4,856	$	(25,753)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		5,394		—		5,394
Amortization of right-of-use assets		378		—		378
Amortization of debt issuance costs		56		—		56
Impairment of other equity securities		170		—		170

Stock-based compensation		21,865		—		21,865
Deferred income taxes		2,791		(3,877)		(1,086)

Unrealized foreign exchange loss		1,379		—		1,379

Changes in operating assets and liabilities, net of effects of business combination:
Accounts receivable		(2,150)		(605)		(2,755)
Prepaid expenses and other current assets		(6,706)		242		(6,464)
Other assets		(811)		—		(811)
Accounts payable		(117)		—		(117)
Accrued expenses and other liabilities		5,675		97		5,772
Operating lease liabilities		(770)		—		(770)
Income tax payable		7		—		7
Deferred revenue		17,185		(713)		16,472
Net cash provided by operating activities		13,737		—		13,737
Cash flows from investing activities

Proceeds from acquisition working capital adjustment		304		—		304


	Three Months Ended March 31, 2022
		As Reported		Adjustments		As Restated
Purchase of property and equipment		(4,911)		—		(4,911)
Net cash used in investing activities		(4,607)		—		(4,607)
Cash flows from financing activities
Repayment of capital lease obligations		(4)		—		(4)

Repurchase of common stock		(1,094)		—		(1,094)
Shares surrendered for settlement of minimum statutory tax withholding		(11)		—		(11)
Proceeds from issuance of stock under employee stock plans		237		—		237
Net cash used in financing activities		(872)		—		(872)
Effect of exchange rate changes on cash and cash equivalents		(51)		—		(51)
Net increase in cash and cash equivalents, and restricted cash equivalents		8,207		—		8,207
Cash and cash equivalents, and restricted cash equivalents, at beginning of the period		239,297		—		239,297
Cash and cash equivalents at end of the period		$	247,504	$	—	$	247,504