10-K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 (Mark One)

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

For the fiscal year ended December 31, 2021

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 001-38246

Vivint Smart Home, Inc.

(Exact name of registrant as specified in its charter)

Delaware	98-1380306
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4931 North 300 West Provo, UT	84604
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (801) 377-9111

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, par value $0.0001 per share	VVNT	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ☐  No  ý

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  ý    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 ý   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	x	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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was $861.1 million.

As of February 28, 2022, there were 208,734,698 shares of Class A common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement relating to its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.

Table of Contents

TABLE OF CONTENTS

		Page
PART I
Item 1	Business	9
Item 1A	Risk Factors	20
Item 1B	Unresolved Staff Comments	46
Item 2	Properties	46
Item 3	Legal Proceedings	47
Item 4	Mine Safety Disclosures	47
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	47
Item 6	Reserved	48
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	76
Item 8	Financial Statements and Supplementary Data	78
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	129
Item 9A	Controls and Procedures	129
Item 9B	Other Information	131
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	131
PART III
Item 10	Directors, Executive Officers and Corporate Governance	133
Item 11	Executive Compensation	134
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	135
Item 13	Certain Relationships and Related Transactions, and Director Independence	136
Item 14	Principal Accountant Fees and Services	137
PART IV
Item 15	Exhibits and Financial Statement Schedules	139
Item 16	Form 10-K Summary	145
Signatures

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) includes forward-looking statements regarding, among other things, our plans, strategies and prospects, both business and financial. These statements are based on the beliefs and assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions.

Factors that could cause actual results to differ from those implied by the forward-looking statements in this Annual Report on Form 10-K are more fully described in the “Risk Factors” section of this Annual Report on Form 10-K. The risks described in the “Risk Factors” are not exhaustive. Other sections of this Annual Report on Form 10-K describe additional factors that could adversely affect our business, financial condition or results of operations. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief 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 Annual Report on Form 10-K, 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.

Market, ranking and industry data used throughout this Annual Report on Form 10-K, including statements regarding subscriber acquisition costs, attrition and subscriber additions, is based on the good faith estimates of the Company’s management, which in turn are based upon the review of internal surveys, independent industry surveys and publications and other third party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While the Company is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report.

Risk Factor Summary

The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. The following should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in the section entitled “Risk Factors” in this Annual Report on Form 10-K (“Annual Report”).

•The global COVID-19 pandemic may adversely impact our business at least for the near term. Such impact may persist for an extended period of time or become more severe which, in turn, may materially and adversely impact our financial condition, cash flows or results of operations;

•Our industry is highly competitive and pricing pressure from competitors who are larger in scale, have greater resources than us and who may benefit from greater name recognition, economies of scale and other lower costs than us, improvements in technology and shifts in consumer preferences toward do-it-yourself or individual solutions could each adversely impact our subscriber base or pricing structure;

•We incur significant upfront costs to originate new subscribers and our business model relies on long-term retention of subscribers. Premature subscriber attrition can have a material adverse effect on our results;

•Litigation, complaints or adverse publicity or unauthorized use of our brand name could negatively impact our business, financial condition and results of operations;

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•If we fail to attract, retain and engage appropriately qualified employees, including employees in key positions, our operations and profitability may be harmed;

•Our operations depend upon third-party providers of telecommunication technologies and services, which services may become obsolete, impair, degrade or otherwise block our services which could lead to additional expenses to us or loss of users;

•Privacy and data protection concerns and laws and regulations relating to privacy, and data protection and information security could have a material adverse effect on our business through increased operating costs tied to compliance or our failure or our perceived failure to comply with such laws and regulations;

•If our security controls are breached or unauthorized or inadvertent access to subscriber information or other data or to control or view systems are otherwise obtained, our services may be perceived as insecure, we may lose existing subscribers or fail to attract new subscribers, our business may be harmed, and we may incur significant liabilities;

•We offer consumer financing options for our customers to purchase our products and services through our Vivint Flex Pay plan. Use of consumer financing through the Vivint Flex Pay plan may subject us to additional risks including payment risk and federal, state and local regulatory and compliance related risks;

•We are subject to a variety of laws, regulations and licensing requirements that govern our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvements, warranties and door-to-door solicitation. Failure to obtain or maintain necessary licenses or otherwise comply with applicable laws and regulations may have a material adverse effect on our business;

•Our industry is subject to continual technological innovation. Our technology becoming obsolete could require significant capital expenditures or our inability to adapt to changing technologies, market conditions or subscriber preferences in a timely manner could have a material adverse effect on our business;

•We depend on a limited number of suppliers to provide our products and services. Our product suppliers, in turn, rely on a limited number of suppliers to provide significant components and materials used in our products. A change in our existing preferred supply arrangements or a material interruption in supply of products or third-party services could increase our costs or prevent or limit our ability to accept and fill orders for our products and services;

•Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effects of the ongoing COVID-19 pandemic, may adversely affect consumer spending and our financial results;

•We rely on certain third-party providers of licensed software and services integral to the operations of our business. Failure by these third-party providers to maintain, enhance or to continue to develop their software and services on a timely and cost-effective basis or our inability to renew our agreements with them or maintain compatibility of our products with their software and services may have a material adverse effect on our business;

•We are highly dependent on the proper and efficient functioning of our computer, data backup, information technology, telecom and processing systems, platform and our redundant monitoring stations;

•The loss of our senior management could disrupt our business;

•From time to time, we are subject to claims for infringing, misappropriating or otherwise violating the intellectual property rights of others, and will be subject to such claims in the future, which could have an adverse effect on our business and operations;

•Product or service defects or shortfalls in subscriber service could damage our reputation, subjecting us to claims and litigation, increase attrition rates and negatively affect our ability to generate new subscribers, all of which may have a material adverse effect on us;

•The nature of our products and the services we provide exposes us to potentially greater risk of liability for employee acts or omissions or system failure than may be inherent in other businesses;

•Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets;

•We have recorded net losses in the past and we may experience net losses in the future and there can be no assurance that we will be able to achieve or maintain profitability or positive cash flow from operations;

•The nature of our business requires the application of complex revenue and expense recognition rules, and the current legislative and regulatory environment affecting generally accepted accounting principles is uncertain. Significant changes in current principles could affect our financial statements going forward and changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and harm our operating results;

•    We identified material weaknesses in our internal control over financial reporting and if our remediation of a material weakness is not effective, or if we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or operating results, which may adversely affect our business;

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•We have approximately $2.7 billion aggregate principal amount of total debt outstanding. Our substantial indebtedness and the potential need to incur significant additional indebtedness could adversely affect our financial condition;

•The variable interest rates of our existing indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly and make us unable to service our indebtedness;

•The debt agreements governing our existing indebtedness impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities;

•Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our Class A common stock to decline;

•Certain significant Company stockholders whose interests may differ from yours will have the ability to significantly influence our business and management.

WEBSITE AND SOCIAL MEDIA DISCLOSURE

We use our website (www.vivint.com), our company blogs (vivint.com/resources), corporate Twitter accounts (@VivintHome), our corporate Instagram accounts and Facebook accounts (@Vivint), our TikTok channel (@Vivint), our YouTube channel (https://www.youtube.com/vivint) and our corporate LinkedIn account as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about the Company when you enroll your e-mail address by visiting the “Email Alerts” section of our website at www.investors.vivint.com. The contents of our website and social media channels are not, however, a part of this Annual Report.

BASIS OF PRESENTATION

As used in this to the Annual Report on Form 10-K, unless otherwise noted or the context otherwise requires:

•references to “Vivint,” “Vivint Smart Home,” “we,” “us,” “our” and “the Company” are to Vivint Smart Home, Inc. and its consolidated subsidiaries;

•references to “2GIG” are to 2GIG Technologies, Inc., our former affiliate;

•references to “AMRRU” are to average monthly recurring revenue per user, which consists of Total MRR (as defined below) divided by average monthly Total Subscribers (as defined below) during a given period;

•references to “APX” are to APX Group, Inc., a wholly owned subsidiary of the Company;

•references to the “Consumer Financing Program” or “CFP” are to the program, launched in the first quarter of 2017 under the Vivint Flex Pay plan, pursuant to which we offer to qualified customers in the United States an opportunity to finance the purchase of Products (as defined below) and installation fees in connection with the services through a third-party financing provider;

•references to “Average Subscriber Lifetime” are to 100% divided by our expected long-term annualized attrition rate multiplied by 12 months;

•references to “Notes” are to the 6.75% Senior Secured Notes due 2027 (“2027 notes”) and the 5.75% Senior Notes due 2029 (“2029 notes”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources”;

•references to “Legacy Vivint Smart Home” are to Legacy Vivint Smart Home, Inc. (f/k/a Vivint Smart Home, Inc.);

•references to the “Merger” or the “Business Combination” are to the merger, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 15, 2019, by and among Legacy Vivint Smart Home, Inc., the Company and Maiden Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Vivint Smart Home, Inc., as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home pursuant to which Merger Sub merged with and into Legacy Vivint Smart Home with Legacy Vivint Smart Home surviving the merger as a wholly owned subsidiary of Vivint Smart Home;

•references to “Net Service Cost per Subscriber” are to the average monthly service costs incurred during the period (both period and capitalized service costs), including monitoring, customer service, field service and other service support costs, less total non-recurring smart home services billings and cellular network maintenance fees for the period, divided by average monthly Total Subscribers for the same period;

•references to “Products” are to our offering of smart home equipment including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms;

•references to “Revolving Credit Facility” are to the senior secured revolving credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources-

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Revolving Credit Facility”;

•references to “RICs” are to retail installment contracts offered under the Vivint Flex Pay plan with respect to the purchase of Products and installation fees to certain of our customers who do not qualify for the CFP but qualify under our historical underwriting criteria;

•references to “Services” are to our offering of smart home and security services;

•references to “smart home operating system” are to the combination of the software inside our Products and our cloud-based software and mobile apps;

•references to “Smart Home Pros” or “SHPs” are to our full-time smart home professionals who service our customers;

•references to “Smart Home Services” are to our offering of smart home services combining Products and related installation, Services and our proprietary back-end cloud platform software;

•references to “Solar” or “Vivint Solar” are to Vivint Solar, Inc., our former affiliate;

•references to “Sponsor” or “Blackstone” are to certain investment funds affiliated with Blackstone Inc.;

•references to “Net Subscriber Acquisition Costs per New Subscriber” are to the net cash cost to create new smart home and security subscribers during a given 12-month period divided by New Subscribers for that period. These costs include commissions, Products, installation, marketing, sales support and other allocations (general and administrative and overhead); less upfront payments received from the sale of Products associated with the initial installation, and installation fees. Upfront payments reflect gross proceeds prior to deducting fees related to consumer financing of Products. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.

•references to “Total MRR” are to the average monthly total recurring revenue recognized during the period. These revenues exclude non-recurring revenues that are recognized at the time of sale;

•references to “Total Subscribers” are to the aggregate number of active smart home and security subscribers at the end of a given period, excluding subscribers acquired under pilot programs;

•references to the “Vivint Flex Pay” or “Flex Pay” plan are to the plan, introduced in January 2017, under which we launched the Consumer Financing Program and began to offer RICs as well as the option to pay in full at the time of purchase; and

•references to “Smart Home App” are to our application available on both Android and iOS which allows users to automate, control and monitor their smart home experience.

On January 17, 2020 (the “Closing Date”), the Company consummated the Merger.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home surviving as the surviving company (the “Business Combination”) (See Note 7 Business Combination for further discussion). Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Vivint Smart Home, Inc. is treated as the acquired company and Legacy Vivint Smart Home is treated as the acquirer for financial statement reporting and accounting purposes. Legacy Vivint Smart Home was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Legacy Vivint Smart Home’s shareholders prior to the Business Combination had the greatest voting interest in the combined entity;

•At the time of the Business Combination, the largest individual shareholder of the combined entity was an existing shareholder of Legacy Vivint Smart Home;

•At the time of the Business Combination, Legacy Vivint Smart Home’s directors represented the majority of the Vivint Smart Home board of directors;

•At the time of the Business Combination, Legacy Vivint Smart Home’s senior management was the senior management of Vivint Smart Home; and

•At the time of the Business Combination, Legacy Vivint Smart Home was the larger entity based on historical total assets and revenues.

As a result of Legacy Vivint Smart Home being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Legacy Vivint Smart Home is the predecessor and legal successor to the Company. The historical operations of Legacy Vivint Smart Home are deemed to be those of the Company. Thus, the financial statements included in this Annual Report reflect (i) the historical operating results of Legacy Vivint Smart Home prior to the Business Combination; (ii) the combined results of the Company and Legacy Vivint Smart Home following the Business Combination on January 17, 2020; (iii) the assets and liabilities of Legacy Vivint Smart Home at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of Legacy Vivint Smart Home in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Legacy Vivint Smart Home.

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In connection with the Business Combination, Mosaic Acquisition Corp. changed its name to Vivint Smart Home, Inc. The Company’s Common Stock is now listed on the NYSE under the symbol “VVNT”. Prior to the Business Combination, the Company neither engaged in any operations nor generated any revenue. Until the Business Combination, based on the Company’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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Unless specified otherwise, amounts in this Annual Report on Form 10-K are presented in United States (“U.S.”) dollars. Defined terms in the financial statements have the meanings ascribed to them in the financial statements.

PART I

ITEM 1.BUSINESS

Overview

Vivint Smart Home is a leading smart home platform company serving approximately 1.9 million subscribers as of December 31, 2021. Our brand name, Vivint, means to “to live intelligently” and our mission is to help our customers do exactly that by providing them with technology, products and services to create a smarter, greener, safer home that saves our customers money every month.

Although a number of companies offer single devices such as a doorbell camera, smart speaker or thermostat,single offerings do not make a home smart. Rather, a smart home has multiple devices, properly scoped and installed, all integrated into a single expandable platform that incorporates artificial intelligence (“AI”) and machine-learning in its operating system.

We make creating this smart home easy and affordable with an integrated platform, exceptional products, hassle-free professional installation and zero percent annual percentage rate (“APR”) consumer financing for most customers. We help consumers create a customized solution for their home by integrating smart cameras (indoor, outdoor, doorbell), locks, lights, thermostats, garage door control, car protection and a host of safety and security sensors. As of December 31, 2021, on average, the subscribers on our cloud-based home platform had approximately 15 security and smart home devices in each home.

We provide a fully integrated solution for consumers with our vertically integrated business model which includes hardware, software, sales, installation, support and professional monitoring. This model strengthens our ability to deliver superior experiences at every customer touchpoint and a complete end-to-end smart home experience. This seamless integration of high-quality products and services results in an Average Subscriber Lifetime of approximately nine years, as of December 31, 2021. This model also facilitates our ability to offer adjacent products and services that leverage our existing platform and infrastructure, which we believe can extend the Average Subscriber Lifetime and increase the lifetime value we derive from our subscribers.

Our cloud-based home platform currently manages more than 26 million in-home devices as of December 31, 2021. Our subscribers are able to interact with their connected home by using their voice or mobile device—anytime, anywhere. They can engage with people at their front door; view live and recorded video inside and outside their home; control thermostats, locks, lights, and garage doors; and proactively manage the comings and goings of family, friends and visitors. The average subscriber on our cloud-based home platform engages with our smart home app approximately 11 times per day.

Our technology and people are the foundation of our business. Our trained professionals educate consumers on the value and affordability of a smart home, design a customized solution for their homes and their individual needs, teach them how to use our platform to enhance their experience, and provide ongoing tech-enabled services to manage, monitor and secure their home.

We believe that our unique business model and platform gives us a distinct advantage in the market through:

•a proprietary cloud-based platform,

•a differentiated end-to-end distribution model,

•strong growth with compelling unit economics, and

•multiple levers for sustained profitable growth.

As a result, we believe we can integrate new customer offerings from large adjacent markets that logically link back to our smart home platform, compounding the value that we already deliver to our approximately 1.9 million customers. With the large number of devices we have installed per home, we own a rich first-party data environment that helps us not only protect our customers, but also improve the efficiency of their homes and increase their peace of mind. We believe our unique focus on the importance of owning the entire technology stack, coupled with an end-to-end distribution model, leads to an exceptional customer experience. By continuously enhancing our platform, we can improve our customers’ experience wherever they interact with it. We believe that as our customers’ satisfaction increases, it creates multiple potential opportunities for sustained profitable growth for years to come.

Our integrated Smart Home business model generates subscription-based, high-margin recurring revenue from subscribers who sign up for our smart home services. More than 95% of our revenue is recurring, which provides long-term

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visibility and predictability to our business. Despite the many uncertainties pertaining to the COVID-19 pandemic, our recurring revenue model has proven resilient.

Our Industry

The smart home market is an expanding global opportunity and in the early stages of broad consumer adoption. The connected home has a multitude of devices and requires a platform to coordinate them all within a single unified system. Integrating smart home devices from different manufacturers that were not designed to work together is difficult, and often results in an experience that is complex, inconsistent and unreliable. Moreover, do-it-yourself (“DIY”) solutions put a large burden on homeowners to install and support many devices themselves. Some DIY solutions also require a high upfront cost, which can be prohibitively expensive for certain customers, limiting their potential for mass adoption.

Just as developers of smart phone operating systems enabled entirely new kinds of applications and use cases for their mobile devices, we believe that our smart home operating system provides the foundation for the full smart home experience. We believe there is a significant opportunity for companies to provide an end-to-end smart home experience. A successful smart home company must be able to provide the following:

•An end-to-end solution with a comprehensive integration of technology and people;

•A cloud-enabled operating system that provides a seamless and intuitive smart home experience;

•A portfolio of compelling use cases orchestrated across multiple devices and leveraging artificial intelligence for adaptive and personalized automation;

•A broad suite of smart devices designed to work as part of a comprehensive smart home;

•An extensible platform complete with deep partner integrations of popular stand-alone devices;

•Local professional services to educate consumers and to install and support devices in every home; and

•A trusted relationship with consumers who expect their sensitive home data to be kept private.

We believe our fully integrated solution that provides end-to-end product, sales and service throughout the life of the customer successfully addresses all these key points of friction and positions us to drive broad consumer market adoption.

Our Smart Home Platform

We pioneered a comprehensive smart home platform and began installing connected home solutions in 2010. Our cloud-enabled smart home operating system delivers on the promise of a true smart home experience.

Some key benefits of our platform include:

Integrated smart home experiences. We have developed and launched over 15 proprietary devices since 2010, all designed to seamlessly integrate into a comprehensive smart home solution. The software inside these devices, in combination with our cloud-based software and mobile apps, comprises the smart home operating system that knits these elements together to intuitively enable otherwise complex use cases that help address real-world problems. For instance, when someone comes to the front door, the homeowner may want to let them into the house. This requires a doorbell camera, lighting, locks, the security system, and indoor cameras to all work seamlessly together. Our smart home operating system does just this, enabling a multitude of use cases in a simple and intuitive fashion.

Anywhere, anytime access. Our operating system securely manages real-time communications and allows users to interact with their homes from around the globe. In addition to in-home touchscreens and our comprehensive integrations with voice-control devices, we provide apps for Android and iOS mobile devices.

AI-driven automation. Our AI-driven smart home automation and assistance software uses the data from both our and partner devices to enable our subscribers to have a true smart home experience. Because our trained and experienced in-home service professionals (“Smart Home Pros”) install the right devices in the right places in the home, it enables us to collect superior data and generate unique insights. We believe that we have the broadest, deepest, and purest home activity dataset, which we use to understand the state of the home in real time. This enables us to intelligently manage the residence on the homeowners’ behalf, while still keeping them informed and in full control.

Our proprietary platform processes home events such as interactions with lights, locks, thermostats, touchscreens, voice-control devices, and door and motion sensors; thermodynamic data such as interior temperature and heating/cooling duty cycles; location data from mobile devices; and users’ interactions with the platform itself. Our software learns from key interactions, enriching our platform and making the smart home experience smarter. We believe that no other company is as well positioned to capitalize on the opportunity to make the true smart home a reality.

Privacy and security. Much of the information that our technology manages on our subscribers’ behalf, including sensor data, video, and the insights gleaned by our proprietary platform, is sensitive and private, and we take our responsibility to

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protect this information seriously. We use this data to make our products smarter and provide intelligent suggestions to homeowners based on their daily routines, such as asking to lock doors or close the garage doors. Our subscribers trust us to help them manage their homes, which we consider a unique relationship that we strive to strengthen.

Partner relationships. We allow a select number of third-party, standalone devices into our system when doing so enhances the smart home experience for our subscribers. These may be devices that have a large installed base or that have unique capabilities, such as voice assistants. Using the Amazon Alexa and Google Assistant integrations for example, subscribers can use their voice to control their lights, change the temperature, make sure their garage doors are closed, lock their doors, or perform other actions. Other product and technology partnerships include AT&T, Chamberlain, Google Nest, Kwikset, Verizon and a variety of Z-Wave-enabled device manufacturers.

Seamless integration and support. We ensure that all partner devices are seamlessly integrated into our smart home platform, and that we are able to manage and support them as well as our own proprietary devices. This curated, partner-neutral approach is designed to provide our subscribers with a worry-free, end-to-end experience from sale to installation through a lifetime of use and support.

Reliability. The smart home requires an operating system that is always-on, reliable, able to process large streams of incoming data, and protected by enterprise-grade security. We deliver new functionality continually, deploying regular updates to our software. We also push firmware updates to smart home devices throughout the year to deliver new functionality and improve device performance. We ensure that all of the mundane tasks of device management - security, firmware upgrades, telemetry, diagnostics, and more - are taken care of, so that the system is as reliable as possible.

Increased usability and intelligence. With the vertical integration of the development and design of our products and services with our existing sales and customer service functions, we believe we are able to more quickly respond to market needs, and better understand our subscribers’ interactions and engagement with our system. This provides critical data which allows us to improve the power, usability and intelligence of our products and technology.

Continuous innovation. Our Vivint Innovation Center headquartered in Lehi, Utah, and our research and development office in Boston, Massachusetts, focus on the research and development of new products and services, both within and beyond our existing offerings. Our innovation centers include people with expertise in all aspects of the development process, including hardware development, software development, design, and quality assurance. We believe that continuously improving the smart home experience will increase the lifetime value of our current subscribers and attracts new subscribers.

Our Products and Services

We have a layered strategy for pursuing growth and achieving our strategic vision. Our flagship product offering is our fully integrated smart home system. We believe customers are better served by having the right system scoped, installed, and monitored to meet the specific needs of their homes and families. But to provide a truly differentiated offering, the platform within the home must allow homeowners to do much more. It should enable them to benefit from new products and services that leverage their smart home ecosystem. As part of this strategy, we have begun investing in the development of two adjacent markets: smart energy and smart insurance.

Smart Home

Our smart home products are designed to work as part of an integrated system, with features and capabilities that are often not present in devices designed primarily for standalone purchase and use. Our broad device portfolio enables our subscribers to achieve a comprehensive experience, across the entire home.

Some of our key products include:

•Vivint Smart Hub - a 7-inch touchscreen hub that seamlessly connects all smart home devices and makes it easy to control the home.

•Vivint Smart Home App – a single mobile app to control all of the smart home devices in a comprehensive Vivint smart home.

•Vivint Doorbell Camera Pro – an AI-powered doorbell camera with advanced analytics and Smart Deter technology to intelligently detect packages and actively help protect them from porch pirates and other potential threats.

•Vivint Outdoor Camera Pro – an AI-powered security camera that uses advanced analytics and Smart Deter technology to intelligently detect and deter lurkers around the home.

•Vivint Indoor Camera – an indoor camera with two-way talk and one-touch callout so families can easily connect and communicate.

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•Vivint Smart Thermostat – a thermostat that provides a new level of intelligence for temperature control and energy savings by integrating with all the door, window and motion sensors in a Vivint smart home.

•Vivint Car Guard – a first-of-its-kind service that allows homeowners to manage the security of both their home and car with a single app.

Our range of other devices, including smart locks, garage door control, door and window sensors, motion sensors, glass break detectors, key fobs, emergency pendants, smoke and carbon monoxide detectors and water sensors, extend the smart home experience to every part of the home, connecting users to their environments in new ways.

Smart Energy

In late 2020, we began operating as a third-party dealer for residential solar installers. As one of the first smart home companies to expand into solar energy, we are working to deliver deeper customer value by offering a comprehensive bundle that subsidizes the cost of smart home and helps protect customers from rising energy costs, while acting as better stewards of the environment. We intend to create a bundled offering of smart home and smart energy that integrates energy production and consumption data in the Vivint app, allowing customers to intelligently manage their home’s energy usage. We believe that bundling smart home with smart energy products and services presents an opportunity to provide significant incremental value to our customers and to save them money. We are approaching this opportunity through a dual path strategy that minimizes working capital requirements and is sales lead-based. In July 2021, we announced a partnership with Freedom Forever, one of the country’s leading solar installers. This partnership enables Freedom Forever to include a Vivint smart home system with each of its solar sales, which both parties believe will deliver immediate value to the customer, and lead to more smart home installations for Vivint.

In addition, through our partnerships with Freedom Forever and other solar installers, we can offer smart energy to our current customers, as well as new customers. Through these partnerships, we generated over 45 megawatts of installed solar power during 2021, bringing smart energy to approximately 5,000 homes. We believe this will continue to expand in the future as we begin offering a bundled solution in markets where customers are most likely to benefit from residential solar. Over time, we intend to integrate the production data from the solar panels with customer behavior patterns. As a result, we believe smart energy can drive meaningful savings to our customers that will reinforce the value of the Vivint platform, and do so in an environmentally friendly manner.

Smart Insurance

We began selling property and casualty insurance to a limited number of our customers in 2020. The over $600 billion property and casualty insurance market has been looking for a homeowner’s equivalent to the smart driving discount that auto insurance carriers deliver through their telematics solution in automobiles. We believe that Vivint has such a solution, given the rich first-party data that comes from our average customer interacting with such customer's system multiple times per day, and the numerous smart devices in such customer's home that help protect them against water damage, fire, and theft. In addition, customers have opportunities to receive a homeowner’s insurance discount by having a monitored security system as part of their smart homes. As we have engaged with industry leaders in the insurance space, they have shown significant interest in helping us create a home insurance solution that leverages our smart home ecosystem to save our customers money and mitigate the severity of claim events. We believe we can demonstrate to insurers that Vivint customers present a lower risk than homeowners without a smart home system or with a DIY system that was inadequately scoped, and installed or professionally monitored.

To date, we have operated as an agency, reselling insurance products from a few large carriers, selling approximately 7,300 insurance policies in 2021. To better leverage our smart home platform and provide the opportunity for additional savings for consumers, we intend to become a Managing General Agent (“MGA”), which will allow us to develop specific homeowner coverages for our customers. We believe this can increase the number of policies we sell on an annual basis and provide a higher level of customer-specific coverages through our MGA insurance offerings in a number of the states with our largest subscriber base. As we are able to demonstrate the savings and benefits of our propriety coverages, we believe we can expand into several additional states over time.

We are focused on accelerating our long-term growth through each of these adjacencies. Meanwhile, we will maintain the focus on our core smart home business, and consider these opportunities to be natural extensions of our core smart home offering. We believe we have the tools, technology, and capabilities to not only deliver value through an elegant smart home experience, but to save our customers money through innovative energy and insurance solutions.

High-Performing Scalable Economic Model

We believe our end-to-end solution, long-term customer relationships, and subscription-based, high-margin recurring revenues drive significant lifetime value.

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Our business is driven by the acquisition of new subscribers and by managing and retaining our existing subscriber base. Prior to 2017, the acquisition of new subscribers required significant upfront investment. To provide even greater subscriber accessibility and affordability to our Products and Services and improve our cash flow economics, in 2017 we launched Vivint Flex Pay, which enables qualified subscribers to purchase smart home devices with unsecured financing either through a third-party financing partner or through us, in most cases at zero percent APR. Vivint Flex Pay significantly reduced this upfront investment to acquire new subscribers and in turn dramatically improved our cash flows. Our Net Subscriber Acquisition Cost per New Subscriber decreased from $1,018 for the year ended December 31, 2019 to $58 for the year ended December 31, 2021, a reduction of approximately 94%.

Our existing subscriber base generates predictable, high-margin recurring revenue (with approximately 78% net service margins for the year ended December 31, 2021) from our cloud-enabled smart home solutions. Our strategic priorities are focused on leveraging the increased customer satisfaction that results from the distinct advantage derived from our fully integrated platform, and strategic adjacencies such as smart energy and smart insurance, as discussed above. As we successfully execute on these strategic priorities, we believe we can extend our Average Subscriber Lifetime and increase the value of our customers over that lifetime.

We will continue investing in innovative technologies that we believe will make our platform more valuable and engaging for subscribers, and we intend to continue investing in new subscriber acquisition channels to further improve the economics of our business model. We will also continue working to introduce additional solutions to improve the lifetime value of our customers and the unit economics of our business, by continually enhancing the smart home experience and identifying additional adjacent in-home products and services that leverage our smart home platform and customer relationships.

Sales and Marketing

Our go-to-market strategy is based on directly educating consumers about the value and benefits of a smart home experience. We reach consumers through a variety of highly efficient customer acquisition channels, including our national inside sales and direct-to-home sales channels. Our nationwide sales and service footprint covers the majority of U.S.zip codes. Regardless of sales channel, our tech-enabled sales professionals always take a consultative approach to the sales process, educate potential subscribers on the benefits of smart home technology, and tailor a solution that serves each subscriber’s needs. This consultative sales process has enabled us to achieve a high adoption rate of our smart home solutions.

National Inside Sales

Our national inside sales channel provides a consultative experience for consumers who contact us. The inside sales channel generates leads through multiple sources, both digital and traditional, including paid, organic and local search, as well as display advertising. We believe that we will continue to experience growth in this channel as our brand awareness improves and customers’ understanding of the benefits of a smart home increases.

Direct-to-Home Sales

Our direct-to-home tech-enabled sales representatives provide an in-home consultative sale to help homeowners throughout the United States understand the benefits of a smart home. Markets are selected each year based on a number of factors, including demographics, population density and our past experience selling in these markets. We also have a program whereby a number of direct-to-home sales representatives reside in certain select markets and sell in those markets on a year-round basis. We expect the number of new subscriber contracts generated through this program to increase over time.

Marketing Strategy

Vivint’s national marketing efforts are anchored in our mission to redefine the home experience with technology and services to create a smarter, greener, safer home that saves our customers money every month. Our customer marketing and organic social teams are focused on prioritizing customers’ needs for education, technology improvements, world-class service, and a sense of community. We invest in certain marketing strategies which amplify the brand and awareness of our solutions, including through general paid media outlets. We also have exclusive brand naming rights for the Vivint Arena, home of the NBA’s Utah Jazz.

Field Operations

When it comes to creating a smart home experience, we believe many homeowners want and need professional help to set up their systems and to ensure that they are fully functional. We deploy Smart Home Pros throughout North America to provide professional installation and prompt tech-enabled services to our subscribers. In contrast to DIY solutions, we provide professional, white glove installation, followed by ongoing in-home service, customer support and 24/7 professional monitoring.

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In addition to providing high quality installation and services, Smart Home Pros also deliver tailored in-home customer service. Our Smart Home Pros work together with customers to determine the most effective installation plan. Because of their experience and expertise, Smart Home Pros can offer recommendations for additional, industry-leading products to ensure the customer’s system provides the highest possible functionality and security. As part of the installation process, the customer is trained on how to use the system and Smart Home Pros work to answer any questions and address any customer concerns. We believe this customer-focused attention sets Vivint apart from our competition.

Customer Care and Monitoring

Our customer service team responds to non-emergency inquires related to service and billing. In many cases, they can remotely troubleshoot system issues, without the need to send a Smart Home Pro to the home. Our customer service centers operate 24/7 year-round and are fully redundant across multiple locations globally. Our team has won multiple awards for customer service including the Business Intelligence Group’s “Excellence in Customer Service” award in 2021. We continue to improve our customer care offerings with online self-help tools and resources. Customer service representatives are required to pass background checks and receive extensive training.

Our two central monitoring facilities are located in Utah and Minnesota and act as primary backups for each other and operate 24/7 year-round, including on holidays. Our professional monitoring teams respond to medical, fire, flood, carbon monoxide and burglary alerts within seconds and relay appropriate information to first responders, such as local police, fire departments or medical emergency response centers. Our team has twice won the Monitoring Association’s “Monitoring Center of the Year” award, most recently in 2021. This is the highest accolade for central monitoring stations. All professionals who work in our monitoring facilities undergo comprehensive training and are required to pass background checks, and, in certain cases, licensing tests or other checks.

Our Customers

We had approximately 1.9 million subscribers in North America as of December 31, 2021. Our business is not dependent on any single subscriber or a few subscribers, as such, the loss of any single subscriber or a few subscribers would not have a material adverse effect on the respective market or on us as a whole. No individual subscriber accounted for more than 1% of our consolidated 2021 revenue.

Subscriber Contracts

We seek to ensure that our subscribers understand their smart home system, along with the key terms of their contracts by conducting two surveys with every subscriber. The first survey, which is generally conducted via a video recording, occurs prior to the execution of the contract and professional installation, and the second survey is conducted electronically after the installation is completed. Each survey's results is stored in our subscriber relationship management software, enabling easy access and review.

Types of Contracts

When signing up for our Services, subscribers currently have the following three ways to pay for their Products: (1) qualified customers in the United States may finance the purchase of Products through a third-party financing provider (“Consumer Financing Program” or “CFP”); (2) we generally offer to a limited number of customers not eligible for the CFP, but who qualify under our underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with us or; (3) customers may purchase the Products at the outset of the service contract either by paying the full amount due at that time via check, automatic clearing house payments (“ACH”), credit or debit card or to a lesser extent by obtaining short-term financing (generally, no more than six-months installment terms) through us (“Pay-in-Full” or “PIF”). We receive recurring revenue for Services on a month-to-month basis from these subscribers. When a subscriber signs up under the CFP program, we receive cash from the third-party financing provider (“Financing Provider”) for the subscriber’s purchase of products and the related installation costs less any upfront fees. Beginning in early 2021, all loans issued by Financing Providers will be originated through a line-of-credit (“LOC”), whereas previously most financing was provided through installment loans. The fee structures of our loans vary, depending on the Financing Provider and the type of Financing Provider loan (“Loans”). The fee structures of these Loans are generally one or more of the following:

•We pay a monthly fee based on either the average daily outstanding balance of the installment Loans, or the number of outstanding Loans;

•We incur fees at the time of the Loan origination and receive proceeds that are net of these fees;

•For certain loans, we also share liability for credit losses, with us being responsible for between 2.6% and 100% of lost principal balances; and

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•We are responsible for reimbursing certain Financing Providers for merchant transaction fees and other fees associated with the Loans.

Term and Termination

Historically, we have generally offered service contracts to subscribers that range in length from 36 to 60 months, subject to automatic monthly renewal after the expiration of the initial term. A majority of new subscribers enter into 60-month contracts. As a result, the average initial contract length has increased over time, reaching an average of 50 months as of December 31, 2021. Generally when the customer pays for their Products upfront, we offer a month-to-month contract at the time of origination. Subscribers have a right of rescission period prescribed by applicable law during which such subscriber may cancel the contract without penalty or obligation. Generally, these rescission periods range from 3 to 30 days, depending on the jurisdiction in which a subscriber resides. As a company policy, we provide new subscribers 65 years of age and older a 30-day right of rescission. If the subscriber rescinds during the applicable rescission period under the terms of the contract, the subscriber is required to return the applicable equipment. Once the applicable rescission period expires, the subscriber is responsible for any unpaid contractual monthly service fees and amounts that remain due under their Vivint Flex pay agreement.

Other Terms

We provide our subscribers with maintenance free of charge for the first 120 days. After 120 days, and during the first five years, we will repair or replace defective smart home devices without charge, but we typically bill the subscriber a charge for each service visit. If a utility or governmental agency requires a change to our platform or tech-enabled service after installation of the system, the subscriber may be charged for the equipment and labor associated with the required change. We also charge subscribers a monthly fee related to the cost of maintaining our cellular communication network.

We do not provide insurance or warrant that the system will prevent a burglary, fire, hold-up or any such other event. Our contracts limit our liability to a maximum of $2,000 per event and, where permissible, provide a one-year statute of limitations to file an action against us. We may cease or suspend tech-enabled monitoring and repair service due to, among other things, work stoppages, weather, phone service interruption, government requirements, subscriber bankruptcy or non-payment by subscribers after we have given notice that their service is being canceled due to such non-payment.

Billing and Collections

A majority of our subscribers pay for our Services electronically either via ACH, credit or debit card, with approximately 89% paying electronically as of December 31, 2021. Our subscribers billed via direct invoice can be billed on any day of the month, with payment due 15 days subsequent to the invoice date. Subscribers are billed in advance for their monthly services based on their billing cycle and not calendar month. In those jurisdictions where we are entitled to do so by law, we charge late fees to subscribers whose accounts are more than 10 days past due.

Intellectual Property

Patents, trademarks, copyrights, trade secrets, and other proprietary rights are important to our business and we continually refine our intellectual property strategy to maintain and improve our competitive position. We seek to protect new intellectual property to safeguard our ongoing technological innovations and strengthen our brand, and we believe we take appropriate action against infringements or misappropriations of our intellectual property rights by others. We review third-party intellectual property rights to help avoid infringement, and to identify strategic opportunities. We typically enter into confidentiality agreements to further protect our intellectual property.

As of December 31, 2021, our portfolio of U.S. and Canadian patents consists of 404 issued patents and numerous additional pending-patent applications that relate to a variety of smart home, security and other technologies utilized in our business. We also own a portfolio of trademarks, including U.S. and Canadian registrations for Vivint, and are a licensee of various patents from our third-party suppliers and technology partners.

Competition

The smart home industry is highly competitive and fragmented. Our major competitors range from large-cap technology companies (e.g., Amazon and Google) which predominantly offer DIY devices to expand their core market opportunity, to security-based providers such as ADT, Alarm.com, Brinks, FrontPoint, Guardian and SimpliSafe. We also face competition from industrial and telecommunications companies that offer connected home experiences such as Arlo, Comcast Xfinity

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Home, Cox Communications, Honeywell, Resideo and Samsung. Historically, the vast majority of companies have not offered comprehensive smart home solutions and accompanying services that meet the growing requirements of households.

We believe we compete effectively with each of our competitors and are uniquely positioned due to our proprietary cloud-based platform and differentiated end-to-end business model. However, we expect competition to intensify in the future as we face increasing competition from competitors who are building their own smart home platforms, such as Amazon, Apple and Google, as well as from companies that offer single-point connected devices. Having installed more than 3.2 million smart home and security systems, we believe we are well positioned to compete. We benefit from more than 22 years of experience; our efficient direct-to-home and inside sales channels; integrated smart home platform; innovative products; and our award-winning customer service. We also believe that our recently announced smart energy and smart insurance initiatives, which we intend to continue developing and expanding, will provide greater differentiation relative to our competitors.

Government Regulations

United States

We are subject to a variety of laws, regulations and licensing requirements of federal, state and local authorities.

We are also required to obtain various licenses and permits from state and local authorities in connection with the operation of our businesses. The majority of states regulate in some manner the sale, installation, servicing, monitoring or maintenance of smart home and electronic security systems. In the states that do regulate such activity, our company and our employees are typically required to obtain and maintain licenses, certifications or similar permits from the state as a condition to engaging in the smart home and security services business.

In addition, a number of local governmental authorities have adopted ordinances regulating the activities of security service companies, typically in an effort to reduce the number of false alarms in their jurisdictions. These ordinances attempt to reduce false alarms by, among other things, requiring permits for individual electronic security systems, imposing fines (on either the subscriber or the company) for false alarms, discontinuing police response to notification of an alarm activation after a subscriber has had a certain number of false alarms, and requiring various types of verification prior to dispatching authorities.

Our sales and marketing practices are regulated by the federal, state and local agencies. These laws and regulations typically place restrictions on the manner in which products and services can be advertised and sold, and to provide residential purchasers with certain rescission rights. In certain circumstances, consumer protection laws also require the disclosure of certain information in the contract with our subscriber and, in addition, may prohibit the inclusion of certain terms or conditions of sale in such contracts. Many local governments regulate direct-to-home sales activities and contract terms and require that salespeople and the company on whose behalf the salesperson is selling obtain licenses to carry on business in that municipality.

In addition, the CFP and RICs are subject to federal and state laws. These laws primarily require that consumer financing contracts include or be accompanied by certain prescribed disclosures, but these laws also may place limitations on particular fees and charges, and require licensing or registration of the party extending consumer credit. Vivint and our financing partners providing third-party consumer financing under Vivint Flex Pay are responsible for compliance with such laws applicable to Vivint Flex Pay, and we are solely responsible for compliance with such federal and state laws regulating RICs.

Canada

Companies operating in the smart home and electronic security service industry in Canada are subject to provincial regulation of their business activities, including the regulation of direct-to-home sales activities and contract terms and the sale, installation and maintenance of smart home and electronic security systems. Consumer protection laws in Canada also require that certain terms and conditions be included in the contract between the service provider and the subscriber.

A number of Canadian municipalities require subscribers to obtain licenses to use electronic security alarms within their jurisdiction. Municipalities also commonly require entities engaged in direct-to-home sales within their municipality to obtain business licenses.

Data Privacy and Security

In the course of our operations, we gather, process, transmit and store subscriber information, including personal, payment, credit, financial and other confidential and private information. We may use this information for operational and marketing purposes in the course of operating our business. Our collection, retention, transfer, storage, use, processing, disclosure, and security of this information are governed by U.S. and Canadian laws and regulations relating to privacy and data security, industry standards and protocols, or it may be asserted that such industry standards or protocols apply to us. In North

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America, federal and various state and provincial governmental bodies and agencies have adopted or are considering adopting laws and regulations limiting, or laws and regulations regarding the collection, retention, transfer, storage, and use, processing, disclosure, and security of certain categories of information. These new laws and regulations may also impact the way we design and develop new technology solutions and the way we sell and market our products and services. Some of these requirements include obligations of companies to notify individuals of security breaches involving particular personal information, which could result from exploitation of a vulnerability in our systems or services, or from breaches experienced by our service providers and/or partners. We are also subject to state and federal laws and regulations regarding telemarketing and other telephonic communications and state and federal laws regarding unsolicited commercial emails, as well as regulations relating to automated telemarketing calls, texts or SMS messages.

Many jurisdictions have established their own data security and privacy legal and regulatory frameworks with which we or our vendors or partners must comply to the extent our operations expand into these geographies or the laws and regulations in these frameworks otherwise may be interpreted to apply to us. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses, mailing addresses, financial account numbers, and, in some jurisdictions, internet protocol addresses. We are also bound by contractual requirements relating to privacy and data security, and may agree to additional contractual requirements addressing these matters from time to time.

Seasonality

Our direct-to-home sales are seasonal in nature with a substantial majority of our new customer originations generally during a sales season from April through August. We make investments in the recruitment of our direct-to-home sales force and the inventory prior to each sales season. We experience increases in subscriber contract costs during these time periods.

The management of our sales channels has historically resulted in a consistent sales pattern that enables us to more accurately forecast customer originations.

Human Capital Management

As a smart home platform company that provides home services to our customers, we know that our success relies heavily on our ability to attract, develop and retain top talent who are committed to delivering the peace of mind our customers expect. We recognize that delivering this peace of mind means we must understand the needs of our diverse customer base and the communities we serve across North America. The best way to do this is to employ top talent with diverse backgrounds, perspectives and experience that can connect with our customer’s needs.

As of December 31, 2021, we employed approximately 11,000 people including our seasonal direct sales and installation force, of which most were employed in the United States. Less than 1% of our employees were based in Canada.

We place a premium on inclusion and strive to continually engage employees on ways to fully realize one of our core values of “We Win Together.” We believe this is a critical component of our strategies for attracting and retaining talent. One way we accomplish this is through Employee Resource Groups (“ERG”s), including our Vivint Pride, Vivint Veterans, Vivint Women and Vivint EDGE (Ethnically Diverse Group of Employees), as well as our Diversity Council. Our ERG programs are staffed by employees with diverse backgrounds, experiences or characteristics who share a common interest in professional development, improving corporate culture and delivering sustained business results. We use these groups to provide guidance to the organization on opportunities to improve inclusion across Vivint, to provide mentorship opportunities for our employee base, and to support the acquisition of diverse talent internally and externally. Each ERG is sponsored and supported by senior leaders across the enterprise. In 2019 and 2020, we were recognized by Forbes as one of “America's Best Employers for Diversity” and in 2021, Newsweek named Vivint in the top “100 Most Loved Workplaces.” Approximately 38% of our employee base self identifies as ethnically diverse and approximately 19% of our employee base self identifies as female.

Attracting talent

Attracting top talent starts at the candidate pipeline stage. Our talent acquisition team works closely with managers to develop job descriptions that are inclusive, to attract a broad spectrum of candidates. We work with many groups and networks including universities, alumni networks, job boards, diverse affinity groups, Utah’s Women Tech Council and veterans groups in order to cast a wide net to identify a diverse slate of qualified candidates.

Developing Talent

We are committed to the continued development of our employees. We rely heavily on experiential learning through stretch assignments, projects and other on-the-job opportunities while layering in mentoring, coaching, and formal training as

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appropriate to facilitate talent development. Strategic talent reviews and succession planning occur on a planned annual cadence across all business areas. The CEO and Chief People Officer hold meetings with senior leadership to review top talent, identify opportunities to develop and stretch our talent, and develop action plans to mitigate retention risks and talent gaps. This approach has enabled us to continue providing formal career growth to our internal employees with approximately 75% of open management positions being filled internally in 2021.

Retaining Talent

An important component of retention is a competitive total rewards package which includes:

•Competitive compensation that incentivizes performance

•Comprehensive health insurance coverage

•Access to our on-site clinic for employees located close to the Provo headquarters, which delivers personalized health care and wellness solutions for our employees, including access to mental health professionals at a nominal cost

•Life insurance and disability leave

•Mental health support for all employees

•401(k) matching

•Paid parental leaves for birth, adoption, or foster placement

•(Paid Time Off) PTO for our hourly employees and unlimited paid time away for our salaried employees

While a competitive total rewards program provides a solid foundation for retention, we believe it is critical to continually focus on ensuring our employees are highly engaged and feel valued. Our leaders hold regular one-on-one meetings, where leaders take time to connect with their employees, and to understand what is working well for them and areas for improvement and development. We also conduct an annual company-wide engagement survey and pulse surveys throughout the year to seek feedback from our employees on a variety of topics including, but not limited to, confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities, how we live our values and improvements we can make. We then develop plans to address opportunities for improvement, based on the survey results.

Health and Safety

We are committed to providing a safe and healthy environment for all our employees. This requires us to identify the specific hazards within the unique working environments of our sales, service, installation and corporate operations. We use leading indicators reported through Job Safety Analysis and Job Safety Observation (audits) to provide an assessment of prevailing hazards identified on the job. Both indicators provide leaders with data that enables real-time coaching and engagement conversations while providing the Health and Safety Team analysis of the workplace hazards, for training and policy development. In addition, we utilize a number of measures including Total Recordable Incident Rate (“TRIR”), and Lost Time (or Lost Workday) Incident Rate (“LTIR”), to measure the overall effectiveness of our health and safety program. For 2021, we had a TRIR of 1.6, a LTIR of 0.89 and zero work-related fatalities.

Maintaining a healthy and safe work environment for our employees through the COVID-19 pandemic remains a significant focus for us. We continue to maintain COVID-19 operating procedures aimed at keeping our employees and customers safe when in customers’ homes; requiring appropriate personal protective equipment; offering paid time off for those who are diagnosed with and quarantined due to COVID-19; and making rapid testing available to our employees through our on-site clinic located in our Provo headquarters. In addition, many of our office-based employees continue to work from home or work a combination of in office and from home on a hybrid schedule.

Suppliers

We license certain communications infrastructure, software and services from Alarm.com to support subscribers using our Go!Control panel, which was approximately 5% of our Total Subscribers at December 31, 2021. These Go!Control panels are connected to Alarm.com’s hosted platform. Alarm.com also provides an interface to enable these subscribers to access their systems remotely. We also license certain intellectual property from Alarm.com for our subscribers using the SkyControl or Smart Hub panel.

Generally, our hardware device suppliers maintain a stock of devices and key components to cover any minor supply chain disruptions. Although it has not yet had a significant impact on our business, some technology companies are facing shortages of certain components used in our Products, which if prolonged could impact our ability to obtain the equipment needed to support our operations and could increase Product costs. Such shortages are requiring us to purchase components on

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the spot market at elevated prices and utilize expedited shipping methods to maintain adequate supply, which result in increased costs for components and equipment. Where possible we also utilize dual sourcing methods to minimize the risk of a disruption from a single supplier. However, we also rely on a number of sole source and limited source suppliers for critical components of our solution. Replacing any sole source or limited source suppliers could require the expenditure of significant resources and time to redesign and resource these products.

Where You Can Find More Information

We file annual, quarterly and current reports, and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the internet at the SEC’s website at http://www.sec.gov. In addition, we maintain a website at http://www.vivint.com. We make available free of charge on or through our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We are providing the address to our website solely for the information of investors. The information on our website is not a part of, nor is it incorporated by reference into, this Annual Report.

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ITEM 1A.RISK FACTORS

You should carefully consider the following risk factors and all other information contained in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only risks facing us. Additional risks and uncertainties that we are unaware of, or those we currently deem immaterial, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, cash flows or results of operations.

Risks Relating to Our Business and Industry

The global COVID-19 pandemic may adversely impact our business, at least for the near term. Such impact may persist for an extended period of time or become more severe which, in turn, may materially and adversely impact our financial condition, cash flows or results of operations.

In December 2019, COVID-19 was initially reported and on March 11, 2020, the World Health Organization (WHO) characterized COVID-19 as a pandemic. In March 2020, the United States declared a national emergency and almost every state has declared public health emergencies concerning the outbreak of the disease and preventative measures to try to contain the spread of COVID-19.

The COVID-19 pandemic has materially and adversely affected global economies, financial markets and the overall environment for our business, and may materially and adversely impact our financial condition, cash flow or results of operations, including without limitation the following:

•Changes to prevailing economic conditions, including increasing interest rates, rising inflation and the expiration of federal, state and local economic stimulus programs could impact our customers' ability to pay for our Products and Services. Such conditions may also negatively impact the creditworthiness of new subscribers or current subscribers who are seeking to renew their subscription agreements, as well as the ability of our financing partners to provide consumer financing. If we lose our consumer financing sources, we may not be able to access alternate sources at acceptable, value-creating rates. In addition, increased loan write-offs for subscribers may result in us having to make higher loss share payments to our financing partners;

•The COVID-19 pandemic may have a negative impact on our liquidity and capital resources, including if we experience adverse impacts relating to the timing of payments by our customers and increased customer default rates, which could impact the sufficiency of our credit facilities and our ability to comply with debt covenants;

•Economic and market conditions caused by the impact of the COVID-19 pandemic may adversely affect the value of certain of our assets and liabilities, as well as the market value of our securities, and could in the future impact the collectability of accounts receivable and RICs, requiring increased reserves and resulting in the possible impairment of goodwill and Capitalized Contract Costs;

•The impact of the COVID-19 pandemic, including the actions taken by federal, state, local and foreign governments in response to the pandemic, could cause a significant disruption in our operations or the operations of third parties, which in turn could impair our ability to obtain the equipment needed to support our operations, staff call centers or deliver equipment and services to our subscribers on a timely basis;

•Material disruptions in the operations of our limited number of suppliers, or of the suppliers on which our suppliers rely for significant components and materials, has increased our costs, and in the future, could further increase our costs or prevent or limit our ability to install our equipment in the homes of new subscribers or repair/replace equipment in the homes of existing subscribers. Additionally, we may incur higher working capital costs, if we are unable to sell or install the equipment in our inventory or are unable to cancel orders that are yet to be received;

•Some technology companies are facing shortages of certain components used in our Products, which has impacted our ability to obtain the equipment needed to support our operations. Such shortages have required us to incur additional costs associated with expedited shipping methods and purchase components on the spot market at elevated prices to maintain adequate supply. These activities have increased our costs for components and equipment. If these component shortages continue, we will likely continue to incur greater costs in connection with our operations and it could impact our ability to install our Products in new subscribers' home or repair/replace our Products in our existing subscribers' homes;

•The impact of the COVID-19 pandemic on financial markets could have an adverse impact on our access to capital and the cost of debt financing. In addition, global securities markets have experienced, and may continue to experience, significant volatility as a result of the COVID-19 pandemic, and the price of our securities has been volatile and has decreased significantly in recent months. If we cannot access the capital we need to fund our operations or implement our growth strategy, it could impair our ability to compete effectively and harm our business;

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•Pandemic-related disruptions may increase our exposure to claims or litigation with respect to losses caused by such disruptions and may have a particularly adverse effect on our business in the event that pandemic-related losses are not covered by our property and business interruption insurance in part or at all;

•We may experience decreased employee productivity and retention, and difficulty hiring and training new employees including as a result of implementing work-from-home policies for corporate employees across all our facilities;

•Our ability to maintain our geographically dispersed central monitoring stations to provide 24/7 professional monitoring services for all emergencies may be impaired;

•We are experiencing increased costs and expenses, including as a result of (i) conducting daily “fitness- for-duty” assessments for all customer-facing employees, including temperature and symptoms checks and providing personal protective equipment for any sales, installation and service visits (of which we may incur shortages due to supply chain issues); (ii) rescheduling of appointments for customers that are experiencing signs of illness; (iii) the expansion of benefits to our employees, including the provision of additional paid time off for employees who have contracted COVID-19 or are required to be quarantined; and (iv) implementing increased health and safety protocols at all our facilities, including increased cleaning/sanitization of workspaces, restricting visitor access, mandating social distancing guidelines and increasing the availability of sanitization products;

•The risk of cyber-attacks or other privacy or data security incidents may be heightened as a result of our moving increasingly towards a remote working environment and online marketing channels. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic. An extended period of remote working by our employees could also strain our technology resources and introduce operational risks, including heightened cybersecurity risk; and

•COVID-19 presents a significant threat to our employees’ well-being and morale, which could erode customer service and quality standards, presenting increased costs. At times during the various outbreaks that have occurred during the course of the pandemic, we have experienced a decrease in productivity in the event of a significant rate of infection or illness among our employees. While we have implemented and deployed a business continuity plan to protect the health of our employees and have contingency plans in place for key employees or executive officers who may become sick or otherwise unable to perform their duties for an extended period of time, such plans cannot anticipate all scenarios, and we may experience potential loss of productivity or a delay in the roll out of certain strategic plans.

The global spread of the COVID-19 pandemic has been complex and continues to evolve with each additional variant and wave of outbreak that emerges. The ongoing impact of the COVID-19 pandemic (or any future resurgence thereof) on our business remains uncertain and depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the emergence of variants, the availability and adoption rates of vaccines and treatments, the extent and effectiveness of containment actions, the actions taken by governments, companies, or counterparties and subscribers or potential subscribers in response to the pandemic and the pace of recovery when the pandemic subsides.

Our industry is highly competitive.

We operate in a highly competitive industry. We face, and may in the future face, competition from other providers of information and communication products and services, including cable and telecommunications companies, Internet service providers, large technology companies, singular experience companies, industrial and smart hardware companies, and others that may have greater capital and resources than us. We also face competition from large residential security companies that have or may have greater capital and other resources than we do. Competitors that are larger in scale and have greater resources may benefit from greater economies of scale and other lower costs that permit them to offer more favorable terms to consumers (including lower service costs) than we offer, causing such consumers to choose to enter into contracts with such competitors. For instance, cable and telecommunications companies are expanding into the smart home and security industries and are bundling their existing offerings with automation and monitored security services. In some instances, it appears that certain components of such bundled offerings are significantly underpriced and, in effect, subsidized by the rates charged for the other product or services offered by these companies. These bundled pricing alternatives may influence subscribers’ desire to subscribe to our services at rates and fees we consider appropriate. These competitors may also benefit from greater name recognition and superior advertising, marketing, promotional and other resources. To the extent that such competitors utilize any competitive advantages in markets where our business is more highly concentrated, the negative impact on our business may increase over time. In addition to potentially reducing the number of new subscribers we are able to originate, increased competition could also result in increased subscriber acquisition costs and higher attrition rates that would negatively impact us over time. The benefit offered to larger competitors from economies of scale and other lower costs may be magnified by an economic downturn in which subscribers put a greater emphasis on lower cost products or services. In addition, we face competition from regional competitors that concentrate their capital and other resources in targeting local markets.

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We also face potential competition from do-it-yourself (DIY) systems, which enable consumers to install their own systems and monitor and control their home over the Internet without the need for a subscription agreement with a service provider. Improvements in these systems may result in more subscribers choosing to take on the responsibility for installation, maintenance, and management of connected home systems themselves. In addition, consumers may prefer individual device solutions that provide more narrowly targeted functionality instead of a more comprehensive integrated smart home solution. Pricing pressure or improvements in technology and shifts in consumer preferences towards DIY and/or individual solutions could adversely impact our subscriber base or pricing structure and have a material and adverse effect on our business, financial condition, results of operations and cash flows.

Cable and telecommunications companies actively targeting the smart home market and expanding into the monitored security space, and large technology companies expanding into the smart home market could result in pricing pressure, a shift in subscriber preferences towards the services of these companies and a reduction in our market share. Continued pricing pressure from these competitors or failure to achieve pricing based on the competitive advantages previously identified above could prevent us from maintaining competitive price points for our products and services, resulting in lost subscribers or in our inability to attract new subscribers, and have an adverse effect on our business, financial condition, results of operations and cash flows.

We rely on long-term retention of subscribers and subscriber attrition can have a material adverse effect on our results.

We incur significant upfront costs to originate new subscribers. Accordingly, our long-term performance is dependent on our subscribers remaining with us for several years after the initial term of their contracts. One reason for attrition occurs when subscribers move and do not reconnect. Subscriber moves are impacted by changes in the housing market. See “-Our business is subject to macroeconomic, microeconomic and demographic factors that may negatively impact our results of operations.” Some other factors that can increase subscriber attrition include problems experienced with the quality of our Products or Services, unfavorable general economic conditions, adverse publicity and the preference for lower pricing of competitors’ products and services. In addition, we generally experience an increased level of subscriber cancellations in the months surrounding the expiration of such subscribers’ initial contract term. If we fail to retain our subscribers for a sufficient period of time, our profitability, business, financial condition, results of operations and cash flows could be materially and adversely affected. Our inability to retain subscribers for a long term could materially and adversely affect our business, financial condition, cash flows or results of operations.

Litigation, complaints or adverse publicity or unauthorized use of our brand name could negatively impact our business, financial condition and results of operations.

From time to time, we engage in the defense of, and may in the future be subject to, certain investigations, claims and lawsuits arising in the ordinary course of our business. For example, we have been named as defendants in putative class actions alleging violations of wage and hour laws, the Telephone Consumer Protection Act, common law privacy and consumer protection laws. From time to time, our subscribers have communicated and may in the future communicate complaints to organizations such as the Better Business Bureau, regulators, law enforcement or the media. Any resulting actions or negative subscriber sentiment or publicity could reduce the volume of our new subscriber originations or increase attrition of existing subscribers. Any of the foregoing may materially and adversely affect our business, financial condition, cash flows or results of operations.

Unauthorized use of our brand name by third parties may also adversely affect our business and reputation, including the perceived quality and reliability of our products and services. We rely on trademark law, internal policies and agreements with our employees, subscribers, business partners and others to protect the value of our brand name. Despite our precautions, we cannot provide assurance that those procedures are sufficiently effective to protect against unauthorized third-party use of our brand name. We may not be successful in investigating, preventing or prosecuting all unauthorized third-party use of our brand name. Future litigation with respect to such unauthorized use could also result in substantial costs and diversion of our resources. These factors could adversely affect our reputation, business, financial condition, results of operations and cash flows.

If we fail to attract, retain and engage appropriately qualified employees, including employees in key positions, our operations and profitability may be harmed. In addition, changes in market compensation rates may adversely affect our profitability.

Our business strategy of offering high-quality products and services for our customers requires a highly-trained and engaged workforce and, as a result, is highly dependent on our ability to attract, train and retain sufficient numbers of qualified employees. Specifically, because sales representatives become more productive as they gain experience, retaining those

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individuals is very important for our success, especially during our peak April through August sales season. Further, failure to recruit or retain qualified employees in the future may impair our efficiency and effectiveness and our ability to pursue growth opportunities. A significant amount of turnover of our executive team or other employees in key positions, such as engineering, finance or legal, with specific knowledge relating to us, our operations and our industry may negatively impact our operations. Factors that affect our ability to maintain sufficient numbers of qualified employees include, for example, employee engagement, our reputation, unemployment rates, competition from other employers, availability of qualified personnel and our ability to offer appropriate compensation and benefit packages. If we are unable to attract, train and retain sufficient numbers of qualified employees, our business, financial condition, cash flows or results of operations could be adversely affected.

We operate in a competitive labor market and there is a risk that market increases in compensation and employer-provided benefits could have a material adverse effect on our profitability. We may also be subject to continued market pressure to increase employee hourly wage rates and increased cost pressure on employer-provided benefits. Our need to implement corresponding adjustments within our labor model and compensation and benefit packages could have a material adverse impact to the profitability of our business.

Our operations depend upon third-party providers of telecommunication technologies and services.

Our operations depend upon third-party cellular and other telecommunications providers to communicate signals to and from our subscribers in a timely, cost-efficient and consistent manner. The failure of one or more of these providers to transmit and communicate signals in a timely manner could affect our ability to provide services to our subscribers. There can be no assurance that third-party telecommunications providers and signal processing centers will continue to transmit and communicate signals to or from our third-party providers and the monitoring stations without disruption. Any such disruption, particularly one of a prolonged duration, could have a material adverse effect on our business. In addition, failure to renew contracts with existing providers or to contract with other providers on commercially acceptable terms or at all may adversely impact our business.

Certain elements of our operating model have historically relied on our subscribers’ continued selection and use of traditional landline telecommunications to transmit signals to and from our subscribers. There is a growing trend for consumers to switch to the exclusive use of cellular, satellite or internet communication technology in their homes, and telecommunication providers may discontinue their landline services in the future. In addition, many of our subscribers who use cellular communication technology for their systems use products that rely on older 2G and 3G technologies, and certain telecommunication providers have discontinued 2G services in certain markets, and these and other telecommunication providers are expected to discontinue 2G and 3G services in other markets in the future. The discontinuation of landline, 2G, 3G and any other services by telecommunications providers in the future would require our subscriber’s system to be upgraded to alternative, and potentially more expensive, technologies. This could increase our subscriber attrition rates and slow our new subscriber originations. To maintain our subscriber base that uses components that are or could become obsolete, we may be required to upgrade or implement new technologies, including by offering to subsidize the replacement of subscribers’ outdated systems at our expense. Any such upgrades or implementations could require significant capital expenditures and also divert management’s attention and other important resources away from our customer service and new subscriber origination efforts.

We depend on third-party providers of internet access services that may impair, degrade or otherwise block our services that could lead to additional expenses or loss of users.

Our interactive services are accessed through the internet and our security monitoring services are increasingly delivered using internet-based technologies. In addition, our distributed cloud storage solution, including the Vivint Smart Drive, is dependent upon internet services for shared storage. Some providers of broadband access may take measures that affect their subscribers’ ability to use these products and services, such as degrading the quality of the data packets we transmit over their lines, giving those packets low priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their subscribers more for using our services or terminating the subscriber’s contract.

The Federal Communications Commission (“FCC”) released an order that became effective on June 11, 2018, that repeals most of the rules that the agency previously had in place that prevented providers of broadband internet access services from impairing, degrading or blocking services provided by third parties to us. The prior rules prohibiting impairment, degradation and blocking are commonly referred to as “network neutrality” rules. Numerous parties have appealed the FCC order which is before the U.S. Court of Appeals for the District of Columbia. We cannot predict whether the FCC order will be upheld, reversed or remanded, nor the timing of the appellate court’s resolution of the appeal.

Following the adoption of the FCC’s order reversing the network neutrality rules, a number of states have passed network neutrality laws. The laws vary by state both in substance and in scope. There is legal uncertainty as to whether states have

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authority to pass laws that would conflict with the recent FCC order due to the interstate nature of internet communications and for other reasons. We cannot predict whether state laws that are interpreted to conflict with the FCC’s order will survive judicial scrutiny if challenged.

The largest providers of broadband internet access services have publicly stated that network neutrality rules are not required as they would not engage in some of the practices that the rules prohibit. While it is difficult to predict what would occur in the absence of such rules, it is possible that as a result of the lack of network neutrality rules, we could incur greater operating expenses which could harm our results of operations. While we think it is unlikely and that other laws may be implicated should broadband internet access providers affirmatively interfere with the delivery of our services that rely on broadband internet connections, interference with our services by broadband internet access service providers for using our products and services could cause us to lose existing subscribers, impair our ability to attract new subscribers and materially and adversely affect our business, financial condition, results of operations and cash flows.

Changes in laws or regulations that impact our underlying providers of telecommunications services could adversely impact our business

Telecommunications service providers are subject to extensive regulation in the markets where we operate or may expand in the future. Changes in the applicable laws or regulations affecting telecommunication services could require us to change the way we operate, which could increase costs or otherwise disrupt our operations, which in turn could adversely affect our business, financial condition, cash flows or results of operations.

We must successfully upgrade and maintain our information technology systems.

We rely on various information technology systems to manage our operations. As necessary, we implement modifications and upgrades to these systems, and replace certain of our legacy systems with successor systems with new functionality.

There are inherent costs and risks associated with modifying or changing these systems and implementing new systems, including potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. While management seeks to identify and remediate issues, we can provide no assurance that our identification and remediation efforts will be successful or that we will not encounter additional issues as we complete the implementation of these and other systems. In addition, our information technology system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. The implementation of new information technology systems may also cause disruptions in our business operations and have an adverse effect on our business, cash flows and operations.

Privacy and data protection concerns, laws, and regulations relating to privacy, and data protection and information security could have a material adverse effect on our business.

In the course of our operations, we gather, process, transmit and store subscriber information, including personal, payment, credit and other confidential and private information. We may use this information for operational and marketing purposes in the course of operating our business.

Our collection, retention, transfer and use of this information are governed by U.S. and foreign laws and regulations relating to privacy, data protection and information security, industry standards and protocols, or it may be asserted that such industry standards or protocols apply to us. The regulatory framework for privacy and information security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. In North America, federal and various state and provincial governmental bodies and agencies have adopted or are considering adopting laws and regulations limiting, or laws and regulations regarding the collection, distribution, use, disclosure, storage, and security of certain categories of information. These new laws and regulations may also impact the way we design and develop new technology solutions. Some of these requirements include obligations of companies to notify individuals of security breaches involving particular personal information, which could result from exploitation of a vulnerability in our systems or services or breaches experienced by our service providers and/or partners. For example, in the State of California, the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020, expands the scope of what is considered “personal information” and creates new data access and opt-out rights for consumers, which creates new requirements for us and other companies that operate in California. We are also subject to state and federal laws and regulations regarding telemarketing and other telephonic communications and state and federal laws regarding unsolicited commercial emails, as well as regulations relating to automated telemarketing calls, texts or SMS messages.

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Many jurisdictions have established their own data security and privacy legal and regulatory frameworks with which we or our vendors or partners must comply to the extent our operations expand into these geographies or the laws and regulations in these frameworks otherwise may be interpreted to apply to us. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses and, in some jurisdictions, internet protocol addresses. We are also bound by contractual requirements relating to privacy, data protection and information security, and may agree to additional contractual requirements addressing these matters from time to time.

Our compliance with these various requirements increases our operating costs, and additional laws, regulations, standards or protocols (or new interpretations of existing laws, regulations, standards or protocols) in these areas may further increase our operating costs, require us to take on additional privacy and data security related obligations in our contracts and adversely affect our ability to effectively market our products and services. In view of new or modified legal obligations relating to privacy, data protection or information security, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our products and services and otherwise adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new services and features could be limited.

Further, our failure or perceived failure to comply with any of these laws, regulations, standards, protocols or other obligations could result in a loss of subscriber data, fines, sanctions and other liabilities and additional restrictions on our collection, transfer or use of subscriber data. In addition, our failure to comply with any of these laws, regulations, standards, protocols or other obligations could result in a material adverse effect on our reputation, subscriber attrition, new subscriber origination, financial condition, cash flows or results of operations.

If our security controls are breached or unauthorized or inadvertent access to subscriber information or other data or to control or view systems are otherwise obtained, our services may be perceived as insecure, we may lose existing subscribers or fail to attract new subscribers, our business may be harmed, and we may incur significant liabilities.

Use of our solutions involves the storage, transmission and processing of personal, payment, credit and other confidential and private information of our subscribers, and may in certain cases permit access to our subscribers’ homes or property or help secure them. We also maintain and process other confidential and proprietary information in our business, including our employees’ and contractors’ personal information and confidential business information. We rely on proprietary and commercially available systems, software, tools and monitoring to protect against unauthorized use or access of the information we process and maintain. Our services and the networks and information systems we utilize in our business are at risk for breaches as a result of third-party action, employee, vendor or partner error, malfeasance, or other factors. For example, we have experienced instances of our employees, contractors and other third parties improperly accessing our and/or our subscribers’ systems and information in violation of our internal policies and procedures.

Criminals and other nefarious actors are using increasingly sophisticated methods, including cyberattacks, phishing, social engineering and other illicit acts to capture, access or alter various types of information, to engage in illegal activities such as fraud and identity theft, and to expose and exploit potential security and privacy vulnerabilities in corporate systems and websites. Unauthorized intrusion into the portions of our systems and networks and data storage devices that process and store subscriber confidential and private information, the loss of such information or the deployment of malware or other harmful code to our services or our networks or systems may result in negative consequences, including the actual or alleged malfunction of our products or services. In addition, third parties, including our partners and vendors, could also be sources of security risks to us in the event of a failure of their own security systems and infrastructure. Further, the risk of cyber-attacks could be exacerbated by new or ongoing geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations. The threats we and our partners and vendors face continue to evolve and are difficult to predict due to advances in computer capabilities, new discoveries in the field of cryptography and new and sophisticated methods used by criminals. There can be no assurances that our defensive measures will prevent cyber-attacks or that we will discover network or system intrusions or other breaches on a timely basis or at all. We cannot be certain that we will not suffer a compromise or breach of the technology protecting the systems or networks that house or access our products and services or on which we or our partners or vendors process or store personal information or other sensitive information or data, or that any such incident will not be believed or reported to have occurred. Any such actual or perceived compromises or breaches to systems, or unauthorized access to our subscribers’ data, products or systems, or acquisition or loss of, data, whether suffered by us, our partners or vendors or other third parties, whether as a result of employee error or malfeasance or otherwise, could harm our business. They could, for example, cause interruptions in operations, loss of data, loss of confidence in our services and products and damage to our reputation, and could limit the adoption of our services and products. They could also subject us to costs, regulatory investigations and orders, litigation, contract damages, indemnity demands and other liabilities and materially

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and adversely affect our subscriber base, sales, revenues and profits. Any of these could, in turn, have a material adverse impact on our business, financial condition, cash flows or results of operations.

Further, if a high-profile security breach occurs with respect to another provider of smart home solutions, our subscribers and potential subscribers may lose trust in the security of our services or in the smart home space generally, which could adversely impact our ability to retain existing subscribers or attract new ones. Even in the absence of any security breach, subscriber concerns about security, privacy or data protection may deter them from using our service. Our insurance policies covering errors and omissions and certain security and privacy damages and claim expenses may not be sufficient to compensate for all potential liability. Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.

Our Vivint Flex Pay plan is a business model that may subject us to additional risks.

In 2017, we introduced Vivint Flex Pay, which allowed subscribers to finance the purchase of their products and related installation through our Vivint Flex Pay plan. Under Vivint Flex Pay, we offer to our qualified U.S. subscribers an opportunity to finance through a third party the purchase of products and related installation used in connection with our smart home services. We offer certain of our U.S. subscribers who do not qualify for third-party financing, the opportunity to finance their purchase of Products and related installation under a retail installment contract program (a “RIC”), which is financed by us. Under Vivint Flex Pay, subscribers pay separately for the Products and our Services. As an alternative to the financing offered under these programs, subscribers are able to purchase the products by check, ACH, credit or debit card, and pay in full at the time of installation.

There can be no assurance that the Vivint Flex Pay plan will continue to be successful. If this plan is not favorably received by subscribers or is otherwise not performing as intended by us, it could have an adverse effect on our business, subscriber growth rate, financial condition and results of operations. In addition, reductions in consumer lending and/or the availability of consumer credit under the Vivint Flex Pay plan could limit the number of subscribers with the financial means to purchase the products and thus limit the number of subscribers who are able to subscribe to our smart home services. There is no assurance that our current providers of consumer financing, or any other companies that may in the future offer financing to our subscribers will continue to provide subscribers with access to credit or that credit limits under such arrangements will be sufficient. In addition, a severe disruption in the global financial markets could impact the providers of credit under the Vivint Flex Pay plan, and such instability could also affect the ability of subscribers to access financing under the Vivint Flex Pay plan or otherwise. Such restrictions or limitations on the availability of consumer credit or unfavorable reception of the Vivint Flex Pay plan by potential subscribers could have a material adverse impact on our business, results of operations, financial condition and cash flows.

In addition, the Vivint Flex Pay plan subjects us to additional regulatory requirements and compliance obligations. In particular, the Vivint Flex Pay plan may require that we be licensed as a lender in certain jurisdictions in which we operate. We face the risk of increased consumer complaints, potential supervision, examinations or enforcement actions by federal and state licensing and regulatory agencies and/or penalties for violation of financial services, consumer protections and other applicable laws and regulations. For example, in 2019, we received a subpoena in connection with an investigation by the U.S. Department of Justice (“DOJ”) concerning potential violations of the Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”). In January 2021, we entered into a settlement agreement with the DOJ that resolved this investigation. As part of this settlement, we paid $3.2 million to the United States. In 2019, we also received a civil investigative demand from the staff of the Federal Trade Commission (“FTC”) concerning potential violations of the Fair Credit Reporting Act (“FCRA”) and the “Red Flags Rule” thereunder, and the Federal Trade Commission Act (“FTC Act”). In April 2021, we entered into a settlement with the FTC that resolved this investigation. As part of this settlement, which was approved by a federal court on May 3, 2021, we paid a total of $20 million to the United States and agreed to implement various additional compliance-related measures. For additional detail regarding the FTC settlement, see “—We are subject to various risks in connection with the ongoing settlement administration process involving the FTC, and may be subject to FTC Actions in the future.” Any further regulatory investigations could result in significant costs, fines or penalties and damage our reputation. In addition, any resolution of such regulatory investigations may alter or limit the way we do business or result in termination or modification of existing business and financing relationships. If any federal or state governmental agency were to determine that violations of certain laws or regulations occurred, or if any proceedings or investigations were to be determined adversely against us or resulted in legal actions, claims, regulatory proceedings, enforcement actions, or judgments, fines, or settlements involving a payment of material amounts, or if injunctive relief were issued against us, our business, financial condition and results of operations could be materially adversely affected. In addition, even if regulatory inquiries or investigations do not result in an adverse determination or the payment of material amounts, we expect to continue to incur costs in connection with such matters and our business, reputation, financial condition, liquidity, or results of operations could be adversely impacted.

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We currently offer RICs in a number of the jurisdictions in which we operate and therefore are subject to regulation by state and local authorities for the use of RICs. We provide intensive training to our employees regarding sales practices and the content of our RICs and strive to comply in all material respects with these laws; however, we cannot be certain that our employees will abide by our policies and applicable laws, which violations could have a material and adverse impact on our business. We also offer RICs to our Canadian subscribers, and as a result are subject to additional regulatory requirements in Canada. In the future, we may elect to offer installment loans and other financial services products similar to the Consumer Financing Program directly to qualified subscribers. If we elect to offer such financial services directly, this may further expand our regulatory and compliance obligations.

In addition, as Vivint Flex Pay evolves, we may become subject to additional regulatory requirements and compliance obligations.

We are subject to payment related risks.

We accept payments using a variety of methods, including check, credit card, debit card and direct debit from a subscriber’s bank account. For existing and future payment options that we offer to our subscribers, we may become subject to additional regulations, compliance requirements and fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide payment-processing services, including the processing of credit cards, debit cards and electronic checks, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for card -issuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit and debit card payments from our subscribers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected. See “—Privacy and data protection concerns and laws, and regulations relating to privacy, data protection and information security, could have a material adverse effect on our business” and “—If our security controls are breached or unauthorized or inadvertent access to subscriber information or other data or to control or view systems are otherwise obtained, our services may be perceived as insecure, we may lose existing subscribers or fail to attract new subscribers, our business may be harmed, and we may incur significant liabilities.”

We may fail to obtain or maintain necessary licenses or otherwise fail to comply with applicable laws and regulations.

Our business focuses on contracts and transactions with residential subscribers and therefore is subject to a variety of laws, regulations and licensing requirements that govern our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvements, warranties and door-to-door solicitation. We are a licensed service provider in each market where such licensure is required, and we are responsible for every subscriber installation. Our business may become subject to additional such requirements in the future. In certain jurisdictions, we are also required to obtain licenses or permits to comply with standards governing marketing and sales efforts, installation of equipment or servicing of subscribers, monitoring station employee selection and training and to meet certain standards in the conduct of our business. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. We strive to comply with all applicable laws and regulations relating to our interactions with residential subscribers. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Our non-compliance with any such law or regulations could also expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business. We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation of matters relating to our interactions with residential consumers could require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition and results of operations. If we expand the scope of our products or services or our operations in new markets, we may be required to obtain additional licenses and otherwise maintain compliance with additional laws, regulations or licensing requirements.

Changes in these laws or regulations or their interpretation, as well as new laws, regulations or licensing requirements which may be enacted, could dramatically affect how we do business, acquire subscribers, and manage and use information we collect from and about current and prospective subscribers and the costs associated therewith. For example, certain U.S. municipalities have adopted, or are considering adopting, laws, regulations or policies aimed at reducing the number of false

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alarms, including: (1) subjecting companies to fines or penalties for transmitting false alarms, (2) imposing fines on subscribers for false alarms or (3) imposing limitations on law enforcement response. These measures could adversely affect our future operations and business by increasing our costs, reducing subscriber satisfaction or affecting the public perception of the effectiveness of our products and services. In addition, federal, state and local governmental authorities have considered, and may in the future consider, implementing consumer protection rules and regulations, which could impose significant constraints on our sales channels.

Regulations have been issued by the FTC, FCC and Canadian Radio-Television and Telecommunications Commission (the “CRTC”) that place restrictions on direct-to-home marketing, telemarketing, email marketing and general sales practices. These restrictions include, but are not limited to, limitations on methods of communication, requirements to maintain a “do not call” list, cancellation rights and required training for personnel to comply with these restrictions.

The FTC regulates both general sales practices and telemarketing specifically and has broad authority to prohibit a variety of advertising or marketing practices that may constitute “unfair or deceptive acts or practices”. The CRTC has enforcement authority under the Canadian Anti-Spam Law (“CASL”), which prohibits the sending of commercial emails without prior consent of the recipient or an existing business relationship and sets forth rules governing the sending of commercial emails. CASL allows for a private right of action for the recovery of damages or provides for enforcement by CRTC, permitting the recovery of significant civil penalties, costs and attorneys’ fees in the event that regulations are violated. Similarly, most of the statutes and regulations in the United States allow a private right of action for the recovery of damages or provide for enforcement by the FTC, state attorneys general or state agencies permitting the recovery of significant civil or criminal penalties, costs and attorneys’ fees in the event that regulations are violated. Any new or changed laws, regulations or licensing requirements, or the interpretation of such laws, regulations or licensing requirements could have a material adverse effect on our business, financial condition, cash flows or results of operations. We strive to comply with all such applicable regulations but cannot assure you that we or third parties that we may rely on for telemarketing, email marketing and other lead generation activities will be in compliance with all applicable regulations at all times. Although our contractual arrangements with such third parties expressly require them to comply with all such regulations and to indemnify us for their failure to do so, we cannot assure you that the FTC, FCC, CRTC, private litigants or others will not attempt to hold us responsible for any unlawful acts conducted by such third parties or that we could successfully enforce or collect upon such indemnities. Additionally, certain FCC rulings and/or FTC enforcement actions may support the legal position that we may be held vicariously liable for the actions of third parties, including any telemarketing violations by our independent, third-party, authorized dealers that are performed without our authorization or that are otherwise prohibited by our policies. Both the FCC and the FTC have relied on certain actions to support the notion of vicarious liability, including but not limited to, the use of the company brand or trademark, the authorization or approval of telemarketing scripts or the sharing of consumer prospect lists. Changes in such regulations or the interpretation thereof that further restricts such activities could result in a material reduction in the number of leads for our business and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may fail to comply with import and export, bribery and money laundering laws, regulations and controls.

We conduct our business in the U.S. and Canada and source our products from Thailand, Vietnam, Mexico, Taiwan, China, Malaysia and the United States. We are subject to regulation by various federal, state, local and foreign governmental agencies, including, but not limited to, agencies and regulatory bodies or authorities responsible for monitoring and enforcing product safety and consumer protection laws, data privacy and security laws and regulations, employment and labor laws, workplace safety laws and regulations, environmental laws and regulations, antitrust laws, federal securities laws and tax laws and regulations.

We are subject to the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. Travel Act, and possibly other anti-bribery laws, including those that comply with the Organization for Economic Cooperation and Development, or OECD, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and other international conventions. Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering, or providing directly or indirectly improper payments or benefits to recipients in the public or private sector. Certain laws could also prohibit us from soliciting or accepting bribes or kickbacks. We can be held liable for the corrupt activities of our employees, representatives, contractors, partners and agents, even if we did not explicitly authorize such activity. Although we have implemented policies and procedures designed to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, partners, and agents will comply with these laws and policies.

Our operations require us to import from Thailand, Vietnam, Mexico, Taiwan, China, Malaysia and export to Canada, which geographically stretches our compliance obligations. We are also subject to anti-money laundering laws such as the USA

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PATRIOT Act and may be subject to similar laws in other jurisdictions. Our Products are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. We may also be subject to import/export laws and regulations in other jurisdictions in which we conduct business or source our Products. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers. In addition, U.S. Customs and Border Protection is investigating our historical compliance with regulations relating to duties and tariffs in connection with our import of certain products from outside the United States. The Department of Justice is also investigating potential violations of the False Claims Act relating to similar issues. We are cooperating with these investigations.

Changes in laws that apply to us could result in increased regulatory requirements and compliance costs which could harm our business, financial condition, cash flows and results of operations. In certain jurisdictions, regulatory requirements may be more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject us to whistleblower complaints, investigations, sanctions, settlements, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions, suspension or debarment from contracting with certain governments or other customers, the loss of export privileges, multi-jurisdictional liability, reputational harm, and other collateral consequences. If any governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, cash flows and results of operations could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and an increase in defense costs and other professional fees.

The policies of the U.S. Government may adversely impact our business, financial condition and results of operations.

Certain changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment could adversely affect our business. General trade tensions between the U.S. and China escalated in 2018, with three rounds of U.S. tariffs on Chinese goods taking effect in July, August and September 2018, each followed by a round of retaliatory Chinese tariffs on U.S. goods. If duties on existing tariffs are raised or if additional tariffs are announced, many of our inbound products to the United States would be subject to tariffs assessed in the cost of goods as imported. If these duties are imposed on such products, we may be required to raise our prices, which may result in the loss of subscribers and harm our operating performance. These factors and other uncertainties around U.S. relations with China have led us to shift some our supply chain production outside of China and, depending on future developments, we may continue to shift additional supply chain production outside of China, which could result in additional one-time costs or increased costs to the Company. Depending on future developments, we may continue to shift additional supply chain production outside of China, which could result in additional one-time costs or increased costs to us.

While there is currently a substantial lack of clarity and uncertainty around the likelihood, timing and details of any such policies and reforms, such policies and reforms may materially and adversely affect our business, financial condition and results of operations and the value of our securities.

Police departments could refuse to respond to calls from monitored security service companies.

Police departments in certain U.S. and Canadian jurisdictions do not respond to calls from monitored security service companies unless certain conditions are met, such as video or other verification or eyewitness accounts of suspicious activities, either as a matter of policy or by local ordinance. In most cases this is accomplished through contracts with private guard companies, which increases the overall cost of monitoring. If more police departments were to refuse to respond or be prohibited from responding to calls from monitored security service companies unless certain conditions are met, such as video or other verification or eyewitness accounts of suspicious activities, our ability to attract and retain customers could be negatively impacted and our business, financial condition, results of operations, and cash flows could be materially adversely affected.

Increased adoption of laws purporting to characterize certain charges in our subscriber contracts as unlawful, may adversely affect our operations.

If a subscriber cancels prior to the end of the initial term of the contract, other than in accordance with the contract, we may, under the terms of the subscriber contract, charge the subscriber the amount that would have been paid over the remaining term of the contract. Several states have adopted, or are considering adopting, laws restricting the charges that can be imposed upon contract cancellation prior to the end of the initial contract term. Such initiatives could negatively impact our business and have a material adverse effect on our business, financial condition, cash flows or results of operations. Adverse rulings

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regarding these matters could increase legal exposure to subscribers against whom such charges have been imposed and increase the risk that certain subscribers may seek to recover such charges from us through litigation or otherwise. In addition, the costs of defending such litigation and enforcement actions could have an adverse effect on our business, financial condition, cash flows or results of operations.

Our new Products and Services may not be successful.

We launched our first smart home products and services beginning in 2010. Since that time, we have launched a number of other offerings. We anticipate launching additional products and services in the future. These products and services and the new products and services we may launch in the future may not be well received by our subscribers, may not help us to generate new subscribers, may adversely affect the attrition rate of existing subscribers, may increase our subscriber acquisition costs and may increase the costs to service our subscribers. For example, in 2021, we made significant investments in the development of our smart energy and smart insurance business. Any profits we may generate from these or other new products or services may be lower than profits generated from our other products and services and may not be sufficient for us to recoup our development or subscriber acquisition costs incurred. New products and services may also have lower operating margins, particularly to the extent that they do not fully utilize our existing infrastructure. In addition, new products and services may require increased operational expenses or subscriber acquisition costs and present new and difficult technological and intellectual property challenges that may subject us to claims or complaints if subscribers experience service disruptions or failures or other quality issues. To the extent our new products and services are not successful, it could have a material adverse effect on our business, financial condition, cash flows or results of operations.

The technology we employ may become obsolete, which could require significant capital expenditures.

Our industry is subject to continual technological innovation. Our products and services interact with the hardware and software technology of systems and devices located at our subscribers’ property. We may be required to implement new technologies or adapt existing technologies in response to changing market conditions, subscriber preferences, industry standards or inability to secure necessary intellectual property licenses, which could require significant capital expenditures. It is also possible that one or more of our competitors could develop a significant technological advantage that allows them to provide additional or superior products or services, or to lower their price for similar products or services, that could put us at a competitive disadvantage. Our inability to adapt to changing technologies, market conditions or subscriber preferences in a timely manner could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Our future operating and financial results are uncertain.

Prior growth rates in revenues and other operating and financial results should not be considered indicative of our future performance. Our future performance and operating results depend on, among other things: (1) our ability to renew and/or upgrade contracts with existing subscribers and maintain subscriber satisfaction with existing subscribers; (2) our ability to generate new subscribers, including our ability to scale the number of new subscribers generated through direct to-home, inside sales and other channels; (3) our ability to increase the density of our subscriber base for existing service locations or continue to expand into new geographic markets; (4) our ability to successfully develop and market new and innovative products and services; (5) the level of product, service and price competition; (6) the degree of saturation in, and our ability to further penetrate, existing markets; (7) our ability to manage growth, revenues, origination or acquisition costs of new subscribers and attrition rates, the cost of servicing our existing subscribers and general and administrative costs; and (8) our ability to attract, train and retain qualified employees. If our future operating and financial results suffer as a result of any of the other reasons mentioned above, or any other reasons, there could be a material adverse effect on our business, financial condition, cash flows or results of operations.

There can be no assurance that we will be able to achieve or maintain profitability or positive cash flow from operations.

Our ability to generate future positive operating results and cash flows depends, in part, on our ability to generate new subscribers in a cost-effective manner, while minimizing attrition of existing subscribers. New subscriber acquisitions play a particularly important role in our financial model as they not only increase our future operating cash flows, but also help to replace the cash flows lost as a result of subscriber attrition. If we are unable to cost-effectively generate new subscribers or retain our existing subscribers, our business, operating results and financial condition would be materially adversely affected. In addition, to drive our growth, we have made significant upfront investments in subscriber acquisition costs, as well as technology and infrastructure to support our growing subscriber base. As a result of these investments, we have incurred losses and used significant amounts of cash to fund operations. As our business scales, we expect recurring revenue to increase due to growth in our total subscribers. If such increase occurs, a greater percentage of our net acquisition costs for new subscribers may be funded through revenues generated by our existing subscriber base. We also expect the number of new subscribers to

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decrease as a percentage of our total subscribers as our business scales, which we believe, along with the expected growth in recurring revenue, will improve operating results and operating cash flows over time. Our ability to improve our operating results and cash flows, however, is subject to a number of risks and uncertainties and there can be no assurance that we will achieve such improvements. To the extent the number of new subscribers does not decrease as a percentage of our total subscribers or we do not reduce the percentage of our revenue used to support new investments, we will continue to incur losses and require a significant amount of cash to fund our operations, which in turn could have a material adverse effect on our business, cash flows, operating results and financial condition.

Our inside sales channel depends on third parties and other sources that we do not control to generate leads that we then convert into subscribers. If our third-party partners and lead generators are not successful in generating leads for our inside sales channel, if the quality of those leads deteriorates, or if we are unable to generate leads through other sources that are cost effective and can be successfully converted into subscribers, it could have a material adverse effect on our financial condition, cash flows or results of operations.

Also, our subscribers consist largely of homeowners, who are subject to economic, credit, financial and other risks, as applicable. These risks could materially and adversely affect a subscriber’s ability to make required payments to us on a timely basis. Any such decrease or delay in subscriber payments may have a material adverse effect on us. As a result of financial distress, subscribers may apply for relief under bankruptcy and other laws relating to creditors’ rights. In addition, subscribers may be subject to involuntary application of such bankruptcy and other laws relating to creditors’ rights. The bankruptcy of a subscriber could adversely affect our ability to collect payments, to protect our rights and otherwise realize the value of our contract with the subscriber. This may occur as a result of, among other things, application of the automatic stay, delays and uncertainty in the bankruptcy process and potential rejection of such subscriber contracts. Our subscribers’ inability to pay, whether as a result of economic or credit issues, bankruptcy or otherwise, could have a material adverse effect on our financial condition, cash flows or results of operations.

Our business is subject to economic and demographic factors that may negatively impact our results of operations.

Our business is generally dependent on national, regional and local economic conditions.

Historically, both the U.S. and worldwide economies have experienced cyclical economic downturns, some of which have been prolonged and severe. These economic downturns have generally coincided with, and contributed to, increased energy costs, concerns about inflation, slower economic activity, decreased consumer confidence and spending, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. These conditions and concerns result in a decline in business and consumer confidence and increased unemployment.

Where disposable income available for discretionary spending is reduced (due to, for example, higher housing, energy, interest or other costs or where the perceived wealth of subscribers has decreased) and disruptions in the financial markets adversely impact the availability and cost of credit, our business may experience increased attrition rates, a reduced ability to originate new subscribers and reduced consumer demand.

For instance, recoveries in the housing market increase the occurrence of relocations, which may lead to subscribers disconnecting service and not contracting with us in their new homes. We cannot predict the timing or duration of any economic slowdown or the timing or strength of a subsequent economic recovery, worldwide or in the specific markets where our subscribers are located.

Furthermore, any deterioration in new construction and sales of existing single-family homes could reduce opportunities to originate new subscribers and increase attrition among our existing subscribers. Such downturns in the economy in general, and the housing market in particular, may negatively affect our business.

In addition, unfavorable shifts in population and other demographic factors may cause us to lose subscribers as people migrate to markets where we have little or no presence, or if the general population shifts into a less desirable age, geographic or other demographic group from our business perspective.

We depend on a limited number of suppliers to provide our Products and Services. Our product suppliers, in turn, rely on a limited number of suppliers to provide significant components and materials used in our products. A change in our existing preferred supply arrangements or a material interruption in supply of products or third-party services could increase our costs or prevent or limit our ability to accept and fill orders for our products and services.

We obtain important components of our systems from several suppliers. Should such suppliers cease to manufacture the

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products we purchase from them or become unable to timely deliver these products in accordance with our requirements, or should such other suppliers choose not to do business with us, we may be required to locate alternative suppliers. We also rely on a number of sole or limited source suppliers for critical components of our solution. Replacing sole source suppliers or our limited source suppliers could require the expenditure of significant resources and time to redesign and resource these products. In addition, any financial or other difficulties our suppliers face may have negative effects on our business. We may be unable to locate alternate suppliers on a timely basis or to negotiate the purchase of control panels or other equipment on favorable terms, if at all. In addition, our equipment suppliers, in turn, depend upon a limited number of outside unaffiliated suppliers for key components and materials used in our control panels and other equipment. If any of these suppliers cease to or are unable to provide components and materials in sufficient quantity and of the requisite quality, especially during our summer selling season when a large percentage of our new subscriber originations occur, and if there are not adequate alternative sources of supply, we could experience significant delays in the supply of equipment or incur additional costs to secure our supply needs through other sources. Any such delay in the supply of equipment of the requisite quality could adversely affect our ability to originate subscribers and cause our subscribers not to continue, renew or upgrade their contracts or to choose not to purchase such products or services from us. This would result in delays in or loss of future revenues and could have a material adverse effect on our business, financial condition, cash flows or results of operations. Also, if previously installed components and materials were found to be defective, we might not be able to recover the costs associated with the recall, repair or replacement of such products, across our installed subscriber base, and the diversion of personnel and other resources to address such issues could have a material adverse effect on our financial condition, cash flows or results of operations.

Macroeconomic pressures in the markets in which we operate, including, but not limited to, the effects of the ongoing COVID-19 pandemic, may adversely affect consumer spending and our financial results.

Our revenues and margins are dependent on various economic factors, including rates of inflation, energy costs, consumer attitudes toward discretionary spending, currency fluctuations, and other macro-economic factors which may impact consumer spending and ultimately, our financial results. In fact, inflation has recently reached levels not experienced in decades. Consumers may be affected by such factors in various ways, including:

• whether or not they make a purchase;

• their choice of smart home service provider or price-point;

• how frequently they upgrade or replace their devices; and

• their appetite to purchase adjacent products or services from us (for example, smart energy or smart insurance).

Real GDP growth, consumer confidence, the ongoing COVID-19 pandemic, inflation (including wage inflation), employment levels (including as a result of an increasingly competitive job market), oil prices, interest rates, tax rates, availability of consumer financing, housing market conditions, foreign currency exchange rate fluctuations, costs for items such as fuel and food and other macroeconomic trends can adversely affect consumer demand for our Products and Services. Geopolitical tensions around the world can also impact macroeconomic conditions and could have a material adverse impact on our financial results. In addition to general levels of inflation, we are also subject to risks of specific inflationary pressures on product prices due to, for example, high consumer demand, component shortages and supply chain disruptions. We may be unable to increase our prices sufficiently to offset these pressures.

Furthermore, increases in compensation, wage pressure, and other expenses for our employees, may adversely affect our financial results. These cost increases may be the result of inflationary pressures that could further reduce our sales or profitability. Increases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of products sold, or operating, selling and general and administrative expenses. Our competitive price model and pricing pressures in the industry may inhibit our ability to reflect these increased costs in the prices of our Products and Services, in which case such increased costs could have a material adverse effect on our business, financial condition, and results of operations.

As a result of one or more factors listed above, both existing and potential customers may experience deterioration of their financial resources, which could result in them delaying or canceling plans to install our Products. Our partners or vendors could experience similar negative conditions, which could impact their ability to fulfill their financial obligations to us. Future weakness in the global economy could adversely affect our business, results of operations, financial condition and cash flows. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our customers’ disposable income or result in fewer individuals engaging in discretionary spending.

During fiscal 2021, we experienced significant cost increases in many parts of our business, including input costs, labor costs, and fuel costs and we expect the inflationary environment to continue during fiscal 2022. If we are unable to pass through

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rising input costs and raise the price of our Products or Services, or consumer confidence weakens, we are likely to experience reductions in our operating margins and cash flow.

Currency fluctuations could materially and adversely affect us, and we have not hedged this risk.

Historically, a small portion of our revenue has been denominated in Canadian Dollars. For the year ended December 31, 2021, before intercompany eliminations, approximately $60.7 million of our revenues were denominated in Canadian Dollars. As of December 31, 2021, $337.7 million of our total assets and $307.8 million of our total liabilities were denominated in Canadian Dollars. In the future, we expect to continue generating revenue denominated in Canadian Dollars and other foreign currencies. Accordingly, we may be materially and adversely affected by currency fluctuations in the U.S. Dollar versus these currencies. Weaker foreign currencies relative to the U.S. Dollar may result in lower levels of reported revenues with respect to foreign currency- denominated subscriber contracts, net income, assets, liabilities and accumulated other comprehensive income on our U.S. Dollar-denominated financial statements. We have not historically hedged against this exposure. Foreign exchange rates are influenced by many factors outside of our control, including but not limited to: changing supply and demand for a particular currency, monetary policies of governments (including exchange- control programs, restrictions on local exchanges or markets and limitations on foreign investment in a country or on an investment by residents of a country in other countries), changes in balances of payments and trade, trade restrictions and currency devaluations and revaluations. Also, governments may from time to time intervene in the currency markets, directly and by regulation, to influence prices directly. As such, these events and actions are unpredictable. The resulting volatility in the exchange rates for the other currencies could have a material adverse effect on our financial condition and results of operations.

We rely on certain third-party providers of licensed software and services integral to the operations of our business.

Certain aspects of the operation of our business depend on third-party software and service providers. We rely on certain software technology that we license from third parties and use in our products and services to perform key functions and provide critical functionality. For example, our subscribers with Go! Control panels utilize technology hosted by Alarm.com to access their systems remotely through a smart phone application or through a web interface. With regard to licensed software technology, we are, to a certain extent, dependent upon the ability of third parties to maintain, enhance or develop their software and services on a timely and cost- effective basis, to meet industry technological standards and innovations to deliver software and services that are free of defects or security vulnerabilities, and to ensure their software and services are free from disruptions or interruptions. Further, these third-party services and software licenses may not always be available to us on commercially reasonable terms or at all.

If our agreements with third-party software or services vendors are not renewed or the third-party software or services become obsolete, fail to function properly, are incompatible with future versions of our products or services, are defective or otherwise fail to address our needs, there is no assurance that we would be able to replace the functionality provided by the third-party software or services with software or services from alternative providers. Furthermore, even if we obtain licenses to alternative software or services that provide the functionality we need, we may be required to replace hardware installed at our monitoring stations and at our subscribers’ homes, including security system control panels and peripherals, to affect our integration of or migration to alternative software products. Any of these factors could have a material adverse effect on our financial condition, cash flows or results of operations.

We are highly dependent on the proper and efficient functioning of our computer, data backup, information technology, telecom and processing systems, platform and our redundant monitoring stations.

Our ability to keep our business operating is highly dependent on the proper and efficient operation of our computer systems, information technology systems, telecom systems, data-processing systems and subscriber software platform. Although we have redundant central monitoring facilities, backup computer and power systems and disaster recovery tests, if there is a catastrophic event, natural disaster, security breach, negligent or intentional act by an employee or other extraordinary event, we may be unable to provide our subscribers with uninterrupted services.

Furthermore, because computer and data backup and processing systems are susceptible to malfunctions and interruptions, we cannot guarantee that we will not experience service failures in the future. A significant or large-scale malfunction or interruption of any computer or data backup and processing system could adversely affect our ability to keep our operations running efficiently and respond to alarm system signals. We do not have a backup system for our subscriber software platform. If a malfunction results in a wider or sustained disruption, it could have a material adverse effect on our reputation, business, financial condition, cash flows or results of operations.

We are subject to unionization and labor and employment laws and regulations, which could increase our costs and

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restrict our operations in the future.

As we continue to grow and enter different regions, unions may make attempts to organize all or part of our employee base. If all, or even a part of, our workforce were to become unionized, and the terms of the collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability. Additionally, responding to such organization attempts distracts our management and results in increased legal and other professional fees; and, labor union contracts could put us at increased risk of labor strikes and disruption of our operations.

Our business is subject to a variety of employment laws and regulations and may become subject to additional such requirements in the future. Although we believe we are in material compliance with applicable employment laws and regulations, in the event of a change in requirements, we may be required to modify our operations or to utilize resources to maintain compliance with such laws and regulations. Moreover, we may be subject to various employment-related claims, such as individual or class actions or government enforcement actions relating to alleged employment discrimination, employee classification and related withholding, wage- hour disputes, labor standards or healthcare and benefit issues. Our failure to comply with applicable employment laws and regulations and related legal actions against us may affect our ability to compete or have a material adverse effect on our business, financial condition, cash flows or results of operations.

The loss of our senior management could disrupt our business.

The success of our business depends upon the skills, experience and efforts of our key executive personnel and employees. Members of our senior management have been and will continue to be integral to the continuing evolution of our business. There is significant competition for executive personnel with experience in the smart home and security industry and our sales channels. As a result of this need and the competition for a limited pool of industry-based executive experience, we may not be able to retain our existing senior management. For example, in June 2021, our founder and Chief Executive Officer stepped down from his position and in August 2021, our then Chief Legal Officer left the Company to pursue another opportunity. In addition, we may not be able to fill new positions or vacancies created by expansion or turnover. We do not and do not currently expect to have in the future, “key person” insurance on the lives of any member of our senior management. The loss of any member of our senior management team without retaining a suitable replacement could have a material adverse effect on our business, financial condition, cash flows or results of operations.

If we are unable to acquire necessary intellectual property or adequately protect our intellectual property, we could be competitively disadvantaged.

Our intellectual property, including our patents, trademarks, copyrights, trade secrets and other proprietary rights, constitutes a significant part of our value. Our success depends, in part, on our ability to protect our proprietary technology, brands and other intellectual property against dilution, infringement, misappropriation and competitive pressure by defending our intellectual property rights. To protect our intellectual property rights, we rely on a combination of patent, trademark, copyright and trade secret laws of the United States, Canada and other countries and a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection. In addition, we make efforts to acquire rights to intellectual property necessary for our operations. However, there can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States.

We own a portfolio of issued U.S. patents and pending U.S. and foreign patent applications that relate to a variety of smart home, security and wireless Internet technologies utilized in our business. We may file additional patent applications in the future in the United States and internationally. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner all the way through to the successful issuance of a patent. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention.

If we fail to acquire the necessary intellectual property rights or adequately protect or assert our intellectual property rights, competitors may dilute our brands or manufacture and market similar products and services or convert our subscribers, which could adversely affect our market share and results of operations. We may not receive patents or trademarks for all our pending patent and trademark applications, and existing or future patents or licenses may not provide competitive advantages for our products and services. Furthermore, it is possible that our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient or not have the coverage originally sought, or that our issued patents will not provide us with any competitive advantages. Our competitors may challenge, invalidate or avoid the application of our existing

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or future intellectual property rights that we obtain or license. In addition, patent rights may not prevent our competitors from developing, using or selling products or services that are similar to or address the same market as our products and services. The loss of protection for our intellectual property rights could reduce the market value of our brands and our products and services, reduce new subscriber originations or upgrade sales to existing subscribers, lower our profits, and could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Our policy is to require our employees that were hired to develop material intellectual property included in our products to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party. Finally, in order to benefit from the protection of patents and other intellectual property rights, we must monitor and detect infringement, misappropriation or other violations of our intellectual property rights and pursue infringement, misappropriation or other claims in certain circumstances in relevant jurisdictions, all of which are costly and time-consuming. As a result, we may not be able to obtain adequate protection or to effectively enforce our issued patents or other intellectual property rights.

In addition to patents and registered trademarks, we rely on trade secret rights, copyrights and other rights to protect our unpatented proprietary intellectual property and technology. Despite our efforts to protect our proprietary technologies and our intellectual property rights, unauthorized parties, including our employees, consultants, service providers or subscribers, may attempt to copy aspects of our products or obtain and use our trade secrets or other confidential information. We generally enter into confidentiality agreements with our employees and third parties that have access to our material confidential information, and generally limits access to and distribution of our proprietary information and proprietary technology through certain procedural safeguards. These agreements may not effectively prevent unauthorized use or disclosure of our intellectual property or technology, could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how related to the design, manufacture or operation of our products and may not provide an adequate remedy in the event of unauthorized use or disclosure. We cannot assure you that the steps taken by us will prevent misappropriation of our intellectual property or technology or infringement of our intellectual property rights. Competitors may independently develop technologies or products that are substantially equivalent or superior to our solutions or that inappropriately incorporate our proprietary technology into their products or they may hire our former employees who may misappropriate our proprietary technology or misuse our confidential information. In addition, if we expand the geography of our service offerings, the laws of some foreign countries where we may do business in the future do not protect intellectual property rights and technology to the same extent as the laws of the United States, and these countries may not enforce these laws as diligently as government agencies and private parties in the United States.

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others or to defend against claims of infringement, misappropriation or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial condition. If we are unable to protect our intellectual property and technology, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create the innovative products that have enabled us to be successful to date.

From time to time, we are subject to claims for infringing, misappropriating or otherwise violating the intellectual property rights of others, and will be subject to such claims in the future, which could have an adverse effect on our business and operations.

We cannot be certain that our products and services or those of third parties that we incorporate into our offerings do not and will not infringe the intellectual property rights of others. Many of our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. From time to time, we are subject to claims based on allegations of infringement, misappropriation or other violations of the intellectual property rights of others, including litigation brought by special purpose or so-called “non-practicing” entities that focus solely on extracting royalties and settlements by enforcing intellectual property rights and against whom our patents may therefore provide little or no deterrence or protection.

Regardless of their merits, intellectual property claims divert the attention of our personnel and are often time- consuming and expensive. In addition, to the extent claims against us are successful, we may have to pay substantial monetary damages (including, for example, treble damages if we are found to have willfully infringed patents and increased statutory damages if we are found to have willfully infringed copyrights) or discontinue or modify certain products or services that are found to infringe another party’s rights or enter into licensing agreements with costly royalty payments. Defending against claims of infringement, misappropriation or other violations or being deemed to be infringing, misappropriating or otherwise violating the intellectual property rights of others could impair our ability to innovate, develop, distribute and sell our current and planned

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products and services. We have in the past and will continue in the future to seek one or more licenses to continue offering certain products or services, which could have a material adverse effect on our business, financial condition, cash flows or results of operations. For example, we are one of several respondents in a patent matter pending before the U.S. International Trade Commission seeking an injunction against the continued importation of certain of our hardware. We have also been named as a defendant in related U.S. District Court cases alleging patent infringement and in which the plaintiff seeks unspecified money damages. We believe that the allegations in each of these matters are without merit and intend to vigorously defend against the claims; however, there can be no assurance regarding the ultimate outcome of these matters.

In some cases, we indemnify our channel partners against claims that our products infringe, misappropriate or otherwise violate the intellectual property rights of third parties. Such claims could arise out of our indemnification obligation with our channel partners and end-subscribers, whom we typically indemnify against such claims. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by the discovery process. Although claims of this kind have not materially affected our business to date, there can be no assurance material claims will not arise in the future.

Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be materially and adversely affected. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If a third party does not offer us a license to its technology or other intellectual property on reasonable terms, or at all, we could be enjoined from continued use of such intellectual property. As a result, we may be required to develop alternative, non-infringing technology, which could require significant time (during which we could be unable to continue to offer our affected products, subscriptions or services), effort, and expense and may ultimately not be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain products, providing certain subscriptions or performing certain services or that requires us to pay substantial damages, royalties or other fees. Any of these events could harm our business, financial condition and results of operations.

Our solutions contain third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to sell our products and subscriptions.

Certain of our solutions contain software modules licensed to us by third-party authors under “open-source” licenses. The use and distribution of open-source software may entail greater risks than the use of third-party commercial software, as open-source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code.

Some open-source licenses contain requirements that we make available the source code for modifications or derivative works we create based upon the type of open-source software we use. If we combine our proprietary software with open-source software in a certain manner, we could, under certain open-source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.

Although we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open- source agreement, the terms of many open-source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize solutions incorporating such software. Moreover, we cannot assure you that our processes for controlling our use of open-source software in our solutions will be effective. From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open-source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation. If we are held to have breached the terms of an open-source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re -engineering could not be accomplished on a timely or cost-effective basis, or to make generally available, in source-code form, our proprietary code, any of which could adversely affect our business, results of operations and financial condition.

Product or service defects or shortfalls in subscriber service could have an adverse effect on us.

Our inability to provide products or services in a timely manner or defects within our products or services, including products and services of third parties that we incorporate into our offerings, could adversely affect our reputation and subject us

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to claims or litigation. In addition, our inability to meet subscribers’ expectations with respect to our products, services or subscriber service could increase attrition rates or affect our ability to generate new subscribers and thereby have a material adverse effect on our business, financial condition, cash flow or results of operations.

We are exposed to greater risk of liability for employee acts or omissions or system failure, than may be inherent in other businesses.

The nature of the products and services we provide potentially exposes us to greater risks of liability for employee acts or omissions or system failures than may be inherent in other businesses. If subscribers believe that they incurred losses as a result of our action or inaction, the subscribers (or their insurers) have and could in the future bring claims against us. Although our service contracts contain provisions limiting our liability for such claims, no assurance can be given that these limitations will be enforced, and the costs of such litigation or the related settlements or judgments could have a material adverse effect on our financial condition. In addition, there can be no assurance that we are adequately insured for these risks. Certain of our insurance policies and the laws of some states may limit or prohibit insurance coverage for punitive or certain other types of damages or liability arising from gross negligence. If significant uninsured damages are assessed against us, the resulting liability could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Future transactions could pose risks.

We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to time to pursue additional business opportunities and may decide to eliminate or acquire certain businesses, products or services or expand into new channels or industries. Such acquisitions or dispositions could be material. For example, in 2019, we completed a spin-off of our wireless internet business and in 2020 our parent company consummated a merger with Mosaic Acquisition Corp. There are various risks and uncertainties associated with potential acquisitions and divestitures, including: (1) availability of financing; (2) difficulties related to integrating previously separate businesses into a single unit, including product and service offerings, distribution and operational capabilities and business cultures; (3) general business disruption; (4) managing the integration process; (5) diversion of management’s attention from day-to-day operations, assumption of costs and liabilities of an acquired business, including unforeseen or contingent liabilities or liabilities in excess of the amounts estimated; (7) failure to realize anticipated benefits and synergies, such as cost savings and revenue enhancements; (8) potentially substantial costs and expenses associated with acquisitions and dispositions; (9) potential increases in compliance costs; (10) failure to retain and motivate key employees; and (11) difficulties in applying our internal control over financial reporting and disclosure controls and procedures to an acquired business. Any or all of these risks and uncertainties, individually or collectively, could have material adverse effect on our business, financial condition, cash flow or results of operations. We can offer no assurance that any such strategic opportunities will prove to be successful. Among other negative effects, our pursuit of such opportunities could cause our cost of investment in new subscribers to grow at a faster rate than our recurring revenue and fees collected at the time of installation. Additionally, any new product or service offerings could require developmental investments or have higher cost structures than our current arrangements, which could reduce operating margins and require more working capital. Moreover, expansion into any new industry or channel could result in higher compliance costs as we may become subject to laws and regulations to which we are not currently subject.

Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets.

As of December 31, 2021, we had approximately $0.9 billion of goodwill and identifiable intangible assets. Goodwill and other identifiable intangible assets are recorded at fair value on the date of acquisition. In addition, as of December 31, 2021, we had approximately $1.4 billion of capitalized contract costs, net. We review such assets for impairment at least annually. Impairment may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services we offer, challenges to the validity of certain intellectual property, reduced sales of certain products or services incorporating intellectual property, increased attrition and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of our intangible assets. Any future determination of impairment of goodwill or other identifiable intangible assets could have a material adverse effect on our financial position and results of operations.

Insurance policies may not cover all of our operating risks and a casualty loss beyond the limits of our coverage could negatively impact our business.

We are subject to all of the operating hazards and risks normally incidental to the provision of our products and services and business operations. In addition to contractual provisions limiting our liability to subscribers and third parties, we maintain

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insurance policies in such amounts and with such coverage and deductibles as required by law and that we believe are reasonable and prudent. See “—We are exposed to greater risk of liability for employee acts or omissions or system failure than may be inherent in other businesses.” Nevertheless, such insurance may not be adequate to protect us from all the liabilities and expenses that may arise from claims for personal injury, death or property damage arising in the ordinary course of our business and current levels of insurance may not be able to be maintained or available at economical prices. If a significant liability claim is brought against us that is not covered by insurance, then we may have to pay the claim with our own funds, which could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Our business is concentrated in certain markets.

Our business is concentrated in certain markets. As of December 31, 2021, subscribers in Texas and California represented approximately 19% and 9%, respectively, of our total subscriber base. Accordingly, our business and results of operations are particularly susceptible to adverse economic, weather and other conditions in such markets and in other markets that may become similarly concentrated.

If the insurance industry changes its practice of providing incentives to homeowners for the use of residential electronic security services, we may experience a reduction in new subscriber growth or an increase in our subscriber attrition rate.

Some insurers provide a reduction in premium rates for insurance policies written on homes that have monitored electronic security systems. There can be no assurance that insurance companies will continue to offer these rate reductions. If these incentives were reduced or eliminated, homeowners who otherwise may not feel the need for our products or services would be removed from our potential subscriber pool, which could hinder the growth of our business, and existing subscribers may choose to cancel or not renew their contracts, which could increase our attrition rates. In either case, our results of operations and growth prospects could be adversely affected.

We have recorded net losses in the past and we may experience net losses in the future.

We have recorded consolidated net losses of $305.6 million, $603.3 million, and $400.7 million in the years ended December 31, 2021, 2020 and 2019, respectively. We may likely continue to record net losses in future periods.

The nature of our business requires the application of complex revenue and expense recognition rules and the current legislative and regulatory environment affecting generally accepted accounting principles is uncertain. Significant changes in current principles could affect our financial statements going forward and changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and harm our operating results.

The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies’ accounting policies are being subject to heightened scrutiny by regulators and the public. Further, the accounting rules and regulations are continually changing in ways that could materially impact our financial statements. For example, in May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, which superseded nearly all existing revenue recognition guidance.

We identified material weaknesses in our internal control over financial reporting and if our remediation of a material weakness is not effective, or if we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or operating results, which may adversely affect our business.

In the course of reviewing certain customer contract transactions during the quarter ended September 30, 2021, we identified a material weakness in our internal control over financial reporting relating to the timing of revenue recognition. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. Specifically, we found that we did not properly design and maintain effective controls over revenue in the quarter ended September 30, 2021 and prior reporting periods to accurately determine the appropriate period to recognize revenue associated with certain transactions. These transactions primarily related to specific monthly service charge adjustments and modifications that created a material right to the customer, which resulted in errors in the reporting of revenue and other income statement and balance sheet items in certain prior periods.

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We assessed the materiality of the misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to all prior consolidated financial statements taken as a whole and, therefore, amending previously filed reports to correct the errors was not required. However, we concluded that the cumulative effect of correcting the errors in the quarter ended September 30, 2021 would materially misstate our consolidated financial statements for the three and nine months ended September 30, 2021. Accordingly, we reflected the corrections in the results for prior periods included in our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021 and in this Annual Report on Form 10-K. We will also revise such information in future filings to reflect the correction of the errors.

This material weakness, however, could have resulted in additional misstatement to the accounts and disclosures that would have resulted in a material misstatement of our consolidated financial statements that would not have been prevented or detected. Because of this material weakness in our internal control over financial reporting, management concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective.

After implementing a number of changes to our processes and controls during the fourth quarter of fiscal 2021, to improve our internal control over financial reporting to remediate the control deficiencies that gave rise to the material weakness, our management concluded that the material weakness that existed as of September 30, 2021 was remediated. The processes and controls implemented to address the material weakness are described in Part II, Item 9A. Controls and Procedures of this Annual Report on Form 10-K.

Moreover, as previously disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, we identified a material weakness in our internal controls over financial reporting related to our control to review the evaluation of the accounting for complex financial instruments, such as for warrants issued by Mosaic Acquisition Corp., which did not operate effectively to appropriately apply the provisions of Financial Accounting Standards Board Accounting Standards Codification 815-40. After implementing certain changes to our processes to improve our internal control over financial reporting to remediate the control deficiency that gave rise to this material weakness, our management concluded that the previously identified material weakness was remediated.

We cannot assure you that additional material weaknesses will not arise in the future or that management has identified all material weaknesses. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result, and we could be subject to litigation or regulatory enforcement actions. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses. The potential consequences of any material weakness could have a material adverse effect on our business, results of operations and financial condition.

Additionally, as a result of such material weakness or restatements, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and the material weakness in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.

We are subject to various risks in connection with the ongoing settlement administration process involving the FTC, and may be subject to FTC Actions in the future.

As previously disclosed, in 2019, we received a civil investigative demand from the staff of the FTC concerning potential violations of the Fair Credit Reporting Act and the “Red Flags Rule” thereunder, and the Federal Trade Commission Act. In April 2021, the Company entered into a settlement with the FTC that resolved this investigation. As part of this settlement, which was approved by a federal court on May 3, 2021, the Company paid a total of $20 million to the United States and agreed to implement various additional compliance-related measures.

We are currently in the process of administering the terms of this settlement, which include multiple undertakings by the Company. The Company has been endeavoring to comply with these undertakings and the demands on management and costs incurred in connection with these undertakings may be substantial. We have been engaged in ongoing discussions with the staff of the FTC regarding the Company’s compliance with the terms of the settlement. In addition, in accordance with the settlement, the Company is required to undergo biennial assessments by an independent third-party assessor who will review the Company’s compliance programs and provide a report to the FTC staff on our ongoing compliance with the settlement.

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In the context of the regulatory inquiries discussed above, the Company has hired a Chief Ethics and Compliance Officer (CECO) who, under the oversight of the Audit Committee, has led the Company’s efforts to develop and implement a compliance program built upon a control architecture that is comprised of preventative and detective controls that are designed to reinforce our most critical processes. The Company has also formed a Corporate Compliance Committee, which provides management with clear line of sight reporting on the performance of the compliance program and areas for continuous improvement. If these and other measures that the Company may take in the future are not successful, it could adversely affect our business, reputation, financial condition, and results of operations.

Under the terms of the settlement, the first of these assessments is required to start during the fourth quarter of 2021 and we expect to receive the results of that assessment during the first quarter of 2022. In connection with this and any subsequent assessment performed pursuant to the settlement, the assessor may identify deficiencies in the Company’s efforts to comply with the settlement and, should the FTC at any time make a determination that we are not in full compliance with the settlement, it could take further action against the Company such as seeking judicial remedies against us for any noncompliance, and we could be subject to additional sanctions and restrictions on our operations, which may seriously harm our financial position and results of operations and lead to other materially adverse consequences for our business. In addition, the filing of an application with the court against us for noncompliance with the settlement could lead to regulatory actions by other regulatory agencies or private litigation against us, could impact our ability to obtain regulatory approvals necessary to carry out our present or future plans and operations, and could result in negative publicity that might adversely affect our business.

Risks Relating to Our Indebtedness

Our substantial indebtedness could adversely affect our financial condition.

We have substantial indebtedness. Net cash interest paid for the years ended December 31, 2021 and 2020 related to our indebtedness (excluding finance or capital leases) totaled $170.7 million and $212.6 million, respectively. Our net cash flows from operating activities for the years ended December 31, 2021 and 2020, before these interest payments, were cash inflow of $253.2 million and cash inflow of $439.3 million, respectively. Accordingly, our net cash provided by operating activities were sufficient to cover interest payments for the years ended December 31, 2021 and 2020.

As of December 31, 2021, we had approximately $2.7 billion aggregate principal amount of total debt outstanding, all of which was issued or borrowed by APX and guaranteed by Vivint Smart Home, Inc., APX Group Holdings, Inc. and by substantially all of APX’s domestic subsidiaries, $1.9 billion of which was secured debt, which requires significant interest and principal payments. Subject to the limits contained in the agreements governing our existing indebtedness, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could increase. Specifically, our high level of debt could have important consequences, including the following:

•making it more difficult for us to satisfy our obligations with respect to the notes and our other debt;

•limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

•requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows and future borrowings available for working capital, capital expenditures (including subscriber acquisition costs), acquisitions and other general corporate purposes;

•increasing our vulnerability to general adverse economic and industry conditions;

•exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

•limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

•placing us at a disadvantage compared to other, less leveraged competitors; and

•increasing our cost of borrowing.

We may be able to incur significant additional indebtedness in the future.

Despite our current level of indebtedness, we may be able to incur substantially more debt and enter into other transactions, which could further exacerbate the risks to our financial condition described above. As of December 31, 2021, we had $356.0 million of availability under the revolving credit facility (after giving effect to $14.0 million of letters of credit outstanding and no borrowings). Moreover, although the debt agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions

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are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the previous risk factor would increase.

In addition, the exceptions to the restrictive covenants permit us to enter into certain other transactions. Accordingly, subject to market conditions, we opportunistically seek to access the credit and capital markets from time to time, whether to refinance or retire our existing indebtedness, for the investment in and operation of our business, or for other general corporate purposes. Such transactions may take the form of new or amended senior secured credit facilities, including term or revolving loans, secured or unsecured notes and/or other instruments or indebtedness. These transactions may result in an increase in our total indebtedness, secured indebtedness and/or debt service costs.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Borrowings under our Credit Agreement are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. Our variable rate indebtedness uses LIBOR as a benchmark for establishing the interest rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. In the event that LIBOR is entirely phased out as is currently expected, the Credit Agreement provides that the Company and the administrative agent thereunder may amend the Credit Agreement to replace the LIBOR definition included therein with a successor rate based on prevailing market convention. In the event no such successor rate has yet been established as market convention, the Company and the administrative agent under the Credit Agreement may select a different rate which is reasonably practicable for the administrative agent to administer subject to receiving consent, within 15 business days of notice of such change, from lenders holding at least a majority of the aggregate principal amount of commitments and loans then outstanding under the Credit Agreement. The consequences of these developments cannot be entirely predicted, but could include an increase in the interest cost of our variable rate indebtedness.

We may be unable to service our indebtedness.

Our ability to make scheduled payments on and to refinance our indebtedness, including the notes, depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, including the notes, to refinance our debt or to fund our other liquidity needs (including funding subscriber acquisition costs).

If we are unable to meet our debt service obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, including the notes, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations.

Moreover, in the event of a default, the holders of our indebtedness, including the notes, could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest. The lenders under our revolving credit facility could also elect to terminate their commitments thereunder, cease making further loans, and institute foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation. If we breach our covenants under our revolving credit facilities, we would be in default under the applicable credit facility. The lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.

The debt agreements governing our existing indebtedness impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The debt agreements governing our existing indebtedness impose significant operating and financial restrictions on us. These restrictions limit our ability to, among other things:

•incur or guarantee additional debt or issue disqualified stock or preferred stock;

•pay dividends and make other distributions on, or redeem or repurchase, capital stock;

•make certain investments;

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•incur certain liens;

•enter into transactions with affiliates;

•merge or consolidate;

•materially change the nature of our business;

•amend, prepay, redeem or purchase certain subordinated debt;

•enter into agreements that restrict the ability of certain subsidiaries to make dividends or other payments to the bond issuer; and

•transfer or sell assets.

In addition, our revolving credit facility requires that we maintain a consolidated first lien net leverage ratio of not more than 5.95 to 1.0 on the last day of each applicable test period.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as other terms of our existing indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our results of operations and our financial condition.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our assets or cash flows would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

Risks Relating to Ownership of Our Class A Common Stock

Our stock price may change significantly and you could lose all or part of your investment as a result.

The closing price of our Class A common stock during 2021 ranged from $8.27 to $24.66 per share and is likely to continue to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “—Risks Relating to Our Business and Industry” and the following:

•results of operations that vary from the expectations of securities analysts and investors;

•results of operations that vary from those of our competitors;

•changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

•declines in the market prices of stocks generally;

•strategic actions by us or our competitors;

•announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

•any significant change in our management;

•changes in general economic or market conditions or trends in our industry or markets;

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•changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

•future sales of our common stock or other securities;

•investor perceptions or the investment opportunity associated with our common stock relative to other investment alternatives;

•the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

•litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

•guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

•the development and sustainability of an active trading market for our common stock;

•actions by institutional or activist stockholders;

•changes in accounting standards, policies, guidelines, interpretations or principles; and

•other events or factors, including those resulting from natural disasters, acts of war (including the recent invasion of Ukraine by Russia), acts of terrorism or responses to these events.

These broad market and industry fluctuations may adversely affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If the Company was involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from the Company’s business regardless of the outcome of such litigation.

Our warrants are accounted for as a liability and changes in the fair value of the warrants may have an adverse effect on the Company’s financial results and the market price for our Class A common stock.

On April 12, 2021, the staff of the SEC released the SEC Staff Statement informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our warrants, which were classified as equity, and determined to reclassify the warrants as a liability measured at fair value, with changes in fair value each period reported in earnings. Due to the recurring fair value measurement, we expect to recognize non-cash gains or losses on the warrants each reporting period, and the amount of such gains or losses could be material, which may cause our consolidated financial statements and results of operations to fluctuate quarterly and may have an adverse impact on the market price of our Class A common stock.

Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our Class A common stock to decline.

The sale of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.

Pursuant to a registration rights agreement, 313 Acquisition, LLC (“313 Acquisition”), certain stockholders of 313 Acquisition, Mosaic Sponsor, LLC, Fortress Mosaic Sponsor LLC and certain other stockholders named therein have exercised their right to require us to register the sale of their shares of our Class A common stock under the Securities Act. By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our Class A common stock to decline. The shares covered by registration rights represent a substantial majority of our outstanding Class A common stock.

In March 2020, we filed a registration statement on Form S-8 to register 34.3 million shares of Class A common stock that have been issued or are reserved for issuance under our 2020 Omnibus Incentive Plan, which includes shares of Class A common stock underlying restricted shares of Class A common stock, stock appreciation rights and restricted stock units that have been granted to our directors, executive officers and other employees as “substitute awards” pursuant to such 2020 Omnibus Incentive Plan, all of which are subject to time-based vesting conditions, as well as all shares of Class A common

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stock underlying the hypothetical stock appreciation rights subject to each of our (i) Third Amended and Restated 2013 Long-Term Incentive Pool Plan for Lead Technicians, (ii) Second Amended and Restated 2013 Long- Term Incentive Pool Plan for Regional Technicians, (iii) Third Amended and Restated 2013 Long-Term Incentive Pool Plan for Sales Managers and (iv) Third Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Managers. Under our registration statement on Form S-8, subject to the satisfaction of applicable vesting periods, the shares of Class A common stock issuable upon the satisfaction of all applicable vesting conditions tied to the aforementioned equity awards or upon exercise of any outstanding stock appreciation rights can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. We intend to similarly register all shares of Class A common stock that may be approved for issuance under the 2020 Omnibus Incentive Plan in the future pursuant to the evergreen provision thereof or otherwise.

In the future, we may also issue our securities in connection with investments or acquisitions. The number of shares of our Class A common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of Class A common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws (“Bylaws”) may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in our best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

These provisions provide for, among other things:

•the ability of the Board to issue one or more series of preferred stock;

•advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

•certain limitations on convening special stockholder meetings;

•limiting the ability of stockholders to act by written consent;

•providing that the Board is expressly authorized to make, alter or repeal the Bylaws;

•the removal of directors only for cause and only upon the affirmative vote of holders of at least 66 2/3% of the shares of common stock entitled to vote generally in the election of directors if the Stockholder Parties and their affiliates hold less than 30% of our outstanding shares of Class A common stock; and

•that certain provisions may be amended only by the affirmative vote of at least 30% of the shares of Class A common stock entitled to vote generally in the election of directors if the Stockholder Parties and their affiliates hold less than 30% of our outstanding shares of Class A common stock.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third- party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

The Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

The Certificate of Incorporation provides that, subject to limited exceptions, any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee to us or our stockholders, (iii) action asserting a claim arising pursuant to any provision of the DGCL or the Certificate of Incorporation or the Bylaws or (iv) action asserting a claim governed by the internal affairs doctrine shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of the Certificate of Incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of the Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified

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types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Certain significant Company stockholders whose interests may differ from those of Company public stockholders will have the ability to significantly influence our business and management.

Pursuant to the stockholders agreement (the “Stockholders Agreement”) that we entered into with Mosaic Sponsor, LLC and Fortress Mosaic Sponsor LLC (the “SPAC sponsors”), Blackstone and certain other parties thereto (collectively, the “Stockholder Parties”), Blackstone has the right to designate nominees for election to our Board at any meeting of its stockholders. The number of Blackstone Designees (as defined in the Stockholders Agreement) will be equal to (i) a majority of the total number of directors in the event that 313 Acquisition, Blackstone and their respective affiliates (collectively, the “313 Acquisition Entities”) beneficially own in the aggregate 50% or more of the outstanding shares of Class A common stock, (ii) 40% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 40%, but not 50% or more, of the outstanding shares of Class A common stock, (iii) 30% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 30%, but not more than 40%, of the outstanding shares of Class A common stock, (iv) 20% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 20%, but not more than 30%, of the outstanding shares of Class A common stock and (v) 10% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 5%, but not more than 20% of the outstanding shares of Class A common stock.

Under the Stockholders Agreement, we agreed to nominate one director designated by Fortress Mosaic Investor LLC to our Board (the “Fortress Designee”) so long as the Fortress Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of our Class A common stock the Fortress Holders own immediately following the consummation of the Merger; provided that the Fortress Designee must be (A) Andrew McKnight, (B) Max Saffian or (C) another senior employee or principal of Fortress Investment Group who is acceptable to a majority of the members of the board of directors of the Company.

Under the Stockholders Agreement, we agreed to nominate one director designated by the Summit Designator (as defined in the Stockholders Agreement) to our Board so long as the Summit Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of our Class A Common Stock they own immediately following the consummation of the Merger.

Accordingly, the persons party to the Stockholders Agreement will be able to significantly influence the approval of actions requiring Board approval through their voting power. Such stockholders will retain significant influence with respect to our management, business plans and policies, including the appointment and removal of its officers. In particular, the persons party to the Stockholder Agreement could influence whether acquisitions, dispositions and other change of control transactions are approved.

Affiliates of Blackstone exert significant influence on the Company, and their interests may conflict with ours or yours in the future.

As of February 25, 2022, affiliates of Blackstone beneficially own approximately 48% of our Class A common stock. For so long as Blackstone continues to own a significant percentage of our Class A common stock, Blackstone will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval. Accordingly, for such period of time, Blackstone will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as affiliates of Blackstone continues to own a significant percentage of our Class A common stock, Blackstone will be able to cause or prevent a change of control of the Company or a change in the composition of the Company’s board of directors and could preclude any unsolicited acquisition of the Company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of the Company and ultimately might affect the market price of our Class A common stock. In addition, Blackstone may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you. For example, Blackstone could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets. In certain circumstances, acquisitions of debt at a discount by purchasers that are related to a debtor can give rise to cancellation of indebtedness income to such debtor for U.S. federal income tax purposes. So long as affiliates of Blackstone continues to own a significant amount of our combined voting power, even if such amount is less than 50%, Blackstone will continue to be able to strongly influence or effectively control our decisions.

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Notwithstanding Blackstone’s control of or substantial influence over us, we may from time to time enter into transactions with Blackstone and its affiliates, or enter into transactions in which Blackstone or its affiliates otherwise have a direct or indirect material interest. In connection with the Merger, the Company adopted a formal written policy for the review and approval of transactions with related persons.

Certain of our stockholders, including Blackstone, the SPAC sponsors and affiliates of Summit Partners, L.P., may engage in business activities which compete with the Company or otherwise conflict with the Company’s interests.

Blackstone, the SPAC sponsors, affiliates of Summit Partners, L.P. and certain other Stockholder Parties and their respective affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Our amended and restated certificate of incorporation provides that none of the Stockholder Parties, any of their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates has any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The Stockholder Parties also may pursue acquisition opportunities that may be complementary to the Company’s business and, as a result, those acquisition opportunities may not be available to us.

General Risk Factors

If securities analysts do not continue to publish research or reports about our business, or if they downgrade our stock or our sector, stock price and trading volume could decline.

The trading market for our Class A common stock depends in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the analysts who does cover us downgrades our stock or industry, or the stock of any of its competitors, or publishes inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause the Company’s stock price or trading volume to decline.

Catastrophic events may disrupt our business.

Unforeseen events, or the prospect of such events, including acts of war (including the recent invasion of Ukraine by Russia), terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the recent emergence of COVID-19, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States, Canada or elsewhere, could disrupt our operations, disrupt the operations of suppliers or subscribers or result in political or economic instability. These events could reduce demand for our products and services, make it difficult or impossible to receive equipment from suppliers or impair our ability to market our products and services and/or deliver products and services to subscribers on a timely basis. Any such disruption could also damage our reputation and cause subscriber attrition. We could also be subject to claims or litigation with respect to losses caused by such disruptions. Our property and business interruption insurance may not cover a particular event at all or be sufficient to fully cover our losses. For additional detail regarding the risks we face with respect to COVID-19, see “—The global COVID-19 pandemic may adversely impact our business, at least for the near term. Such impact may persist for an extended period of time or become more severe which, in turn, may materially and adversely impact our financial condition, cash flows or results of operations.”

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.

ITEM 2.PROPERTIES

Our headquarters, and one of our two monitoring facilities, are located in Provo, Utah. These premises are under leases expiring between December 2024 and June 2028. Additionally, we lease the premises for a separate monitoring station located in Eagan, Minnesota. We also have facility leases in Lehi, Utah; Lindon, Utah; Logan, Utah; Boston, Massachusetts; and

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various other locations throughout the United States and Canada for research and development, call center, warehousing, recruiting, and training purposes. We believe that these facilities are adequate for our current needs and that suitable additional or substitute space will be available as needed to accommodate any expansion of our operations.

ITEM 3.LEGAL PROCEEDINGS

The information required with respect to this item can be found under “Legal” in Note 15, Commitments and Contingencies, of the notes to our consolidated financial statements contained in this Annual Report, and such information is incorporated by reference into this Item 3.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company’s Class A common stock is listed on the NYSE under the trading symbol “VVNT”.

Stockholders

As of December 31, 2021, there were 278 stockholders of record of our Class A common stock. This number does not indicate the actual number of beneficial owners of the Company's common stock as some shares are held in “street name” by brokers and others on behalf of individual owners.

Dividends

We have not paid any cash dividends on our common stock to date. Our Board may from time to time consider whether or not to institute a dividend policy. It is our present intention to retain any earnings for use in our business operations and, accordingly, we do not anticipate the Board declaring any dividends in the foreseeable future. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our Board. Further, our ability to declare dividends will also be limited by restrictive covenants contained in our debt agreements.

Stock Performance Graph

The following shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act.

The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor’s 500 Index and the Russell 2000 Index. The chart assumes $100 was invested at the close of market on October 19, 2017, in the Class A common stock of Vivint Smart Home Inc., the S&P 500 Index and the Russell 2000 Index, and assumes the reinvestment of any dividends.

The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.

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Issuer Purchases of Equity Securities

The following table provides information about purchases of shares of our Class A Common Stock during the periods indicated, which related to shares withheld upon vesting of equity awards to satisfy tax withholding obligations:

Date	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 - 31, 2021	—	$	—	—	—
November 1 - 30, 2021	8,423	12.54		—	—
December 1 - 31, 2021	7,512	10.49		—	—

(1) Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirements.

ITEM 6.RESERVED

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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements.

Business Overview

Vivint Smart Home is a leading smart home platform company serving approximately 1.9 million subscribers as of December 31, 2021. Our brand name, Vivint, means to “to live intelligently” and our mission is to help our customers do exactly that by providing them with technology and services to create a smarter, greener, safer home that saves our customers money every month.

Although a number of companies offer single devices such as a doorbell camera, smart speaker or thermostat, single offerings do not make a home smart. Rather, a smart home has multiple devices, properly located and installed, all integrated into a single expandable platform that incorporates artificial intelligence (“AI”) and machine-learning in its operating system.

We make creating this smart home easy and affordable with an integrated platform, exceptional products, hassle-free professional installation and zero percent annual percentage rate (“APR”) consumer financing for most customers. We help consumers create a customized solution for their home by integrating smart cameras (indoor, outdoor, doorbell), locks, lights, thermostats, garage door control, car protection and a host of safety and security sensors. As of December 31, 2021, on average, the subscribers on our cloud-based home platform had approximately 15 security and smart home devices in each home.

We provide a fully integrated solution for consumers with our vertically integrated business model that includes hardware, software, sales, installation, support and professional monitoring. This model strengthens our ability to deliver superior experiences at every customer touchpoint and a complete end-to-end smart home experience. This seamless integration of high-quality products and services results in an Average Subscriber Lifetime of approximately nine years, as of December 31, 2021. This model also facilitates our ability to offer adjacent products and services that leverage our existing platform and infrastructure, which we believe can extend the Average Subscriber Lifetime and increase the lifetime value we derive from our subscribers.

Our cloud-based home platform currently manages more than 26 million in-home devices as of December 31, 2021. Our subscribers are able to interact with their connected home by using their voice or mobile device—anytime, anywhere. They can engage with people at their front door; view live and recorded video inside and outside their home; control thermostats, locks, lights, and garage doors; and proactively manage the comings and goings of family, friends and visitors. The average subscriber on our cloud-based home platform engages with our smart home app approximately 11 times per day.

Our technology and people are the foundation of our business. Our trained professionals educate consumers on the value and affordability of a smart home, design a customized solution for their homes and their individual needs, teach them how to use our platform to enhance their experience, and provide ongoing tech-enabled services to manage, monitor and secure their home.

We believe that our unique business model and platform gives us a distinct advantage in the market through:

•a proprietary cloud-based platform,

•a differentiated end-to-end distribution model,

•strong growth with compelling unit economics, and

•multiple levers for sustained profitable growth.

As a result, we believe we can integrate new customer offerings from large adjacent markets that logically link back to our smart home platform, compounding the value that we already deliver to our approximately 1.9 million customers. With the large number of devices we have installed per home, we own a rich first-party data environment that helps us not only protect our customers, but also improve the efficiency of their homes and increase their peace of mind. We believe our unique focus on the importance of owning the entire technology stack, coupled with an end-to-end distribution model, leads to an exceptional customer experience. By continuously enhancing our platform, we can improve our customers’ experience wherever they interact with it. We believe that as our customers’ satisfaction increases, it creates multiple potential opportunities for sustained profitable growth for years to come.

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Our integrated Smart Home business model generates subscription-based, high-margin recurring revenue from subscribers who sign up for our smart home services. More than 95% of our revenue is recurring, which provides long-term visibility and predictability to our business. Despite the many uncertainties pertaining to the COVID-19 pandemic, our recurring revenue model has proven resilient.

For 2021, some key metrics of our business included:

•Total Subscribers — As of December 31, 2021 and 2020, we had approximately 1.9 million and 1.7 million subscribers, respectively, representing year-over-year growth of 9.4%.

•Revenues — In 2021 and 2020, we generated revenue of approximately $1.5 billion and $1.3 billion, respectively, representing a year-over-year increase of 18%.

•Net Loss — In 2021 and 2020 we had a net loss of $305.6 million and $603.3 million, respectively.1

•Adjusted EBITDA — In 2021 and 2020, we generated Adjusted EBITDA of approximately $669.1 million and $578.8 million, respectively, representing a year-over-year increase of over 16%.1

COVID-19 update

In December 2019, COVID-19 was first reported and on March 11, 2020, the World Health Organization (WHO) characterized COVID-19 as a pandemic.

Operational update. During 2020, we implemented a number of operational changes to continue to provide the same level of service our customers have come to rely on, while caring for the well-being of our customers and employees. These changes included transitioning our customer care professionals and corporate employees to work-from-home environments while maintaining our geographically dispersed central monitoring stations to provide 24/7 professional monitoring services for all emergencies, performing operating and safety procedures based on the latest CDC guidelines, providing paid time off for any employee who has contracted COVID-19 or is required to be quarantined by a public health authority and encouraging our employees to receive COVID-19 vaccinations by offering incentives to customer facing employees and by providing vaccines at our onsite clinic located at our Provo, Utah headquarters. We have also developed a plan for employees to return to the office once our management determines that it is safe to do so, utilizing a hybrid model in which employees split their time between working from the office and from home.

The United States has experienced multiple spikes in new COVID-19 cases since the beginning of the pandemic, most recently as a result of the Omicron variant. The full impact of the pandemic on our business and results of operations will depend on the ultimate duration of the pandemic as well as the severity of the current and any future resurgences in COVID-19 cases. While we did not experience a significant adverse financial impact from the COVID-19 pandemic in 2020 or 2021, our business could be adversely impacted in the future if the COVID-19 pandemic continues for an extended period of time and regions of the country are forced to roll back plans for reopening their economies.

Financial update. Although the COVID-19 pandemic did not have a material impact on our results of operations for 2020 or 2021, as discussed above, with respect to the operational challenges posed by the pandemic the broader implications of COVID-19 on our future results of operations and overall financial performance remain uncertain. Depending on the breadth and duration of the ongoing outbreak or new variants of the virus, which we are not currently able to predict, the adverse impact could be material. Our future business could be adversely affected by COVID-19, including our ability to maintain compliance with our debt covenants, due to the following:

•Our ability to generate new subscribers, particularly in our direct-to-home sales channel.

•The impact of the pandemic and actions taken in response thereto on global and regional economies and economic activity, including the duration and magnitude of increased inflation rates and the associated impact on consumer discretionary spending.

•Ability to obtain the equipment necessary to generate new subscriber accounts or service our existing subscriber base, due to potential supply chain disruption. For example, although it has not yet had a significant impact on our business, some technology companies are facing shortages of certain components used in our Products, which if prolonged could impact our ability to obtain the equipment needed to support our operations and would likely increase Product costs. Such shortages are requiring us to purchase components on the spot market at elevated prices and utilize expedited shipping methods to maintain adequate supply, which result in increased costs for the components and equipment.

1 See the section titled “Key Performance Measures—Adjusted EBITDA” for information regarding our use of Adjusted EBITDA and a reconciliation of net loss to Adjusted EBITDA.

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•Limitations on our ability to enter our customer’s homes to perform installs or equipment repairs.

•Inefficiencies and potential incremental costs resulting from the requirement for many of our employees to work from home.

•Ability to attract and retain employees due to labor shortages, along with wage inflation resulting from these labor shortages.

These factors could become indicators of asset impairments in the future, depending on the significance and duration of the disruption. While short-term, temporary disruptions may not indicate an impairment; the effects of a prolonged outbreak may cause asset impairments.

We continue to monitor the situation and guidance from international and domestic authorities, including federal, state and local public health authorities, and may be required or elect to take additional actions based on their recommendations.

Key Factors Affecting Operating Results

Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including our ability to grow our subscriber base in a cost-effective manner, expand our Product and Service offerings to generate increased revenue per user, provide high quality Products and subscriber service, including adjacent products and services, to maximize subscriber lifetime value and improve the leverage of our business model.

Key factors affecting our operating results include the following:

Subscriber Lifetime and Associated Cash Flows

Our subscribers are the foundation of our recurring revenue-based model. Our operating results are significantly affected by the level of our Net Acquisition Costs per New Subscriber and the value of Products and Services purchased by those New Subscribers. A reduction in Net Subscriber Acquisition Costs per New Subscriber or an increase in the total value of Products or Services purchased by a New Subscriber increases the life-time value of that subscriber, which in turn, improves our operating results and cash flows over time.

The net upfront cost of adding subscribers is a key factor impacting our ability to scale and our operating cash flows. Vivint Flex Pay, which became our primary equipment financing model in early 2017, has significantly improved our cash flows associated with originating New Subscribers. Prior to Vivint Flex Pay, we recovered the cost of equipment installed in subscribers’ homes over time through their monthly service billings. We generally offer to a limited number of customers who are not eligible for the CFP, or do not choose to Pay-in-Full at the time of origination, but who qualify under our underwriting criteria, the option to enter into a RIC directly with us, which we fund through our balance sheet. Under Vivint Flex Pay, we've experienced the following financing mix for New Subscribers:

	Year ended December 31,
	2021		2020		2019
New Subscribers (U.S. only):
Financed through CFP	74	%	75	%	71	%
Paid-in-Full (ACH, credit or debit card)	24	%	22	%	18	%
Purchased through RICs	2	%	3	%	11	%

This shift in financing from RICs to the CFP has significantly reduced our Net Subscriber Acquisition Cost per New Subscriber, as well as the cash required to acquire New Subscribers. Our Net Subscriber Acquisition Cost per New Subscriber has decreased from $1,018 as of December 31, 2019 to $58 as of December 31, 2021, a reduction of approximately 94%. Going forward, we expect the percentage of subscriber contracts financed through RICs to remain a very small percentage of our financing mix. We will also continue to explore ways of growing our subscriber base in a cost-effective manner through our existing sales and marketing channels, through the growth of our financing programs, as well as through strategic partnerships and new channels, as these opportunities arise.

Existing subscribers are also able to use Vivint Flex Pay to upgrade their systems or to add new Products, which we believe further increases subscriber lifetime value. This positively impacts our operating performance, and we anticipate that adding new financing options to the CFP will generate additional opportunities for revenue growth and a subsequent increase in subscriber lifetime value.

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We seek to increase our average monthly revenue per user, or AMRRU, by continually innovating and offering new smart home solutions that further leverage the investments made to date in our existing platform and sales channels. Since 2010, we have successfully expanded our smart home platform, which has allowed us to generate higher AMRRU and in turn realize higher smart home device revenue from new subscribers for these additional offerings. For example, the introduction of our proprietary Vivint Smart Hub, Vivint SkyControl Panel, Vivint Doorbell Camera Pro, Vivint Indoor Camera, Vivint Outdoor Camera Pro, and Vivint Smart Thermostat has expanded our smart home platform. We believe that growing our AMRRU will improve our operating results and operating cash flows over time. Our ability to improve our operating results and cash flows, however, is subject to a number of risks and uncertainties as described in greater detail elsewhere in this filing and there can be no assurance that we will achieve such improvements. To the extent that we do not scale our business efficiently, we will continue to incur losses and require a significant amount of cash to fund our operations, which in turn could have a material adverse effect on our business, cash flows, operating results and financial condition.

Our ability to retain our subscribers also has a significant impact on our financial results, including revenues, operating income, and operating cash flows. Because we operate a business built on recurring revenues, subscriber lifetime is a key determinant of our operating success. Our Average Subscriber Lifetime is approximately 106 months (or approximately nine years) as of December 31, 2021. If our expected long-term annualized attrition rate increased by 1% to 12.3%, Average Subscriber Lifetime would decrease to approximately 98 months. Conversely, if our expected attrition decreased by 1% to 10.3%, our Average Subscriber Lifetime would increase to approximately 117 months. Our ability to increase overall revenue growth and extend our Average Subscriber Lifetime depends, in part, on our ability to successfully expand into new adjacent products and services, such as smart energy and smart insurance. This success is dependent on our ability to scale these adjacent businesses in a cost-effective manner and integrate them into our existing smart home platform, where appropriate.

The operating margins from smart energy and smart insurance are lower than for our smart home business. Therefore, while we expect total Adjusted EBITDA dollars to increase as a result of smart energy and smart insurance, they will reduce our overall Adjusted EBITDA Margin percentage.

Our ability to service our existing customer base in a cost-effective manner, while minimizing customer attrition, also has a significant impact on our financial results and operating cash flows. Critical to managing the cost of servicing our subscribers is limiting the number of calls into our customer care call centers, and in turn, limiting the number of calls requiring the deployment of a Smart Home Pro to the customer’s home to resolve the issue. We believe that our proprietary end-to-end solution allows us to proactively manage the costs to service our customers by directly controlling the design, interoperability and quality of our Products. It also provides us the ability to identify and resolve potential product issues through remote software or firmware updates, typically before the customer is even aware of an issue. Through continued focus in these areas, our Net Service Cost per Subscriber has decreased from $13.73 to $10.41 for the years ended December 31, 2019 and December 31, 2021, respectively, a decrease of 24%, while effectively managing subscriber attrition.

A portion of the subscriber base can be expected to cancel its service every year. Subscribers may choose not to renew or may terminate their contracts for a variety of reasons, including, but not limited to, relocation, cost, switching to a competitor’s service or service issues. We analyze our attrition by tracking the number of subscribers who cancel their service as a percentage of the monthly average number of subscribers at the end of each 12-month period. We caution investors that not all companies, investors and analysts in our industry define attrition in this manner.

The table below presents our smart home and security subscriber data for the years ended December 31, 2021, 2020 and 2019:

	Year ended December 31,
	2021		2020		2019
Beginning balance of subscribers	1,695,498		1,552,541		1,444,822
New subscribers	360,509		343,434		316,403
Attritted subscribers	(200,866)		(200,477)		(208,684)
Ending balance of subscribers	1,855,141		1,695,498		1,552,541
Monthly average subscribers	1,776,794		1,616,311		1,502,310
Attrition rate	11.3	%	12.4	%	13.9	%

Historically, we have experienced an increased level of subscriber cancellations in the months surrounding the expiration of such subscribers’ initial contract term. Attrition in any twelve month period may be impacted by the number of subscriber contracts reaching the end of their initial term in such period. Attrition in the twelve months ended December 31, 2021 includes the effect of the 2016 60-month and 2017 42-month contracts reaching the end of their initial contract term. Attrition in the

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twelve months ended December 31, 2020 includes the effect of the 2015 60-month and 2016 42-month contracts reaching the end of their initial contract term.

Sales and Marketing Efficiency

As discussed above, our continued ability to attract and sign new subscribers in a cost-effective manner will be a key determinant of our future operating performance. Because our direct-to-home and national inside sales channels are currently our primary means of subscriber acquisition, we have invested heavily in scaling these channels. Our sales representatives generally become more productive as they gain more experience. As a result, the tenure mix among our sales teams, and our ability to retain experienced sales representatives, impacts our level of new subscriber acquisitions and overall operating success. The continued productivity of our sales teams is instrumental to our subscriber growth and vital to our future success.

Originating subscriber growth through these investments in our sales teams depends, in part, on our ability to launch cost-effective marketing campaigns, both online and offline. This is particularly true for our national inside sales channel, because national inside sales fields inbound requests from subscribers who find us using online search and submitting our online contact form. Our marketing campaigns are created to attract potential subscribers and build awareness of our brand across all our sales channels. We also believe that building brand awareness is important to countering the competition we face from other companies selling their solutions in the geographies we serve, particularly in those markets where our direct-to-home sales representatives are present.

Expand Monetization of Platform and Related Services

To date, we have made significant investments in our smart home platform and the development of our organization, and expect to leverage these investments to continue expanding the breadth and depth of our Product and Service offerings over time, including integration with third party products and expanding into adjacent products and services to drive future revenue. As smart home technology develops, we will continue expanding these offerings to reflect the growing needs of our subscriber base and focus on expanding our platform through the addition of new smart home Products, experiences and use cases. As a result of our investments to date, we have approximately 1.9 million active customers on our smart home platform. We intend to continue developing this platform to include new complex automation capabilities, use case scenarios, and comprehensive device integrations. Our platform supports over 26 million connected devices as of December 31, 2021.

We believe that the smart home of the future will be an ecosystem in which businesses seek to deliver products and services to subscribers in a way that addresses the individual subscriber’s lifestyle and needs. As smart home technology becomes the setting for the delivery of a wide range of these products and services, including healthcare, entertainment, home maintenance, aging in place and consumer goods, we hope to become the hub of this ecosystem and the strategic partner of choice for the businesses delivering these products and services. Our success in connecting with business partners who integrate with our smart home platform in order to reach and interact with our subscriber base is expected to be a part of our continued operating success. We expect that additional partnerships will generate incremental revenue by increasing the value of Products purchased by our customers as a result of integration of these partners' products with our smart home platform. If we are able to continue expanding our partnerships with influential companies, as we already have with Google, Amazon, Chamberlain and Philips, we believe that this will help us to further increase our revenue and resulting profitability.

Any new Products, Services, or features we add to our ecosystem creates an opportunity to generate revenue, either through sales to our existing subscribers or through the acquisition of New Subscribers. Furthermore, we believe that by vertically integrating the development and design of our Products and Services with our existing sales and subscriber service activities allows us to quickly respond to market needs, and better understand our subscribers’ interactions and engagement with our Products and Services. This provides critical data that we expect will enable us to continue improving the power, usability and intelligence of these Products and Services. As a result, we anticipate that continuing to invest in technologies that make our platform more engaging for subscribers, and by offering a broader range of smart home experiences and adjacent in-home services such as smart insurance and smart energy, will allow us to grow revenue and further monetize our subscriber base, because it improves our ability to offer tailored service packages to subscribers with different needs.

Key Performance Measures

In evaluating our results, we review several key performance measures discussed below. We believe that the presentation of such metrics is useful to our investors and lenders because they are used to measure the value of companies such as ours with recurring revenue streams. Management uses these metrics to analyze its continuing operations and to monitor, assess, and identify meaningful trends in the operating and financial performance of the company.

Total Subscribers

Total Subscribers is the aggregate number of active smart home and security subscribers at the end of a given period.

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Total Monthly Recurring Revenue

Total monthly recurring revenue, or Total MRR, is the average smart home and security total monthly recurring revenue recognized during the period. These revenues exclude non-recurring revenues that are recognized at the time of sale.

Average Monthly Recurring Revenue per User

Average monthly revenue per user, or AMRRU, is Total MRR divided by average monthly Total Subscribers during a given period.

Total Monthly Service Revenue

Total monthly service revenue, or MSR, is the contracted recurring monthly service billings to our smart home and security subscribers, based on the Total Subscribers number as of the end of a given period.

Average Monthly Service Revenue per User

Average monthly service revenue per user, or AMSRU, is Total MSR divided by Total Subscribers at the end of a given period.

Attrition Rate

Attrition rate is the aggregate number of canceled smart home and security subscribers during the prior 12-month period divided by the monthly weighted average number of Total Subscribers based on the Total Subscribers at the beginning and end of each month of a given period. Subscribers are considered canceled when they terminate in accordance with the terms of their contract, are terminated by us or if payment from such subscribers is deemed uncollectible (when at least four monthly billings become past due). If a sale of a service contract to third parties occurs, or a subscriber relocates but continues their service, we do not consider this as a cancellation. If a subscriber transfers their service contract to a new subscriber, we do not consider this as a cancellation.

Average Subscriber Lifetime

Average subscriber lifetime, in number of months, is 100% divided by our expected long-term annualized attrition rate multiplied by 12 months.

Net Service Cost per Subscriber

Net service cost per subscriber is the average monthly service costs incurred during the period (both period and capitalized service costs), including monitoring, customer service, field service and other service support costs, less total non-recurring smart home services billings and cellular network maintenance fees for the period, divided by average monthly Total Subscribers for the same period.

Net Service Margin

Net service margin is the monthly average MSR for the period, less total average net service costs for the period divided by the monthly average MSR for the period.

New Subscribers

New subscribers is the aggregate number of net new smart home and security subscribers originated during a given period. This metric excludes new subscribers acquired by the transfer of a service contract from one subscriber to another.

Net Subscriber Acquisition Costs per New Subscriber

Net Subscriber Acquisition Costs per New Subscriber is the net cash cost to create new smart home and security subscribers during a given 12-month period divided by New Subscribers for that period. These costs include commissions, Products, installation, marketing, sales support and other allocations (general and administrative and overhead); less upfront payments received from the sale of Products associated with the initial installation, and installation fees. Upfront payments reflect gross proceeds prior to deducting fees related to consumer financing of Products. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation (or non-cash compensation), certain financing fees, changes in the fair value of the derivative liability associated with our public and private warrants and certain other non-recurring expenses or gains.

Adjusted EBITDA is not defined under GAAP and is subject to important limitations. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP,

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and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used by other companies.

We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans.

Adjusted EBITDA and other non-GAAP financial measures have important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:

•excludes certain tax payments that may represent a reduction in cash available to us;

•does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized, including capitalized contract costs, that may have to be replaced in the future;

•does not reflect changes in, or cash requirements for, our working capital needs;

•does not reflect the significant interest expense to service our debt;

•does not reflect the monthly financing fees incurred associated with our obligations under the Consumer Financing Program;

•does not include changes in the fair value of the warrant liabilities; and

•does not include non-cash stock-based employee compensation expense and other non-cash charges.

We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income (loss). We have included the calculation of Adjusted EBITDA and reconciliation of Adjusted EBITDA to net loss for the periods presented below under Key Operating Metrics - Adjusted EBITDA.

Net Loss Margin

Net Loss Margin is net loss as a percentage of total revenues for the period.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of total revenues for the period.

Components of Results of Operations

Total Revenues

Recurring and Other Revenue

Our revenues are primarily generated through the sale and installation of our smart home services contracted for by our subscribers. Recurring smart home services for our subscriber contracts are billed directly to the subscriber in advance, generally monthly, pursuant to the terms of subscriber contracts and recognized ratably over the service period. Revenues from Products are deferred and generally recognized on a straight-line basis over the customer contract term, the amount of which is dependent on the total sales price of Products sold. Imputed interest associated with RIC receivables is recognized over the initial term of the RIC. The amount of revenue from Services is dependent upon which of our service offerings is included in the subscriber contracts. Our smart home and video offerings generally provide higher service revenue than our base smart home service offering. Historically, we have generally offered contracts to subscribers that range in length from 36 to 60 months, which are subject to automatic monthly renewal after the expiration of the initial term. In addition, to a lesser extent, we offer month-to-month contracts to subscribers who pay-in-full for their Products at the time of contract origination. At the end of each monthly period, the portion of recurring fees related to services not yet provided are deferred and recognized as these services are provided. To a lesser extent, our revenues are generated through the sales of products and other one-time fees such as service or installation fees, which are invoiced to the customer at the time of sale.

The revenue related to our smart energy business is primarily from commissions received by operating as a sales dealer for third-party residential solar installers. We invoice the solar installer, and recognize the associated revenue, at the time the solar installation is complete.

Although we expect revenue from our smart insurance to continue to grow, to date, revenue from this business has been immaterial to our overall revenue.

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Total Costs and Expenses

Operating Expenses

Operating expenses primarily consists of labor associated with monitoring and servicing subscribers, costs associated with Products used in service repairs, stock-based compensation and housing for our Smart Home Pros who perform subscriber installations. We also incur equipment costs associated with excess and obsolete inventory and rework costs related to Products removed from subscribers' homes. In addition, a portion of general and administrative expenses, primarily comprised of certain human resources, facilities and information technology costs are allocated to operating expenses. This allocation is primarily based on employee headcount and facility square footage occupied. Because our full-time Smart Home Pros perform most subscriber installations related to customer moves, customer upgrades or those generated through our national inside sales channels, the costs incurred within field service associated with these installations are allocated to capitalized contract costs. We generally expect our operating expenses to increase in absolute dollars as the total number of subscribers we service continues to grow, but to remain relatively constant in the near to intermediate term as a percentage of our revenue.

Selling Expenses

Selling expenses are primarily comprised of costs associated with housing for our Smart Home Pros sales representatives, advertising and lead generation, marketing and recruiting, sales commissions related to our smart energy and smart insurance businesses, certain portions of sales commissions associated with our direct-to-home sales channel (residuals), stock-based compensation, overhead (including allocation of certain general and administrative expenses as discussed above) and other costs not directly tied to a specific subscriber origination. These costs are expensed as incurred. We generally expect our selling expenses to increase in the near to intermediate term, both in absolute dollars and as a percentage of our revenue, resulting from increases in the total number of subscriber originations.

General and Administrative Expenses

General and administrative expenses consist largely of research and development, or R&D, finance, legal, information technology, human resources, facilities and executive management expenses, including stock-based compensation expense. Stock-based compensation expense is recorded within various components of our costs and expenses. General and administrative expenses also include the provision for doubtful accounts. We allocate between one-fourth and one-third of our gross general and administrative expenses, excluding stock-based compensation and the provision for doubtful accounts, into operating and selling expenses in order to reflect the overall costs of those components of the business. We generally expect our general and administrative expenses to remain relatively flat in the near to intermediate term in absolute dollars, but decrease as a percentage of our revenues, resulting from economies of scale as we grow our business.

Depreciation and Amortization

Depreciation and amortization consist of depreciation from property, plant and equipment, amortization of equipment leased under finance leases, capitalized contract costs and intangible assets. We generally expect our depreciation and amortization expenses to increase in absolute dollars as we grow our business and increase the number of new subscribers originated on an annual basis, but to remain relatively constant in the near to intermediate term as a percentage of our revenue.

Restructuring Expenses

Restructuring expenses are comprised of costs incurred in relation to activities to exit or dispose of portions of our business that do not qualify as discontinued operations. Expenses for related termination benefits are recognized at the date we notify the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, loss from operations and net loss, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. At least quarterly, we evaluate our assumptions, judgments and estimates and make

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changes accordingly. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results. We believe that the assumptions, judgments and estimates involved in the accounting for revenue recognition, deferred revenue, Consumer Financing Program, retail installment contract receivables, capitalized contract costs, and loss contingencies have the greatest potential impact on our consolidated financial statements; therefore, we consider these to be our critical accounting estimates. For information on our significant accounting policies, see Note 3 to the accompanying audited consolidated financial statements.

Revenue Recognition

We offer our customers smart home services combining Products, including our proprietary Vivint smart hub control panel, door and window sensors, door locks, cameras and smoke alarms; installation; and a proprietary backend cloud platform software and Services. These together create an integrated system that allows our customers to monitor, control and protect their home. Our customers are buying this integrated system that provides them with these smart home services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the smart home services, we have concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights and obligations. We have determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.

The majority of our subscription contracts are between three and five years in length and are generally non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for recurring monitoring and other smart home services is generally due in advance on a monthly basis.

Sales of Products and other one-time fees such as service or installation fees are invoiced to the customer at the time of sale. Any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.

Beginning in late 2020, we began operating as a third-party dealer for residential solar installers in several states throughout the U.S., whereby we earn a commission from the installer for selling their solar services. Because we have no further performance obligations once the installation is complete, we recognize the commissions we receive as revenue at that time.

To date, revenues from our Smart Insurance business have been immaterial to our overall financial results.

Consumer Financing Program

Vivint Flex Pay became our primary equipment financing model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint’s smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through our CFP, (2) we generally offer to a limited number of customers not eligible for the CFP, but who qualify under our underwriting criteria, the option to enter into a RIC directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract either by paying the full amount at that time via check, ACH, credit or debit card or by obtaining short-term financing (generally no more than six month installment terms) through us.

Although customers pay separately for Products and Services under the Vivint Flex Pay plan, we have determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. For RICs, gross deferred revenues are reduced by imputed interest and estimated write-offs. For Products financed through the CFP, gross deferred revenues are reduced by (i) any fees or estimated credit losses the Financing Provider is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to Financing Providers.

Under the CFP, qualified customers are eligible for Loans originated by Financing Providers of between $150 and $6,000. The terms of most Loans are determined based on the customer’s credit quality. The annual percentage rates on these loans is either 0% or 9.99%, depending on the customer's credit quality, and the Loans are issued on either an installment or revolving basis with repayment terms ranging from with a 6- to 60-months.

For certain Financing Provider Loans:

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•We pay a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding Loans.

•We incur fees at the time of the Loan origination and receive proceeds that are net of these fees.

•We also share liability for credit losses, with us being responsible for between 2.6% and 100% of lost principal balances.

•We are responsible for reimbursing certain Financing Providers for merchant transaction fees and other fees associated with the Loans.

Because of the nature of these provisions, we record a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments when the Financing Provider originates Loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services.

The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and loss severity rates. These derivatives are priced quarterly using a credit valuation adjustment methodology. In summary, the fair value represents an estimate of the present value of the cash flows we will be obligated to pay to the Financing Provider for each component of the derivative.

The derivative liability is reduced as payments are made by us to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the consolidated statement of operations.

For certain other Loans, we receive net proceeds (net of fees and expected losses) for which we have no further obligation to the Financing Provider. We record these net proceeds to deferred revenue.

See Note 11 to the accompanying audited consolidated financial statements for further information on our CFP derivative arrangement

Retail Installment Contract Receivables

For subscribers that enter into a RIC to finance the purchase of Products, we record a receivable for the amount financed. Gross RIC receivables are reduced for (i) expected write-offs of uncollectible balances over the term of the RIC and (ii) a present value discount of the expected cash flows using a risk adjusted market interest rate. Therefore, the RIC receivables equal the present value of the expected cash flows to be received by us over the term of the RIC, evaluated on a pool basis. RICs are pooled based on customer credit quality, contract length and geography. At the time of installation, we record a long-term note receivable within long-term notes receivables and other assets, net on the consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the consolidated balance sheets.

We impute the interest on the RIC receivable using a risk adjusted market interest rate and record it as a reduction to deferred revenue and as an adjustment to the face amount of the related receivable. The risk adjusted interest rate considers a number of factors, including credit quality of the subscriber base and other qualitative considerations such as macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the consolidated statements of operations.

When we determine that there are RIC receivables that have become uncollectible, we record an adjustment to the allowance and reduce the related note receivable balance. On a regular basis, we also reassess the expected remaining cash flows, based on historical RIC write-off trends, current market conditions and both Company and third-party forecast data. If we determine there is a change in expected remaining cash flows, the total amount of this change for all RICs is recorded in the current period to the provision for credit losses, which is included in general and administrative expenses in the accompanying consolidated statements of operations. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due.

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. We calculate amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortize those deferred contract costs on a straight-line basis over the expected period of benefit that we have determined to be five years, consistent with the pattern in which we provide services to our customers. We believe this pattern of amortization

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appropriately reduces the carrying value of the capitalized contract costs over time to reflect the decline in the value of the assets as the remaining period of benefit for each monthly portfolio of contracts decreases. The period of benefit of five years is longer than a typical contract term because of anticipated contract renewals. We apply this period of benefit to our entire portfolio of contracts. We update our estimate of the period of benefit periodically and whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations.

The carrying amount of the capitalized contract costs is periodically reviewed for impairment. In performing this review, we consider whether the carrying amount of the capitalized contract costs will be recovered. In estimating the amount of consideration we expect to receive in the future related to capitalized contract costs, we consider factors such as attrition rates, economic factors, and industry developments, among other factors. If it is determined that capitalized contract costs are impaired, an impairment loss is recognized for the amount by which the carrying amount of the capitalized contract costs and the anticipated costs that relate directly to providing the future services exceed the consideration that has been received and that is expected to be received in the future.

Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing, advertising, recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.

On the consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs – deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.

Loss Contingencies

We record accruals for various contingencies including legal and regulatory proceedings and other matters that arise in the normal course of business. The accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of legal counsel. We record an accrual when a loss is deemed probable to occur and is reasonably estimable. We evaluate these matters each quarter to assess our loss contingency accruals, and make adjustments in such accruals, upward or downward, as appropriate, based on our management’s best judgment after consultation with counsel. Factors that we consider in the determination of the likelihood of a loss and the estimate of the range of that loss in respect of legal and regulatory matters include the merits of a particular matter, the nature of the litigation or claim, the length of time the matter has been pending, the procedural posture of the matter, whether we intend to defend the matter, the likelihood of settling for an insignificant amount and the likelihood of the plaintiff or regulator accepting an amount in this range. However, the outcome of such legal and regulatory matters is inherently unpredictable and subject to significant uncertainties. There is no assurance that these accruals for loss contingencies will not need to be adjusted in the future or that, in light of the uncertainties involved in such matters, the ultimate resolution of these matters will not significantly exceed the accruals that we have recorded.

Recent Accounting Pronouncements

See Note 3 to our accompanying audited Consolidated Financial Statements.

Basis of Presentation

We conduct business through one operating segment, Vivint, and primarily operate in two geographic regions: The United States and Canada. See Note 18 in the accompanying consolidated financial statements for more information about our geographic regions.

Results of operations

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	Year ended December 31,
	2021		2020		2019
	(in thousands)
Total revenues	$	1,479,388	$	1,252,267	$	1,151,100
Total costs and expenses	1,633,626		1,514,325		1,298,157
Loss from operations	(154,238)		(262,058)		(147,057)
Other expenses	148,843		340,190		252,326
Loss before taxes	(303,081)		(602,248)		(399,383)
Income tax expense	2,471		1,083		1,313
Net loss	$	(305,552)	$	(603,331)	$	(400,696)

Key performance measures

	Year ended December 31,
	2021			2020			2019
Total Subscribers (in thousands)	1,855.1			1,695.5			1,552.5
Total MSR (in thousands)	$	86,652		$	82,989		$	79,858
AMSRU	$	46.71		$	48.95		$	51.44
Net subscriber acquisition costs per new subscriber	$	58		$	139		$	1,018
Net service cost per subscriber	$	10.41		$	10.54		$	13.73
Net service margin	78		%	79		%	74		%
Average subscriber lifetime (months)	106			92			92
Total MRR (in thousands)	$	118,285		$	103,968		$	96,686
AMRRU	$	66.32		$	64.09		$	64.17

Adjusted EBITDA

The following table sets forth a reconciliation of net loss to Adjusted EBITDA (in millions):

	Year ended December 31,
	2021			2020			2019
Net loss	$	(305.6)		$	(603.3)		$	(400.7)
Interest expense, net	184.5			220.5			260.0
Income tax expense, net	2.5			1.1			1.2
Depreciation	16.5			20.2			25.5
Amortization (1)	585.0			550.6			518.1
Stock-based compensation (2)	166.4			198.2			3.8
Consumer financing fees (3)	43.6			27.7			16.8
Restructuring expenses (4)	—			20.9			—
CEO transition (5)	11.8			—			—
Loss contingency (6)	—			23.2			—
Change in fair value of warrant derivative liabilities (7)	(50.1)			109.3			—
Other expense (income), net (8)	14.5			10.4			(7.7)
Adjusted EBITDA	$	669.1		$	578.8		$	417.0
Net Loss Margin	(21)		%	(48)		%	(35)		%
Adjusted EBITDA Margin	45		%	46		%	36		%

____________________

(1)Excludes loan amortization costs that are included in interest expense.

(2)Reflects non-cash compensation costs related to employee and director stock incentive plans.

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(3)Reflects the reduction to revenue related to the amortization of certain financing fees incurred under the Vivint Flex Pay program.

(4)Employee severance and termination benefits expenses associated with restructuring plans.

(5)Hiring and severance expenses associated with CEO transition in June 2021.

(6)Reflects an increase to the loss contingency accrual relating to the regulatory matters described in Note 15 to the accompanying consolidated financial statements.

(7)Reflects the change in fair value of our derivative liability associated with our public warrants and private placement warrants.

(8)Primarily consists of changes in our derivative instruments, foreign currency exchange and other gains and losses associated with financing and other transactions.    

Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

Revenues

The following table provides our revenue for the years ended December 31, 2021 and 2020:

	2021		2020		% Change
	(in thousands)
Recurring and other revenue	$	1,479,388	$	1,252,267	18	%

Recurring and other revenue increased $227.1 million, or 18% for the year ended December 31, 2021 as compared to the year ended December 31, 2020. The increase was primarily a result of:

•$128.9 million increase resulting from the change in Total Subscribers of approximately 9%;

•$55.3 million in non-recurring revenues primarily from our smart energy initiative, and to a lesser extent our smart insurance and other pilot initiatives;

•$39.2 million increase from the change in AMRRU; and

•$3.7 million positive impact from foreign currency translation as computed on a constant currency basis.

Costs and Expenses

The following table provides the significant components of our costs and expenses for the years ended December 31, 2021 and 2020:

	2021		2020		% Change
	(in thousands)
Operating expenses	$	384,365	$	352,343	9	%
Selling expenses	379,497		302,287		26	%
General and administrative	268,312		267,923		—	%
Depreciation and amortization	601,452		570,831		5	%
Restructuring and asset impairment charges	—		20,941		NM
Total costs and expenses	$	1,633,626	$	1,514,325	8	%

Not Meaningful (“NM”)

 Operating expenses for the year ended December 31, 2021 increased $32.0 million, or 9%, as compared to the year ended December 31, 2020. This increase was partially offset by a $3.6 million decrease in stock-based compensation. Excluding stock-based compensation, operating expenses increased by $35.6 million, or 10%, primarily due to increases to support our subscriber growth of:

•$15.9 million in personnel and related support costs, primarily related to increases in cellular network module upgrades,

•$6.3 million in information technology costs;

•$4.9 million in expensed equipment costs, primarily related to cellular network module upgrades;

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•$2.8 million in customer support costs, comprised primarily of a $12.4 million increase in third-party contracted services, offset by a $9.1 million reduction in personnel related costs;

•$2.5 million in payment processing fees;

•$1.4 million in travel, fuel and vehicle related costs; and

•$1.4 million in facility related costs.

Selling expenses, excluding capitalized contract costs, increased $77.2 million, or 26%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020. This increase included a $1.6 million increase in stock-based compensation. Excluding stock-based compensation, selling expenses increased by $75.6 million, or 27%, primarily due to increases of:

•$52.2 million in commissions, recruiting and other costs associated primarily from the scaling of our smart energy initiative and to a lesser extent our smart insurance and other pilot initiatives;

•$11.0 million increase in marketing costs associated with branding and lead generation costs;

•$5.5 million in third-party contracted services;

•$4.6 million in personnel and related support costs;

•$3.2 million in facility and housing costs; and

•$2.9 million in information technology costs.

These were partially offset by a decrease of $5.6 million in costs associated with our retail channel and other sales pilots.

General and administrative expenses increased $0.4 million, or 0%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020. This increase was partially offset by a $29.8 million decrease in stock-based compensation. Excluding stock-based compensation, general and administrative expenses increased by $30.2 million, or 16%, primarily due to increases of:

•$18.4 million in personnel and related support costs, which includes a $7.0 million sign-on bonus paid to our new CEO in 2021;

•$11.0 million in severance related expenses primarily from the departure of certain corporate executives;

•$9.4 million in legal and finance contracted service costs;

•$3.4 million in marketing costs primarily related to costs associated with building brand awareness;

•$2.8 million in certain insurance related costs; and

•$1.5 million in research and development costs.

These were offset by decreases of:

•$15.7 million in the loss contingency accrual recorded in the year ended December 31, 2020 relating primarily to regulatory matters described in Note 15 to the accompanying consolidated financial statements; and

•$1.2 million in bad debt expenses.

Depreciation and amortization for the year ended December 31, 2021 increased $30.6 million, or 5%, as compared to the year ended December 31, 2020 primarily due to increased amortization of capitalized contract costs related to new subscribers.

Restructuring expenses for the year ended December 31, 2020 related to employee severance and termination benefits expenses (See Note 12 to the accompanying consolidated financial statements).

Other Expenses, net

The following table provides the significant components of our other expenses, net, for the years ended December 31, 2021 and 2020: 

	2021		2020		% Change
	(in thousands)
Interest expense	$	184,993	$	221,175	(16)	%
Interest income	(532)		(708)		NM
Change in fair value of warrant liabilities	(50,107)		109,250		NM
Other loss, net	14,489		10,473		NM
Total other expenses, net	$	148,843	$	340,190	(56)	%

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Interest expense decreased $36.2 million, or 16%, for the year ended December 31, 2021, as compared with the year ended December 31, 2020, primarily due to lower outstanding debt principal and interest rates associated with the July 2021 debt refinance (See Note 6 to the accompanying consolidated financial statements).

Change in fair value of warrant liabilities for the year ended December 31, 2021 and 2020 represents the change in fair value measurements of our outstanding stock warrants.

Other loss, net represented a loss of $14.5 million for the year ended December 31, 2021, as compared to a loss of $10.5 million for the year ended December 31, 2020. The other loss during the year ended December 31, 2021 was primarily due to:

•$30.2 million from losses on debt modification and extinguishment; and

•$14.7 million gain on our CFP derivative instrument, which partially offset these losses.

The other loss during the year ended December 31, 2020 was primarily due to:

•$12.7 million from losses on debt modification and extinguishment;

•$1.0 million loss on sales of assets primarily associated with the sale of the corporate jet; and

•$4.1 million gain on our CFP derivative instrument, which partially offset these losses.

See Note 6 to our accompanying consolidated financial statements for further information on our long-term debt related to other expenses, net.

Income Taxes

The following table provides the significant components of our income tax expense (benefit) for the years ended December 31, 2021 and 2020: 

	2021		2020		% Change
	(in thousands)
Income tax expense	$	2,471	$	1,083	128	%

Income tax expense was $2.5 million for the year ended December 31, 2021, as compared to $1.1 million for the year ended December 31, 2020. Our tax expense and benefit for the years ended December 31, 2021 and 2020, respectively, resulted primarily from the income in our Canadian subsidiary and U.S. state taxes where use of a net operating loss carryover is currently limited or suspended.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

Revenues

The following table provides the significant components of our revenue for the years ended December 31, 2020 and 2019: 

	2020		2019		% Change
	(in thousands)
Recurring and other revenue	$	1,252,267	$	1,151,100	9	%

Recurring and other revenue increased $101.2 million, or 9% for the year ended December 31, 2020 as compared to the year ended December 31, 2019. The increase was primarily a result of:

•$91.6 million increase resulting from the change in Total Subscribers of approximately 9.2%;

•$9.1 million adjustment to reduce recurring and other revenue during the year ended December 31, 2019 associated with a change in accounting estimate related to RIC receivables associated primarily with subscribers originated in 2017 and 2018 (see Note 5 in the accompanying consolidated financial statements); and

•$4.7 million increase for sales from certain pilot programs.

These were partially offset by decreases of:

•$2.8 million resulting from the spin-off of our wireless internet business in July 2019 (see Note 12 in the accompanying consolidated financial statements for further information on the Wireless spin-off);

•$0.7 million decrease from the change in AMRRU; and

•$0.7 million negative affect from currency translation when computed on a constant foreign currency basis.

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Costs and Expenses

The following table provides the significant components of our costs and expenses for the years ended December 31, 2020 and 2019: 

	2020		2019		% Change
	(in thousands)
Operating expenses	$	352,343	$	369,285	(5)	%
Selling expenses	302,287		191,800		58	%
General and administrative	267,923		193,480		38	%
Depreciation and amortization	570,831		543,592		5	%
Restructuring and asset impairment charges	20,941		—		NM
Total costs and expenses	$	1,514,325	$	1,298,157	17	%

Operating expenses for the year ended December 31, 2020 decreased $16.9 million, or 5%, as compared to the year ended December 31, 2019. This decrease included a $19.9 million increase in stock-based compensation primarily associated with grants of equity awards in 2020 and vesting of rollover equity awards. Excluding stock-based compensation, operating expenses decreased by $36.8 million, or 10%, primarily due to decreases of:

•$29.6 million in personnel and related support costs, due primarily to lower staffing levels and related travel as a result of COVID-19;

•$10.1 million in equipment costs from lower excess and obsolete inventory, along with lower equipment pricing and usage;

•$5.5 million in costs associated with our former wireless internet business which was spun out in July 2019; and

•$2.8 million in costs associated with our retail channel and other sales pilots.

These were partially offset by increases of:

•$6.3 million increase in third-party contracted servicing;

•$2.4 million in subcontractor monitoring costs; and

•$0.8 million in facility and housing costs.

Selling expenses, excluding capitalized contract costs, increased $110.5 million, or 58%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019. This increase included a $101.1 million increase in stock-based compensation primarily associated with grants of equity awards in 2020 and vesting of rollover equity awards. Excluding stock-based compensation, selling expenses increased by $9.4 million, or 4%, primarily due to increases of:

•$14.1 million increase in marketing costs associated with branding and lead generation costs;

•$3.6 million in information technology costs; and

•$2.2 million in personnel and related support costs.

These were partially offset by decreases of:

•$8.6 million in costs associated with our retail channel and other sales pilots; and

•$1.8 million in facility and housing costs.

General and administrative expenses increased $74.4 million, or 38%, for the year ended December 31, 2020 as compared to the year ended December 31, 2019. This increase included a $73.0 million increase in stock-based compensation primarily associated with grants of equity awards in 2020 and vesting of rollover equity awards. Excluding stock-based compensation, general and administrative expenses increased by $1.4 million, or 1%, primarily due to increases of:

•$24.4 million in the loss contingency accrual recorded in the year ended December 31, 2020 relating primarily to regulatory matters described in Note 15 to the accompanying consolidated financial statements; and

•$2.4 million in legal and finance contracted service costs.

These were offset by decreases of:

•$14.8 million in personnel and related support costs, due primarily to the organizational restructuring in March 2020 and lower benefits and travel costs related to COVID-19;

•$5.3 million in costs associated with our former wireless internet business which was spun out in July 2019;

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•$3.5 million in bad debt expenses; and

•$1.6 million in research and development costs.

Depreciation and amortization for the year ended December 31, 2020 increased $27.2 million, or 5%, as compared to the year ended December 31, 2019 primarily due to increased amortization of capitalized contract costs related to new subscribers.

Restructuring expenses for the year ended December 31, 2020 related to employee severance and termination benefits expenses (See Note 12 to the accompanying consolidated financial statements).

Other Expenses, net

The following table provides the significant components of our other expenses, net, for the years ended December 31, 2020 and 2019:

	2020		2019		% Change
	(in thousands)
Interest expense	$	221,175	$	260,014	(15)	%
Interest income	(708)		(23)		NM
Change in fair value of warrant liabilities	109,250		—		NM
Other income, net	10,473		(7,665)		NM
Total other expenses, net	$	340,190	$	252,326	35	%

Interest expense decreased $38.8 million, or 15%, for the year ended December 31, 2020, as compared with the year ended December 31, 2019, due primarily to lower outstanding debt as a result of the use of proceeds from the Business Combination to pay down debt and the refinancing transaction that occurred in February 2020 (See Note 6 to the accompanying consolidated financial statements).

Change in fair value of warrant liabilities for the year ended December 31, 2020 represents the change in fair value of our public warrants and private placement warrants.

Other loss (income), net represented a loss of $10.5 million for the year ended December 31, 2020, as compared to income of $7.7 million for the year ended December 31, 2019. The other loss during the year ended December 31, 2020 was primarily due to:

•$12.7 million from losses on debt modification and extinguishment;

•$1.0 million loss on sales of assets primarily associated with the sale of the corporate jet; and

•$4.1 million gain on our CFP derivative instrument, which partially offset these losses.

The other income during the year ended December 31, 2019 was primarily due to:

•$5.1 million gain on our derivative instrument;

•$3.4 million foreign currency exchange gain; and

•$0.8 million of losses on debt modification and extinguishment, which partially offset these gains.

See Note 6 to our accompanying consolidated financial statements for further information on our long-term debt related to other expenses, net.

Income Taxes

The following table provides the significant components of our income tax expense for the years ended December 31, 2020 and 2019:

	2020		2019		% Change
	(in thousands)
Income tax expense	$	1,083	$	1,313	NM

Income tax expense was $1.1 million for the year ended December 31, 2020, as compared to $1.3 million for the year ended December 31, 2019. Our tax expense and benefit for the years ended December 31, 2020 and 2019, respectively, resulted primarily from the income in our Canadian subsidiary, U.S. minimum state taxes where use of a net operating loss carryover is

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currently limited or suspended, and the partial release of the domestic valuation allowance in 2019 associated with certain acquisitions.

Liquidity and Capital Resources

Cash from operations may be affected by various risks and uncertainties, including, but not limited to, the continued effects of the COVID-19 pandemic and other risks detailed in the Risk Factors section of this Annual Report on Form 10-K for the year ended December 31, 2021. Despite the challenging economic environment caused by the pandemic, based on our current business plan and revenue prospects, we continue to believe that our existing cash and cash equivalents, our anticipated cash flows from operating activities and our available credit facility will be sufficient to meet our working capital and operating resource expenditure requirements for at least the next twelve months from the date of this filing.

Our primary source of liquidity has historically been cash from operations, proceeds from issuances of debt securities, borrowings under our credit facilities and, to a lesser extent, capital contributions and issuances of equity. As of December 31, 2021, we had $208.5 million of cash and cash equivalents and $356.0 million of availability under our revolving credit facility (after giving effect to $14.0 million of letters of credit outstanding and no borrowings).

As market conditions warrant, we and our equity holders, including the Sponsor, its affiliates, and members of our management, may from time to time, seek to purchase our outstanding debt securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any purchases made by us may be funded by the use of cash on our balance sheet or the incurrence of new secured or unsecured debt, including additional borrowings under our Revolving Credit Facility. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may be with respect to a substantial amount of a particular class or series of debt, with the attendant reduction in the trading liquidity of such class or series. In addition, any such purchases made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which amounts may be material, and in related adverse tax consequences to us. Depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider various financing transactions, the proceeds of which could be used to refinance our indebtedness or for other purposes.

Cash Flow and Liquidity Analysis

Our cash flows provided by operating activities include recurring monthly billings, cash received from the sale of Products to our customers that either pay-in-full at the time of installation or finance their purchase of Products under the CFP, commissions we receive related to our smart energy and smart insurance businesses and other fees received from the customers we service. Cash used in operating activities includes the cash costs to monitor and service our subscribers, a portion of subscriber acquisition costs, interest associated with our debt, general and administrative costs and smart energy and smart insurance commissions paid to our sales staff. Historically, we financed subscriber acquisition costs through our operating cash flows, the issuance of debt, and to a lesser extent, through the issuance of equity. Currently, the upfront proceeds from the CFP, and subscribers that pay-in-full at the time of the sale of Products, offset a significant portion of the upfront investment associated with subscriber acquisition costs.

Sales from our direct-to-home channel are seasonal in nature. We make investments in the recruitment of our direct-to-home sales representatives, inventory and other support costs for the April through August sales period prior to each sales season. We experience increases in capitalized contract costs, as well as costs to support the sales force throughout the U.S., prior to and during this time period. The incremental inventory purchased to support the direct-to-home sales season is generally consumed prior to the end of the calendar year in which it is purchased.

The following table provides a summary of cash flow data (in thousands): 

	Year ended December 31,
	2021		2020		2019
Net cash provided by (used in) operating activities	$	82,454	$	226,664	$	(221,592)
Net cash used in investing activities	(17,481)		(11,663)		(5,612)
Net cash (used in) provided by financing activities	(170,216)		94,112		218,914

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Cash Flows from Operating Activities

We generally reinvest the cash flows from our recurring monthly billings and cash received from the sale of Products through the Vivint Flex Pay Program associated with the initial installation of the customer's equipment, primarily to (1) maintain and grow our subscriber base, (2) expand our infrastructure to support this growth, (3) enhance our existing Smart Home Service offerings, (4) develop new Smart Home Product and Service offerings and (5) expand into new sales channels and adjacent offerings. These investments are focused on generating new subscribers, increasing the revenue from our existing subscriber base, extending our Average Subscriber Lifetime, enhancing the overall quality of service provided to our subscribers, and increasing the productivity and efficiency of our workforce and back-office functions necessary to scale our business.

For the year ended December 31, 2021, net cash provided by operating activities was $82.5 million. This cash provided was primarily from a net loss of $305.6 million, adjusted for:

•$770.8 million in non-cash amortization, depreciation, and stock-based compensation,

•a $50.1 million gain on warrant derivatives liabilities,

•a $31.3 million provision for doubtful accounts,

•a $0.3 million net loss on disposal of assets, and

•a $30.2 million loss on early extinguishment of debt.

Cash used in operating activities also resulted from changes in operating assets and liabilities, including:

•$611.5 million in additions to capitalized contract costs related to New Subscribers generated during the year,

•$30.7 million increase in additions to accounts receivable,

•$22.8 million decrease in accrued expenses and other liabilities due primarily from increases in accrued interest on our long-term debt and accrued payroll related costs,

•$8.1 million decrease in right-of-use operating lease liabilities,

•$5.1 million increase in prepaid expenses and other current assets, and

•$4.0 million increase in inventories on hand.

These uses of operating cash were partially offset by:

•$259.1 million increase in deferred revenue due to the increased subscriber base and the increase of deferred revenues associated with Product sales under Vivint Flex Pay,

•$16.3 million decrease in other assets primarily due to decreases in notes receivables associated with RICs,

•$6.9 million decrease in right-of-use operating assets.

For the year ended December 31, 2020, net cash provided by operating activities was $226.7 million. This cash provided was primarily from a net loss of $603.3 million, adjusted for:

•$773.0 million in non-cash amortization, depreciation, and stock-based compensation,

•a $109.3 million loss on warrant derivatives liabilities,

•a $23.8 million provision for doubtful accounts,

•a $2.6 million net loss on disposal of assets, and

•a $12.7 million loss on early extinguishment of debt.

Cash used in operating activities also resulted from changes in operating assets and liabilities, including:

•$584.2 million in additions to capitalized contract costs,

•$24.7 million increase in accounts receivable,

•$13.3 million decrease in right-of-use operating lease liabilities, and

•$2.3 million increase in prepaid expenses and other current assets.

These uses of operating cash were partially offset by:

•$304.4 million increase in deferred revenue due to the increased subscriber base and the increase of deferred revenues associated with Product sales under Vivint Flex Pay,

•$156.8 million increase in accrued expenses and other liabilities due primarily from increases in accrued interest on our long-term debt and accrued payroll related costs,

•$29.0 million decrease in other assets primarily due to decreases in notes receivables associated with RICs,

•$17.3 million decrease in inventories on hand, and

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•$12.4 million decrease in right-of-use operating assets.

For the year ended December 31, 2019, net cash used in operating activities was $221.6 million. This cash used was primarily from a net loss of $400.7 million, adjusted for:

•$552.5 million in non-cash amortization, depreciation, and stock-based compensation,

•a $25.0 million provision for doubtful accounts,

•a $1.1 million net gain on disposal of assets,

•a $2.3 million realized gain on equity securities, and

•a $0.8 million loss on early extinguishment of debt.

Cash used in operating activities also resulted from changes in operating assets and liabilities, including:

•a $535.1 million in additions to capitalized contract costs,

•$34.5 million increase in accounts receivable driven primarily by the increase in billed RIC receivables,

•$8.1 million decrease in right-of-use operating lease liabilities,

•a $14.0 million increase in inventories on hand, and

•a $0.8 million increase in prepaid expenses and other current assets.

These uses of operating cash were partially offset by:

•a $133.5 million increase in deferred revenue due to the increased subscriber base and the increase of deferred revenues associated with Product sales under Vivint Flex Pay,

•a $22.3 million decrease in other assets primarily due to decreases in notes receivables associated with RICs,

•a $24.9 million increase in accrued expenses and other liabilities due primarily from increases in accrued interest on our long-term debt and accrued payroll related costs,

•$7.3 million decrease in right-of-use operating assets, and

•a $5.6 million increase in accounts payable due primarily to non-direct third-party services.

Our outstanding aggregate principal debt as of December 31, 2021 was approximately $2.7 billion. Net cash interest paid for the years ended December 31, 2021, 2020 and 2019 related to our indebtedness (excluding finance leases) totaled $170.7 million, $212.6 million and $250.4 million, respectively. Our net cash from operating activities for the years ended December 31, 2021, 2020 and 2019, before these interest payments, were inflows of $253.2 million, $439.3 million and $28.8 million, respectively. Accordingly, our net cash from operating activities were sufficient for the years ended December 31, 2021 and 2020 and insufficient for the year ended December 31, 2019 to cover such interest payments. For additional information regarding our outstanding indebtedness see “—Long-Term Debt” below.

Cash Flows from Investing Activities

Historically, our investing activities have primarily consisted of capital expenditures, business combinations and technology acquisitions. Capital expenditures primarily consist of periodic additions to property, plant and equipment to support the growth in our business.

For the year ended December 31, 2021, net cash used in investing activities was $17.5 million, primarily from capital expenditures of $17.3 million.

For the year ended December 31, 2020, net cash used in investing activities was $11.7 million. This cash used primarily consisted of capital expenditures of $25.2 million and acquisition of intangible assets of $4.5 million. These cash uses were offset by $18.1 million in proceeds on the sale of assets.

For the year ended December 31, 2019, net cash used in investing activities was $5.6 million. This cash used primarily consisted of capital expenditures of $10.1 million and acquisition of intangible assets of $1.8 million. These cash uses were offset by $5.4 million in equity security sales.

Cash Flows from Financing Activities

Historically, our cash flows provided by financing activities primarily related to the issuance of equity securities and debt, primarily to fund the portion of upfront costs associated with generating new subscribers that are not covered through our operating cash flows or through our Vivint Flex Pay program. Uses of cash for financing activities are generally associated with the return of capital to our stockholders, the repayment of debt and the payment of financing costs associated with the issuance of debt.

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For the year ended December 31, 2021, net cash used in financing activities was $170.2 million. Repayments of outstanding debt consisted of $946.3 million, $677.0 million, $400.0 million and $225.0 million aggregate principal amounts of term loans, 2022 Notes, 2023 Notes and 2024 Notes, respectively. Additionally, we incurred $50.2 million in related debt financing costs, $29.4 million for taxes paid related to net share settlements of stock-based compensation awards and $3.2 million of repayments under our finance lease obligations. These cash uses were offset by proceeds from the issuance of $800.0 million aggregate principal amount of 2029 Notes, $1,350.0 million in borrowings under Term Loan Facility and $10.8 million from the exercise of warrants.

For the year ended December 31, 2020, net cash provided by financing activities was $94.1 million, consisting of proceeds from the issuance of $600.0 million aggregate principal amount of 2027 Notes and $950.0 million in borrowings under Term Loans, $463.5 million capital contribution associated with the Merger, $359.2 million in borrowings on the revolving credit facility and $120.8 million from the exercise of warrants. This was offset with $1,754.3 million of repayments on existing notes, $604.2 million of repayments on the revolving credit facility, $24.1 million in financing costs, $9.2 million for taxes paid related to net share settlements of stock-based compensation awards, and $7.7 million of repayments under our finance lease obligations.

For the year ended December 31, 2019, net cash provided by financing activities was $218.9 million, consisting primarily of $225.0 million in borrowings on notes, $342.5 million in borrowings on the revolving credit facility and $4.7 million from a capital contribution. This was offset with $233.1 million of repayments on notes, $97.5 million of repayments on the revolving credit facility, $4.9 million in financing costs, $9.8 million of repayments under our finance lease obligations, $5.4 million in returns of capital associated with the spin-off of Wireless and $2.6 million in cost associated with offering securities.

Long-Term Debt

We are a highly leveraged company with significant debt service requirements. As of December 31, 2021, we had $2,746.6 million of aggregate principal total debt outstanding, consisting of $800.0 million of outstanding 2029 notes, $600.0 million of outstanding 2027 notes and $1,346.6 million of outstanding Term Loan with $356.0 million of availability under our revolving credit facility (after giving effect to $14.0 million of outstanding letters of credit and no borrowings).

Debt Refinance 2021

On July 9, 2021, APX Group, Inc. (the “Issuer” or “APX”), our indirect, wholly owned subsidiary, issued $800.0 million aggregate principal amount of 5.75% Senior Notes due 2029 (the “2029 Notes”), pursuant to an indenture, dated as of July 9, 2021, among the Issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent.

Concurrently with the Notes offering, the Issuer refinanced its existing credit facilities with (i) a new $1,350.0 million first lien senior secured term loan facility (the “Term Loan Facility”) and (ii) a new $370.0 million senior secured revolving credit facility (together with the Term Loan Facility, the “New Senior Secured Credit Facilities”), with the lenders party thereto and Bank of America, N.A. as a lender, administrative agent and collateral agent. The Issuer is the borrower under the New Senior Secured Credit Facilities.

The net proceeds from the 2029 Notes offering, together with the borrowings under the New Senior Secured Credit Facilities and cash on hand, were used to (i) redeem (the “2022 Notes Redemption”) all of the Issuer’s outstanding 7.875% Senior Secured Notes due 2022, (ii) redeem (the “2023 Notes Redemption”) all of the Issuer’s outstanding 7.625% Senior Notes due 2023, (iii) redeem (the “2024 Notes Redemption” and together with the 2022 Notes Redemption and the 2023 Notes Redemption, the “Redemptions”) all of the Issuer’s outstanding 8.50% Senior Secured Notes due 2024, (iv) repay amounts outstanding, and to terminate all commitments, under its existing revolving credit facility and term loan facility and (v) pay the related redemption premiums and all fees and expenses related thereto.

2027 Notes

As of December 31, 2021, APX had $600.0 million outstanding aggregate principal amount of its 2027 notes. As of December 31, 2021, our maximum commitment for interest payments was $161.4 million for the remaining duration of the 2027 notes. Interest on the 2027 notes is payable semiannually in arrears on February 15 and August 15 each year.

We may, at our option, redeem at any time and from time to time prior to February 15, 2023, some or all of the 2027 notes at 100% of the principal amount thereof plus accrued and unpaid interest to the redemption date plus the applicable “make-whole premium.” From and after February 15, 2023, we may, at our option, redeem at any time and from time to time some or all of the 2027 notes at 103.375%, declining to par from and after May 1, 2025, in each case, plus any accrued and unpaid interest to the date of redemption. In addition, on or prior to February 15, 2023, we may, at our option, redeem up to

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40% of the aggregate principal amount of the 2027 notes with the proceeds from certain equity offerings at 100% plus an applicable premium, plus accrued and unpaid interest to the date of redemption. In addition, on or prior to February 15, 2023, during any 12 month period, we also may, at our option, redeem at any time and from time to time up to 10% of the aggregate principal amount of the 2027 notes at a price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, to but excluding the redemption date.

The 2027 notes will mature on February 15, 2027. The 2027 notes are secured, on a pari passu basis, by the collateral securing obligations under the existing senior secured notes, the Revolving Credit Facility and the Term Loan Facility, in each case, subject to certain exceptions and permitted liens.

2029 Notes

As of December 31, 2021, APX had $800.0 million outstanding aggregate principal amount of its 2029 notes. As of December 31, 2021, our maximum commitment for interest payments was $368.9 million for the remaining duration of the 2029 notes. Interest on the 2029 notes is payable semiannually in arrears on January 15 and July 15 each year.

We may, at our option, redeem at any time and from time to time prior to July 15, 2024, some or all of the 2029 notes at 100% of the principal amount thereof plus accrued and unpaid interest to the redemption date plus the applicable “make-whole premium.” From and after July 15, 2024, we may, at our option, redeem at any time and from time to time some or all of the 2029 notes at 102.875%, declining to par from and after July 15, 2026, in each case, plus any accrued and unpaid interest to the date of redemption. In addition, on or prior to July 15, 2024, we may, at our option, redeem up to 40% of the aggregate principal amount of the 2029 notes with the proceeds from certain equity offerings at 100% plus an applicable premium, plus accrued and unpaid interest to the date of redemption. In addition, on or prior to July 15, 2024, we may redeem the 2029 notes, in whole or in part, at a redemption price equal to the sum of (A) 100.0% of the principal amount of the 2029 notes redeemed, plus (B) the applicable premium as of the redemption date, plus (C) accrued and unpaid interest, if any.

The 2029 notes will mature on July 15, 2029.

Senior Secured Credit Facilities

In July 2021, APX amended and restated its existing senior secured term loan credit agreement and existing senior secured revolving credit facility with a new senior secured credit agreement (the “Credit Agreement”) that provides for (i) a term loan facility in an aggregate principal amount of $1,350.0 million (the “Term Loan Facility”, and the loans thereunder, the “Term Loans”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $370.0 million (the “Revolving Credit Facility”, and the loans thereunder, the “Revolving Loans”).

As of December 31, 2021, APX had outstanding term loans under the Term Loan Facility in an aggregate principal amount of $1,346.6 million. As of December 31, 2021, our maximum commitment for interest payments was $496.9 million for the remaining duration of the term loans under the Term Loan Facility. APX is required to make quarterly amortization payments under the Term Loan Facility in an amount equal to 0.25% of the aggregate principal amount of the Term Loans outstanding on the closing date thereof. The remaining outstanding principal amount of the Term Loans will be due and payable in full on July 9, 2028. APX may prepay the Term Loans on the terms specified in the Credit Agreement. No amortization payments are required under the Revolving Credit Facility.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, APX is required to pay a quarterly commitment fee of 50 basis points (which will be subject to two interest rate step-downs of 12.5 basis points, based on APX meeting consolidated first lien net leverage ratio tests) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. APX also pays customary letter of credit and agency fees. The revolving credit commitments outstanding under the Revolving Credit Facility will be due and payable in full on July 9, 2026.

Borrowings under the amended and restated Term Loan Facility and Revolving Credit Facility bear interest, at APX’s option, at a rate per annum equal to either (a)(i) a base rate determined by reference to the highest of (1) the “Prime Rate” in the United States as published in The Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) the LIBO rate for a one month interest period plus 1.00%, plus (ii) 2.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 2.50% and 2.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter) or (b)(i) a LIBO rate determined by reference to the applicable page for the LIBO rate for the interest period relevant to such borrowing plus (ii) 3.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 3.50% and 3.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter), subject in each case to an agreed interest rate floor.

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There were no outstanding borrowings under the Revolving Credit Facility as of December 31, 2021 and December 31, 2020. As of December 31, 2021, we had $356.0 million of availability under our revolving credit facility (after giving effect to $14.0 million of letters of credit outstanding and no borrowings).

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Guarantees and Security (Credit Agreement and Notes)

All of the obligations under the Credit Agreement and the debt agreements governing the Notes are guaranteed by APX Group Holdings, Inc., each of APX Group's existing and future material wholly owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications) and solely in the case of the Notes, Vivint Smart Home, Inc. However, such subsidiaries shall only be required to guarantee the obligations under the debt agreements governing the Notes for so long as such entities guarantee the obligations under the Revolving Credit Facility, the Term Loan Facility or the Company's other indebtedness.

The obligations under the Revolving Credit Facility, the Term Loans and the 2027 notes are secured by a security interest in (1) substantially all of the present and future tangible and intangible assets of APX Group, Inc., and the subsidiary guarantors, including without limitation equipment, subscriber contracts and communication paths, intellectual property, material fee-owned real property, general intangibles, investment property, material intercompany notes and proceeds of the foregoing, subject to permitted liens and other customary exceptions, (2) substantially all personal property of APX Group, Inc. and the subsidiary guarantors consisting of accounts receivable arising from the sale of inventory and other goods and services (including related contracts and contract rights, inventory, cash, deposit accounts, other bank accounts and securities accounts), inventory and intangible assets to the extent attached to the foregoing books and records of APX Group, Inc. and the subsidiary guarantors, and the proceeds thereof, subject to permitted liens and other customary exceptions, in each case held by APX Group, Inc. and the subsidiary guarantors and (3) a pledge of all of the capital stock of APX Group, Inc., each of its subsidiary guarantors and each restricted subsidiary of APX Group, Inc. and its subsidiary guarantors, in each case other than excluded assets and subject to the limitations and exclusions provided in the applicable collateral documents.

Guarantor Summarized Financial Information

Vivint Smart Home, Inc. is the parent guarantor of APX Group’s obligations under the indentures governing the Notes. We are providing the following information with respect to the Revolving Credit Facility, the Term Loan Facility and the Notes. The financial information of Vivint Smart Home, Inc., APX Group Holdings, Inc., APX Group, Inc. and each guarantor subsidiary (collectively the “Guarantors”) is presented on a combined basis with intercompany balances and transactions between the Guarantors eliminated. The Guarantors' amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.

	Year ended December 31, 2021
	(in thousands)
Recurring and other revenues	$	1,418,698
Intercompany revenues	20,454
Total revenues	1,439,152
Total costs and expenses	1,593,414
Loss from operations	(154,262)
Other expenses	149,154
Income tax expense	2,096
Net loss	$	(305,512)

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	December 31, 2021
	(in thousands)
Current assets	$	330,680
Amounts due from Non-Guarantor Subsidiaries	283,319
Non-current assets:
Capitalized contract costs	1,375,031
Goodwill	810,130
Intangible assets, net	48,041
Other non-current assets	137,387
Total non-current assets	2,370,589
Current liabilities	858,616
Amounts due to Non-Guarantor Subsidiaries	253,208
Non-current liabilities	$	3,642,698

Debt Covenants

The Credit Agreement and the debt agreements governing the Notes contain a number of covenants that, among other things, restrict, subject to certain exceptions, APX Group, Inc. and its restricted subsidiaries’ ability to:

•incur or guarantee additional debt or issue disqualified stock or preferred stock;

•pay dividends and make other distributions on, or redeem or repurchase, capital stock;

•make certain investments;

•incur certain liens;

•enter into transactions with affiliates;

•merge or consolidate;

•materially change the nature of their business;

•enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to APX Group, Inc.;

•designate restricted subsidiaries as unrestricted subsidiaries;

•amend, prepay, redeem or purchase certain subordinated debt; and

•transfer or sell certain assets.

The Credit Agreement and the debt agreements governing the Notes contain change of control provisions and certain customary affirmative covenants and events of default. As of December 31, 2021, APX Group, Inc. was in compliance with all covenants related to its long-term obligations.

Subject to certain exceptions, the Credit Agreement and the debt agreements governing the Notes permit APX Group, Inc. and its restricted subsidiaries to incur additional indebtedness, including secured indebtedness.

Our future liquidity requirements will be significant, primarily due to debt service requirements. The actual amounts of borrowings under the Revolving Credit Facility will fluctuate from time to time.

Our liquidity and our ability to fund our capital requirements is dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control and many of which are described under “Part I. Item 1A—Risk Factors”. If those factors significantly change or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from operations or we may not be able to obtain future financings to meet our liquidity needs. We anticipate that to the extent additional liquidity is necessary to fund our operations, it would be funded through borrowings under the Revolving Credit Facility, incurring other indebtedness,

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additional equity or other financings or a combination of these potential sources of liquidity. We may not be able to obtain this additional liquidity on terms acceptable to us or at all.

Covenant Compliance

Under the Credit Agreement and the debt agreements governing the Notes, our subsidiary, APX Group's ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Covenant Adjusted EBITDA (which measure is defined as “Consolidated EBITDA” in the Credit Agreement and “EBITDA” in the debt agreements governing the existing notes) for the applicable four-quarter period. Such tests include an incurrence-based maximum consolidated secured debt ratio and first lien secured debt ratio of 4.25 to 1.0, a consolidated total debt ratio of 5.50 to 1.0, an incurrence-based minimum fixed charge coverage ratio of 2.00 to 1.0, and, solely in the case of the Revolving Credit Facility, a quarterly maintenance-based maximum consolidated first lien secured debt ratio of 4.99 to 1.0 (subject to certain conditions set forth in the Credit Agreement being satisfied), each as determined in accordance with the Credit Agreement and the debt agreements governing the Notes, as applicable. Non-compliance with these covenants could restrict our ability to undertake certain activities or result in a default under the Credit Agreement and the debt agreements governing the Notes.

“Covenant Adjusted EBITDA” is defined as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization (including amortization of capitalized subscriber acquisition costs), further adjusted to exclude the effects of certain contract sales to third parties, non-capitalized subscriber acquisition costs, stock based compensation, changes in the fair value of the derivative liability associated with our public and private warrants and certain unusual, non-cash, non-recurring and other items permitted in certain covenant calculations under the agreements governing our Notes and the Credit Agreement.

We believe that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants contained in the agreements governing the Notes and the Credit Agreement governing the Revolving Credit Facility and the Term Loan Facility. We caution investors that amounts presented in accordance with our definition of Covenant Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Covenant Adjusted EBITDA in the same manner.

Covenant Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

The following table sets forth a reconciliation of net loss to Covenant Adjusted EBITDA (in thousands):

	Year ended December 31,
	2021		2020		2019
Net loss	$	(305,552)	$	(603,331)	$	(400,696)
Interest expense, net	184,461		220,467		259,991
Non-capitalized subscriber acquisition costs (1)	343,138		268,541		273,835
Amortization of capitalized subscriber acquisition costs	524,980		481,213		437,437
Depreciation and amortization (2)	76,472		89,618		106,155
Other expense (income)	14,489		10,473		(7,665)
Non-cash compensation (3)	166,428		198,213		3,737
Restructuring and asset impairment charge (4)	—		20,941		—
Income tax expense	2,471		1,083		1,313
Change in fair value of warrant derivative liabilities (5)	(50,107)		109,250		—
Other adjustments (6)	93,958		95,293		58,029
Covenant Adjusted EBITDA	$	1,050,738	$	891,761	$	732,136

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(1)Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to our organic generation of new subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP.

(2)Excludes loan amortization costs that are included in interest expense.

(3)Reflects non-cash compensation costs related to employee and director stock and stock option plans. Excludes non-cash compensation costs included in non-capitalized subscriber acquisition costs.

(4)Restructuring employee severance and termination benefits expenses. (See Note 12 to the accompanying consolidated financial statements).

(5)Reflects the change in fair value of our derivative liability associated with our public warrants and private placement warrants.

(6)Other adjustments represent primarily the following items (in thousands):

	Year ended December 31,
	2021		2020		2019
Product development (a)	$	16,550	$	15,222	$	18,772
Consumer financing fees (b)	43,573		27,591		16,547
Hiring and termination payments (c)	19,223		3,482		7,870
Certain legal and professional fees (d)	8,083		5,492		7,869
Monitoring fee (e)	5,747		8,077		5,605
Loss contingency (f)	—		23,200		—
Projected run-rate restructuring cost savings (g)	—		11,609		—
All other adjustments (h)	782		620		1,366
Total other adjustments	$	93,958	$	95,293	$	58,029

(a)Costs related to the development of control panels, including associated software and peripheral devices.

(b)Reflects the reduction to revenue related to the amortization of certain financing fees incurred under the Vivint Flex Pay program.

(c)Expenses associated with retention bonus, relocation and severance payments to management.

(d)Legal and professional fees associated with strategic initiatives and financing transactions.

(e)Blackstone Management Partners L.L.C. monitoring fee (See Note 17 to the accompanying consolidated financial statements).

(f)Reflects an increase to the loss contingency accrual relating to the regulatory matters (See Note 15 to the accompanying consolidated financial statements).

(g)Projected run-rate savings related to March 2020 reduction-in-force.

(h)Other adjustments primarily reflect costs associated with various strategic, legal and financing activities.

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Other Factors Affecting Liquidity and Capital Resources

Vivint Flex Pay. Vivint Flex Pay became our primary equipment financing model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for Products through the CFP. Under the CFP, qualified customers are eligible for Loans originated by Financing Providers of between $150 and $4,000. The terms of most loans are determined based on the customer’s credit quality. The annual percentage rates on these Loans is either 0% or 9.99%, depending on the customer’s credit quality, and are either installment or revolving loans with repayment terms ranging from 6- to 60-months. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Consumer Financing Program” for further details.

For certain Financing Provider Loans, we pay a monthly fee based on either the average daily outstanding balance of the loans or the number of outstanding Loans, depending on the third-party financing provider. For certain Loans, we incur fees at the time of the Loan origination and receive proceeds that are net of these fees. Additionally, we share in the liability for credit losses depending on the credit quality of the customer, with our Company being responsible for between 2.6% to 100% of lost principal balances, depending on factors specified in the agreement with such provider. Because of the nature of these provisions, we record a derivative liability at its fair value when the Financing Provider originates Loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability represents the estimated remaining amounts to be paid to the Financing Provider by us related to outstanding Loans, including the monthly fees based on either the outstanding Loan balances or the number of outstanding Loans, shared liabilities for credit losses and customer payment processing fees. The derivative liability is reduced as payments are made by us to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Consolidated Statement of Operations. As of December 31, 2021 and 2020, the fair value of this derivative liability was $216.8 million and $227.9 million, respectively.

For other Financing Provider Loans, we receive net proceeds (net of fees and expected losses) for which we have no further obligation to the third-party. We record these net proceeds to deferred revenue. We expect the number of Loans with this fee structure to increase in the future.

Vehicle Leases. Since 2010, we have leased, and expect to continue leasing, vehicles primarily for use by our Smart Home Pros. For the most part, these leases have 36 to 48-month durations and we account for them as finance leases. At the end of the lease term for each vehicle we have the option to either (i) purchase it for the estimated end-of-lease fair market value established at the beginning of the lease term; or (ii) return the vehicle to the lessor to be sold by them and in the event the sale price is less than the estimated end-of-lease fair market value we are responsible for such deficiency. As of December 31, 2021, our total finance lease obligations were $4.3 million.

Operating Leases. We have operating lease commitments for corporate offices, warehouse facilities, research and development and other operating facilities and other operating assets. As of December 31, 2021 we had $63.7 million of total future operating lease payments.

Purchase Obligations. Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of December 31, 2021 the value of our material non-cancellable purchase obligations was $26.3 million.

Royalties. We have certain royalty commitments associated with the licensing of certain product offerings. These royalty expenses are generally based on a dollar amount per unit. These royalty expenses, which were recorded in our operating expenses in on our Consolidated Statements of Income, was approximately $22.7 million, $21.3 million and $20.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations include activities in the United States and Canada. These operations expose us to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. We monitor and manage these financial exposures as an integral part of our overall risk management program.

Interest Rate Risk

Our revolving credit facility and our term loan facility bear interest at a floating rate. As a result, we may be exposed to fluctuations in interest rates to the extent of our borrowings under these credit facilities. To help manage borrowing costs, we may from time to time enter into interest rate swap transactions with financial institutions acting as principal counterparties. We consider changes in the 30-day LIBOR rate to be most indicative of our interest rate exposure as it is a function of the base rate for our credit facilities and is reasonably correlated to changes in our earnings rate on our cash investments. Assuming the borrowing of all amounts available under our revolving credit facility, if the 30-day LIBOR rate increases by 1% due to normal

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market conditions, our interest expense will increase by approximately $17.2 million per annum. We had no borrowings under the revolving credit facility as of December 31, 2021.

Foreign Currency Risk

We have exposure to the effects of foreign currency exchange rate fluctuations on the results of our Canadian operations. Our Canadian operations use the Canadian dollar to conduct business but our results are reported in U.S. dollars. We are exposed periodically to the foreign currency rate fluctuations that affect transactions not denominated in the functional currency of our U.S. and Canadian operations. Based on our results of our Canadian operations for the year ended December 31, 2021, if Canadian currency exchange rates had decreased 10% throughout the year, our revenues would have decreased by approximately $6.1 million, our total assets would have decreased by $33.8 million and our total liabilities would have decreased by $30.8 million. We do not currently use derivative financial instruments to hedge investments in foreign subsidiaries. For the year ended December 31, 2021, before intercompany eliminations, approximately $60.7 million of our revenues, $337.7 million of our total assets and $307.8 million of our total liabilities were denominated in Canadian Dollars.

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ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Financial Statements Vivint Smart Home, Inc. and Subsidiaries:
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)	79
Consolidated Balance Sheets as of December 31, 2021 and 2020	81
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019	83
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019	84
Consolidated Statements of Changes in Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019	85
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019	86
Notes to Consolidated Financial Statements	88

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Vivint Smart Home, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Vivint Smart Home, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, changes in equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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	Derivative Valuation
Description of the Matter	The Company’s derivative liability as of December 31, 2021 was $216.8 million. As disclosed in Note 3 and Note 11 of the consolidated financial statements, certain customers pay for products by obtaining financing from a third-party financing provider under the Company’s Consumer Financing Program. Under this program, the Company pays certain fees to the financing providers and shares in credit losses depending on the credit quality of the customer. The Company initially records a derivative liability at fair value related to these obligations as a reduction of deferred revenue, with subsequent changes in fair value recorded to other loss (income). Auditing the fair value of the derivative liability involved significant judgment because the discounted cash flow model that is used to estimate the fair value incorporates assumptions such as discount rates, collateral default rates and loss severity rates that are unobservable. Auditing these assumptions is complex because of the inherent uncertainty in these assumptions management used in its calculations.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risk of material misstatement related to management’s determination of the fair value of the derivative liability. This included testing controls over management’s review of the model and the significant assumptions noted above. Our testing of the Company’s estimate of the fair value of the derivative liability included, among other procedures, evaluating the significant assumptions noted above. For example, we compared the discount rates used in the Company’s model against rates independently developed by our fair value specialists. We also evaluated collateral default and loss severity rates. We tested the completeness and accuracy of the underlying data used in developing these estimates as well as the mathematical accuracy of the Company’s calculations. We also developed our own independent estimate of the fair value of the derivative liability and compared it to management's estimate. We also evaluated the related disclosures included in Note 3 and Note 11 to the consolidated financial statements.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2011.

Salt Lake City, Utah

March 1, 2022

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Vivint Smart Home, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Vivint Smart Home, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vivint Smart Home, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, changes in equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Salt Lake City, Utah

March 1, 2022

Vivint Smart Home, Inc. and Subsidiaries

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Consolidated Balance Sheets

(In thousands, except share and par value per share amounts)

	December 31,
	2021		2020
ASSETS
Current Assets:
Cash and cash equivalents	$	208,509	$	313,799
Accounts and notes receivable, net of allowance of $13,271 and $9,911	63,671		64,697
Inventories	51,251		47,299
Prepaid expenses and other current assets	19,385		14,338
Total current assets	342,816		440,133
Property, plant and equipment, net	55,448		52,379
Capitalized contract costs, net	1,405,442		1,318,498
Deferred financing costs, net	2,088		1,667
Intangible assets, net	51,928		111,474
Goodwill	837,153		837,077
Operating lease right-of-use assets	46,000		52,880
Long-term notes receivables and other non-current assets, net	44,753		58,317
Total assets	$	2,785,628	$	2,872,425
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities:
Accounts payable	$	96,317	$	85,656
Accrued payroll and commissions	83,347		87,943
Accrued expenses and other current liabilities	236,250		247,324
Deferred revenue	429,900		327,632
Current portion of notes payable, net	13,500		9,500
Current portion of operating lease liabilities	12,033		12,135
Current portion of finance lease liabilities	2,854		3,356
Total current liabilities	874,201		773,546
Notes payable, net	2,347,765		2,372,235
Notes payable, net - related party	351,080		443,865
Finance lease liabilities, net of current portion	1,416		2,460
Deferred revenue, net of current portion	778,214		621,182
Operating lease liabilities, net of current portion	41,713		49,692
Other long-term obligations	106,135		121,235
Warrant derivative liabilities	24,564		75,531
Deferred income tax liabilities	640		2,168
Total liabilities	4,525,728		4,461,914
Commitments and contingencies (See Note 15)
Stockholders’ deficit:
Preferred stock, $0.0001 par value, 300,000,000 shares authorized; none issued and outstanding as of December 31, 2021 and 2020, respectively	—		—
Class A Common stock, $0.0001 par value, 3,000,000,000 shares authorized; 208,734,193 and 202,216,341 shares issued and outstanding as of December 31, 2021 and 2020, respectively	21		20
Additional paid-in capital	1,703,815		1,548,786
Accumulated deficit	(3,417,038)		(3,111,486)
Accumulated other comprehensive loss	(26,898)		(26,809)
Total stockholders’ deficit	(1,740,100)		(1,589,489)
Total liabilities and stockholders’ deficit	$	2,785,628	$	2,872,425

See accompanying notes to consolidated financial statements

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Vivint Smart Home, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

	Year ended December 31,
	2021		2020		2019
Revenues:
Recurring and other revenue	$	1,479,388	$	1,252,267	$	1,151,100
Costs and expenses:
Operating expenses (exclusive of depreciation and amortization shown separately below)	384,365		352,343		369,285
Selling expenses (exclusive of amortization of deferred commissions of $212,967, $197,697 and $181,265, respectively, which are included in depreciation and amortization shown separately below)	379,497		302,287		191,800
General and administrative expenses	268,312		267,923		193,480
Depreciation and amortization	601,452		570,831		543,592
Restructuring and asset impairment charges	—		20,941		—
Total costs and expenses	1,633,626		1,514,325		1,298,157
Loss from operations	(154,238)		(262,058)		(147,057)
Other expenses (income):
Interest expense	184,993		221,175		260,014
Interest income	(532)		(708)		(23)
Change in fair value of warrant liabilities	(50,107)		109,250		—
Other loss (income), net	14,489		10,473		(7,665)
Loss before income taxes	(303,081)		(602,248)		(399,383)
Income tax expense	2,471		1,083		1,313
Net loss	$	(305,552)	$	(603,331)	$	(400,696)
Net loss per share attributable to common stockholders:
Basic	$	(1.47)	$	(3.37)	$	(4.23)
Diluted	$	(1.71)	$	(3.37)	$	(4.23)
Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic	208,265,631		179,071,278		94,805,201
Diluted	209,078,167		179,071,278		94,805,201

See accompanying notes to consolidated financial statements

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Vivint Smart Home, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(In thousands)

	Year ended December 31,
	2021		2020		2019
Net loss	$	(305,552)	$	(603,331)	$	(400,696)
Other comprehensive (loss) income, net of tax effects:
Foreign currency translation adjustment	(89)		657		1,371
Total other comprehensive (loss) income	(89)		657		1,371
Comprehensive loss	$	(305,641)	$	(602,674)	$	(399,325)

See accompanying notes to consolidated financial statements

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Consolidated Statements of Changes in Equity (Deficit)

(In thousands, except shares)

	Common Stock			Additional paid-in capital		Accumulated deficit	Accumulated other comprehensive loss		Total
	Shares	Amount
Balance, December 31, 2018	94,696,362	9		735,968		(2,107,542)	(28,837)		(1,400,402)
Net Loss	—	—		—		(400,696)	—		(400,696)
Foreign currency translation adjustment	—	—		—		—	1,371		1,371
Stock-based compensation	—	—		4,241		—	—		4,241
Issuance of common stock upon exercise or vesting of equity awards	41,818	—		—		—	—		—
Return of capital	—	—		(4,788)		—	—		(4,788)
ASU 2016-02 adoption	—	—		—		83	—		83
Capital contribution	199,417	—		4,700		—	—		4,700
Balance, December 31, 2019	94,937,597	9		740,121		(2,508,155)	(27,466)		(1,795,491)
Recapitalization transaction	59,793,021	6		422,113		—	—		422,119
Issuance of earnout shares	36,084,141	5		(5)		—	—		—
Tax withholdings related to net share settlement of equity awards	(468,773)	—		(9,313)		—	—		(9,313)
Forfeited shares	(188,972)	—		—		—	—		—
Warrants exercised	10,621,654	—		186,551		—	—		186,551
Issuance of common stock upon exercise or vesting of equity awards	1,437,673	—		—		—	—		—
Net Loss	—	—		—		(603,331)	—		(603,331)
Foreign currency translation adjustment	—	—		—		—	657		657
Stock-based compensation	—	—		198,213		—	—		198,213
Restructuring expenses	—	—		11,106		—	—		11,106
Balance, December 31, 2020	202,216,341	$	20	$	1,548,786	(3,111,486)	$	(26,809)	$	(1,589,489)
Issuance of earnout shares	1,239,818	—		—		—	—		—
Tax withholdings related to net share settlement of equity awards	(1,691,254)	—		(29,398)		—	—		(29,398)
Forfeited shares	(17,198)	—				—	—		—
Warrants exercised	825,016	—		19,743		—	—		19,743
Issuance of common stock upon exercise or vesting of equity awards	6,161,470	1		—		—	—		1
Net Loss	—	—		—		(305,552)	—		(305,552)
Foreign currency translation adjustment	—	—		—		—	(89)		(89)
Stock-based compensation	—	—		164,684		—	—		164,684
Balance, December 31, 2021	208,734,193	21		1,703,815		(3,417,038)	(26,898)		(1,740,100)

See accompanying notes to consolidated financial statements

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Consolidated Statements of Cash Flows

(In thousands)

	Year ended December 31,
	2021		2020		2019
Cash flows from operating activities:
Net loss from operations	$	(305,552)	$	(603,331)	$	(400,696)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities of operations:
Amortization of capitalized contract costs	524,981		481,213		437,437
Amortization of customer relationships	58,134		65,908		74,538
Gain on fair value changes of equity securities	(659)		—		(2,254)
Expensed offering costs	—		—		168
Depreciation and amortization of property, plant and equipment and other intangible assets	18,337		23,710		31,617
Amortization of deferred financing costs and bond premiums and discounts	4,629		3,956		4,703
Loss (gain) on warrant derivative liability	(50,107)		109,250		—
Warrant issuance costs	—		723		—
Loss on sale or disposal of assets	339		2,579		1,121
Loss on early extinguishment of debt	30,210		12,710		806
Stock-based compensation	164,684		198,213		4,241
Provision for doubtful accounts	31,341		23,778		25,043
Deferred income taxes	(3,598)		(1,813)		606
Restructuring and asset impairment charges	—		11,106		—
Changes in operating assets and liabilities:
Accounts and notes receivable, net	(30,724)		(24,684)		(34,486)
Inventories	(3,950)		17,299		(13,951)
Prepaid expenses and other current assets	(5,102)		(2,336)		(816)
Capitalized contract costs, net	(611,547)		(584,151)		(535,063)
Long-term notes receivables and other non-current assets, net	16,335		28,964		22,273
Right-of-use assets	6,881		12,440		7,255
Accounts payable	9,627		3,256		5,611
Accrued payroll and commissions, accrued expenses, and other current and long-term liabilities	(22,837)		156,784		24,899
Current and long-term operating lease liabilities	(8,081)		(13,291)		(8,149)
Deferred revenue	259,113		304,381		133,505
Net cash provided by (used in) operating activities	82,454		226,664		(221,592)
Cash flows from investing activities:
Capital expenditures	(17,275)		(25,245)		(10,119)
Proceeds from the sale of capital assets	141		18,063		878
Acquisition of intangible assets	(347)		(4,481)		(1,801)
Proceeds from sales of equity securities	—		—		5,430
Net cash used in investing activities	(17,481)		(11,663)		(5,612)

 See accompanying notes to consolidated financial statements

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Vivint Smart Home, Inc. and Subsidiaries

Consolidated Statements of Cash Flows Continued

(In thousands)

	Year ended December 31,
	2021		2020		2019
Cash flows from financing activities:
Proceeds from notes payable	1,758,000		1,241,000		225,000
Proceeds from notes payable - related party	392,000		309,000		—
Repayments of notes payable	(1,896,950)		(1,579,499)		(233,100)
Repayments of notes payable - related party	(351,300)		(174,800)		—
Borrowings from revolving line of credit	—		359,200		342,500
Repayments on revolving line of credit	—		(604,200)		(97,500)
Taxes paid related to net share settlements of stock-based compensation awards	(29,398)		(9,171)		—
Repayments of finance lease obligations	(3,158)		(7,657)		(9,781)
Proceeds from Mosaic recapitalization	—		463,522		—
Proceeds from warrant exercises	10,819		120,802		—
Financing costs	(26,351)		(11,191)		—
Deferred financing costs	(23,878)		(12,894)		(4,896)
Payment of offering costs	—		—		(2,574)
Return of capital	—		—		(5,435)
Proceeds from capital contributions	—		—		4,700
Net cash (used in) provided by financing activities	(170,216)		94,112		218,914
Effect of exchange rate changes on cash and cash equivalents	(47)		137		66
Net (decrease) increase in cash and cash equivalents	(105,290)		309,250		(8,224)
Cash and cash equivalents:
Beginning of period	313,799		4,549		12,773
End of period	$	208,509	$	313,799	$	4,549
Supplemental cash flow disclosures:
Income tax paid	$	7,050	$	537	$	661
Interest paid	$	173,160	$	215,223	$	252,911
Supplemental non-cash investing and financing activities:
Finance lease additions	$	1,823	$	855	$	10,197
Intangible asset acquisitions included within accounts payable, accrued expenses and other current liabilities and other long-term obligations	$	157	$	167	$	1,536
Capital expenditures included within accounts payable, accrued expenses and other current liabilities	$	3,426	$	2,458	$	2,074
Deferred offering costs included within accounts payable	$	—	$	—	$	4,206

See accompanying notes to consolidated financial statements

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Vivint Smart Home, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Description of Business

Vivint Smart Home, Inc., and its wholly owned subsidiaries, (collectively the “Company”), is one of the largest smart home companies in North America. The Company is engaged in the sale, installation, servicing and monitoring of smart home and security systems, primarily in the United States and Canada.

2. Revisions of Previously-Issued Financial Statements

During the financial close for the quarter ended September 30, 2021, the Company determined that certain revenue transactions associated with monthly service charge adjustments and contract modifications were not being recognized over the proper period. Consequently, during 2021 and in previous annual and quarterly periods, certain immaterial errors existed in previously reported amounts of revenue.

The Company assessed the materiality of the misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to all prior consolidated financial statements taken as a whole and, therefore, amending previously filed reports to correct the errors was not required. However, the Company concluded that the cumulative effect of correcting the errors in the quarter ended September 30, 2021 would materially misstate the Company’s consolidated financial statements for the three and nine months ended September 30, 2021. Accordingly, the Company has reflected the corrections in the results for prior periods included in this Annual Report on Form 10-K. In addition, the amounts labeled “Adjustment” include certain other previously identified adjustments that were not previously deemed material to the periods presented. The Company will also revise such information in future filings to reflect the correction of the errors.

The following tables present the revised results for each previously reported period, the adjustments made to each period and the previously reported amounts to summarize the effect of the corrections on the previously reported Balance Sheets and Statements of Operations for the periods presented (in thousands, except per-share amounts). These errors did not impact total cash flows from operating, investing or financing activities as presented in the Statement of Cash Flows for any period.

Consolidated Balance Sheets	As of December 31, 2020
	As Previously Reported	Adjustment	As Revised
Long-term notes receivables and other assets, net	62,510	(4,193)	58,317
Total assets	2,876,618	(4,193)	2,872,425
Deferred revenue	321,143	6,489	327,632
Total current liabilities	767,057	6,489	773,546
Deferred revenue, net of current portion	615,598	5,584	621,182
Total liabilities	4,449,841	12,073	4,461,914
Accumulated deficit	(3,095,220)	(16,266)	(3,111,486)
Total stockholders’ deficit	(1,573,223)	(16,266)	(1,589,489)
Total liabilities and stockholders’ deficit	2,876,618	(4,193)	2,872,425

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Consolidated Statements of Operations	Year Ended December 31, 2020
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,260,566	$	(8,299)	$	1,252,267
General and administrative expenses	266,335		1,588		267,923
Total costs and expenses	1,512,737		1,588		1,514,325
Loss from operations	(252,171)		(9,887)		(262,058)
Loss before income taxes	(592,361)		(9,887)		(602,248)
Income tax expense	2,837		(1,754)		1,083
Net loss	(595,198)		(8,133)		(603,331)
Comprehensive loss	(594,541)		(8,133)		(602,674)
Net loss attributable per share to common stockholders:
Basic and diluted	(3.32)		(0.05)		(3.37)

Consolidated Statements of Operations	Year Ended December 31, 2019
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,155,981	$	(4,881)	$	1,151,100
Selling expenses	193,359		(1,559)		191,800
General and administrative expenses	192,182		1,298		193,480
Depreciation and amortization	543,440		152		543,592
Total costs and expenses	1,298,266		(109)		1,298,157
Loss from operations	(142,285)		(4,772)		(147,057)
Loss before income taxes	(394,611)		(4,772)		(399,383)
Net loss	(395,924)		(4,772)		(400,696)
Comprehensive loss	(394,553)		(4,772)		(399,325)
Net loss attributable per share to common stockholders:
Basic and diluted	(4.18)		(0.05)		(4.23)

3. Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying consolidated financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”). Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.

On January 17, 2020 (the “Closing Date”), the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Merger Sub, and Legacy Vivint Smart Home, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home. (See Note 5 “Business Combination” for further discussion).

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home surviving as the surviving company (the “Business Combination”). Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Vivint Smart Home, Inc. is treated as the acquired company and Legacy Vivint Smart Home is treated as the acquirer for financial statement reporting and accounting purposes. Legacy Vivint Smart Home has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

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•Legacy Vivint Smart Home’s shareholders prior to the Business Combination had the greatest voting interest in the combined entity;

•Prior to the Business Combination, Legacy Vivint Smart Home’s directors represented the majority of the Vivint Smart Home board of directors;         

•Prior to the Business Combination, Legacy Vivint Smart Home’s senior management was the senior management of Vivint Smart Home; and         

•Prior to the Business Combination, Legacy Vivint Smart Home was the larger entity based on historical total assets and revenues.

As a result of Legacy Vivint Smart Home being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Legacy Vivint Smart Home is the predecessor and legal successor to the Company. The historical operations of Legacy Vivint Smart Home are deemed to be those of the Company. Thus, the financial statements included in this Annual Report reflect (i) the historical operating results of Legacy Vivint Smart Home prior to the Business Combination; (ii) the combined results of the Company and Legacy Vivint Smart Home following the Business Combination on January 17, 2020; (iii) the assets and liabilities of Legacy Vivint Smart Home at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of Legacy Vivint Smart Home in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Legacy Vivint Smart Home.

In connection with the Business Combination, Mosaic Acquisition Corp. changed its name to Vivint Smart Home, Inc. The Company’s Common Stock is now listed on the NYSE under the symbol “VVNT”. Prior to the Business Combination, the Company neither engaged in any operations nor generated any revenue. Until the Business Combination, based on the Company’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Vivint Flex Pay

The Vivint Flex Pay plan (“Vivint Flex Pay”) became the Company’s primary equipment financing model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint’s smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through third-party financing providers (“Consumer Financing Program” or “CFP”) (2) the Company generally offers a limited number of customers not eligible for the Consumer Financing Program, but who qualify under the Company’s underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card or by obtaining short-term financing (generally no more than six month installment terms) through the Company.

Although customers pay separately for Products and Services under the Vivint Flex Pay plan, the Company has determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. For RICs, gross deferred revenues are reduced by imputed interest and estimated write-offs. For Products financed through the CFP, gross deferred revenues are reduced by (i) any fees the third-party financing provider (“Financing Provider”) is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to the Financing Providers.

Under the CFP, qualified customers are eligible for financing offerings (“Loans”) originated by Financing Providers of between $150 and $6,000. The terms of most Loans are determined based on the customer’s credit quality. The annual percentage rates on these loans is either 0% or 9.99%, depending on the customer's credit quality, and the Loans are issued on either an installment or revolving basis with repayment terms ranging from with a 6- to 60-months.

For certain Financing Provider Loans:

•The Company pays a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding Loans.

•The Company incurs fees at the time of the Loan origination and receives proceeds that are net of these fees.

•The Company also shares liability for credit losses, with the Company being responsible for between 2.6% and

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100% of lost principal balances.

•The Company is responsible for reimbursing certain Financing Providers for merchant transaction fees and other fees associated with the Loans.

Because of the nature of these provisions, the Company records a derivative liability at its fair value when the Financing Provider originates Loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by the Company to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Consolidated Statement of Operations. (See Note 11).

For certain other Loans, the Company receives net proceeds (net of fees and expected losses) for which the Company has no further obligation to the Financing Provider. The Company records these net proceeds to deferred revenue.

Retail Installment Contract Receivables

For subscribers that enter into a RIC to finance the purchase of Products, the Company records a receivable for the amount financed. Gross RIC receivables are reduced for (i) expected write-offs of uncollectible balances over the term of the RIC and (ii) a present value discount of the expected cash flows using a risk adjusted market interest rate. Therefore, the RIC receivables equal the present value of the expected cash flows to be received by the Company over the term of the RIC, evaluated on a pool basis. RICs are pooled based on customer credit quality, contract length and geography. At the time of installation, the Company records a long-term note receivable within long-term notes receivables and other assets, net on the consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the consolidated balance sheets.

The Company imputes the interest on the RIC receivable using a risk adjusted market interest rate and records it as a reduction to deferred revenue and as an adjustment to the face amount of the related receivable. The risk adjusted interest rate considers a number of factors, including credit quality of the subscriber base and other qualitative considerations such as macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the consolidated statements of operations.

When the Company determines that there are RIC receivables that have become uncollectible, it records an adjustment to the allowance and reduces the related note receivable balance. On a regular basis, the Company also assesses the expected remaining cash flows based on historical RIC write-off trends, current market conditions and both Company and third-party forecast data. If the Company determines there is a change in expected remaining cash flows, the total amount of this change for all RICs is recorded in the current period to the provision for credit losses, which is included in general and administrative expenses in the accompanying consolidated statements of operations. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due. (See Note 5).

Revenue Recognition

The Company offers its customers smart home services combining Products, including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary back-end cloud platform software and Services. These together create an integrated system that allows the Company’s customers to monitor, control and protect their home (“Smart Home Services”). The Company’s customers are buying this integrated system that provides them with these Smart Home Services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Smart Home Services, the Company has concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights and obligations. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.

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The majority of the Company’s subscription contracts are between three and five years in length and are generally non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for Smart Home Services is generally due in advance on a monthly basis.

Sales of Products and other one-time fees such as service or installation fees are invoiced to the customer at the time of sale. Revenues for any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.

Beginning in late 2020, the Company began operating as a third-party dealer for residential solar installers in several states throughout the U.S, whereby the Company earns a commission from the installer for selling their solar services. Because there are no further performance obligations once the installation is complete, revenue is recognized at that time.

To date, revenues from the Smart Insurance business have been immaterial to our overall financial results.

Deferred Revenue

The Company's deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home Services. Deferred revenues are recognized over the term of the related performance obligation, which is generally three to five years.

Accounts Receivable

Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring Services, amounts due from Financing Providers and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and are non-interest bearing and are included within accounts and notes receivable, net on the consolidated balance sheets. Accounts receivable totaled $26.4 million and $19.8 million and December 31, 2021 and 2020, respectively net of the allowance for doubtful accounts of $13.3 million and $9.9 million at December 31, 2021 and 2020, respectively. The Company estimates this allowance based on historical collection experience, subscriber attrition rates, current market conditions and both Company and third-party forecast data. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in the accompanying consolidated statements of operations.

The changes in the Company’s allowance for doubtful accounts were as follows for the periods ended (in thousands):

	Year ended December 31,
	2021		2020		2019
Beginning balance	$	9,911	$	8,118	$	5,594
Provision for doubtful accounts	31,341		23,778		25,043
Write-offs and adjustments	(27,981)		(21,985)		(22,519)
Balance at end of period	$	13,271	$	9,911	$	8,118

Restructuring and Asset Impairment Charges

Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or dispose of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 12).

Principles of Consolidation

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The accompanying consolidated financial statements include the accounts of Vivint Smart Home, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company calculates amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortizes those deferred contract costs on a straight-line basis over the expected period of benefit that the Company has determined to be five years, consistent with the pattern in which the Company provides services to its customers. The Company believes this pattern of amortization appropriately reduces the carrying value of the capitalized contract costs over time to reflect the decline in the value of the assets as the remaining period of benefit for each monthly portfolio of contracts decreases. The period of benefit of five years is longer than a typical contract term because of anticipated contract renewals. The Company applies this period of benefit to its entire portfolio of contracts. The Company updates its estimate of the period of benefit periodically and whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations.

The carrying amount of the capitalized contract costs is periodically reviewed for impairment. In performing this review, the Company considers whether the carrying amount of the capitalized contract costs will be recovered. In estimating the amount of consideration the Company expects to receive in the future related to capitalized contract costs, the Company considers factors such as attrition rates, economic factors, and industry developments, among other factors. If it is determined that capitalized contract costs are impaired, an impairment loss is recognized for the amount by which the carrying amount of the capitalized contract costs and the anticipated costs that relate directly to providing the future services exceed the consideration that has been received and that is expected to be received in the future. During the years ended December 31, 2021 and 2020, no impairment losses were recorded.

Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.

On the consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs - deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.

The Company’s depreciation and amortization included in the consolidated statements of operations consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Amortization of capitalized contract costs	$	524,981	$	481,213	$	437,437
Amortization of definite-lived intangibles	60,004		69,465		80,468
Depreciation and amortization of property, plant and equipment	16,467		20,153		25,687
Total depreciation and amortization	$	601,452	$	570,831	$	543,592

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with remaining maturities when purchased of three months or less.

Inventories

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Inventories, which are comprised of smart home and security system equipment and parts are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (FIFO) method. Inventories sold to customers as part of a smart home and security system are generally capitalized as contract costs. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.

Deferred Financing Costs

Certain costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs associated with obtaining the APX Group, Inc.’s (“APX”) revolving credit facility are amortized over the amended maturity dates discussed in Note 6. Deferred financing costs associated with the revolving credit facility reported in the accompanying consolidated balance sheets as deferred financing costs, net at December 31, 2021 and 2020 were $2.1 million and $1.7 million, net of accumulated amortization of $11.5 million and $11.0 million, respectively. Deferred financing costs included in the accompanying consolidated balance sheets within notes payable, net at December 31, 2021 and 2020 were $34.3 million and $27.2 million, net of accumulated amortization of $77.4 million and $70.9 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying consolidated statements of operations totaled $6.9 million, $7.9 million and $9.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Residual Income Plans

The Company has a program that allows certain third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create (the “Channel Partner Plan”). The Company also has a residual sales compensation plan (the “Residual Plan”) under which the Company's sales personnel (each, a “Plan Participant”) receive compensation based on the performance of certain underlying contracts they created in prior years.

For both the Channel Partner Plan and Residual Plan, the Company calculates the present value of the expected future residual payments and records a liability for this amount in the period the subscriber account is originated. These costs are recorded to capitalized contract costs. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability. The current portion of the liability included in accrued payroll and commissions was $4.3 million and $4.1 million as of December 31, 2021 and 2020, respectively, and the noncurrent portion included in other long-term obligations was $23.2 million and $23.8 million at December 31, 2021 and 2020, respectively.

Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards. The Company accounts for forfeitures as they occur (See Note 14).

Advertising Expense

Advertising costs are expensed as incurred. Advertising costs were approximately $89.9 million, $70.9 million and $60.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Income Taxes

The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment.

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Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows (See Note 13).

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.

Concentrations of Supply Risk

As of December 31, 2021, approximately 95% of the Company’s installed panels were the Company's proprietary SkyControl or Smart Hub panels and 5% were 2GIG Go!Control panels. The loss of the Company’s SkyControl panel supplier could potentially impact its operating results or financial position.

Fair Value Measurement

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:

Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.

Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the years ended December 31, 2021, 2020, and 2019.

The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.

Goodwill

The Company tests goodwill at the reporting unit level for impairment annually as of October 1 and on an interim basis when events occur or circumstances exist that indicate the carrying value may no longer be recoverable. The company compares the fair value of our reporting units with the carrying amount, including goodwill. The Company recognizes an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value. The Company’s reporting units are determined based on its current reporting structure, which as of December 31, 2021 consisted of one reporting unit. As of December 31, 2021, there were no changes in facts and circumstances since the most recent annual impairment analysis to indicate impairment existed. During the years ended December 31, 2021, 2020 and 2019, no impairments to goodwill were recorded.

Foreign Currency Translation and Other Comprehensive Income

The functional currency of Vivint Canada, Inc. is the Canadian dollar. Accordingly, Vivint Canada, Inc. assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and Vivint Canada, Inc. revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown as a separate component of equity.

When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ (deficit) equity as accumulated other comprehensive loss or income. When intercompany transactions are deemed to be of a short-term nature, translation

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adjustments are required to be included in the consolidated statement of operations. The Company has determined that settlement of Vivint Canada, Inc. intercompany balances are anticipated and therefore such balances are deemed to be of a short-term nature. Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)

	For the Years Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Translation gain	$	(423)	$	(602)	$	(3,400)

Letters of Credit

As of December 31, 2021 and 2020, the Company had $14.0 million and $15.3 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.

Derivative Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation.

The Company accounts for its public warrants and private placement warrants as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are re-measured at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.

Accounting Pronouncements Issued But Not Yet Adopted

In March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, respectively. Together, the ASUs provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The Company can elect to apply the amendments through December 31, 2022. As of December 31, 2021, the Company had not utilized any of the expedients discussed within this ASU; however, it continues to assess its agreements to determine whether the expedients would be utilized through the allowed period of December 31, 2022.

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4. Revenue and Capitalized Contract Costs

Customers are typically invoiced for Smart Home Services in advance or at the time the Company delivers the related Smart Home Services. The majority of customers pay at the time of invoice via credit card, debit card or ACH. Deferred revenue relates to the advance consideration received from customers, which precedes the Company’s satisfaction of the associated performance obligation. The Company’s deferred revenues primarily result from customer payments received in advance for recurring monthly monitoring and other Smart Home Services, or other one-time fees, because these performance obligations are satisfied over time.

The Company also provides its customers with service warranties associated with product replacement and related services. As of December 31, 2021 and 2020, the Company had warranty service reserves of $6.0 million and $5.7 million, respectively, which are included in accrued expenses and other current liabilities on the consolidated balance sheets.

During the years ended December 31, 2021 and 2020, the Company recognized revenues of $320.0 million and $235.9 million, respectively, that were included in the deferred revenue balance as of December 31, 2020 and 2019, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2021, approximately $3.4 billion of revenue is expected to be recognized from remaining performance obligations for subscription contracts. The Company expects to recognize approximately 63% of the revenue related to these remaining performance obligations over the next 24 months, with the remaining balance recognized over an additional 36 months.

Timing of Revenue Recognition

The Company considers Products, related installation, and its proprietary back-end cloud platform software and services an integrated system that allows the Company’s customers to monitor, control and protect their homes. These Smart Home Services are accounted for as a single performance obligation that is recognized over the customer’s contract term, which is generally three to five years.

Capitalized Contract Costs

Capitalized contract costs generally include commissions, other compensation and related costs paid directly for the generation and installation of new or modified customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company defers and amortizes these costs for new or modified subscriber contracts on a straight-line basis over the expected period of benefit of five years.

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5. Retail Installment Contract Receivables

Certain subscribers have the option to purchase Products under a RIC, payable over either 42 or 60 months. Short-term RIC receivables are recorded in accounts and notes receivable, net and long-term RIC receivables are recorded in long-term notes receivables and other assets, net in the consolidated balance sheets.

The following table summarizes the RIC receivables (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC receivables, gross	$	90,204	$	138,926
RIC allowance	(12,384)		(27,061)
Imputed interest	(7,469)		(13,275)
RIC receivables, net	$	70,351	$	98,590
Classified on the consolidated balance sheets as:
Accounts and notes receivable, net	$	37,270	$	44,931
Long-term notes receivables and other assets, net	33,081		53,659
RIC receivables, net	$	70,351	$	98,590

The changes in the Company’s RIC allowance were as follows (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC allowance, beginning of period	$	27,061	$	38,110
Write-offs	(13,714)		(21,841)
Recoveries	3,446		6,340
Additions from RICs originated during the period	6,795		7,567
Change in expected credit losses	(10,995)		(2,914)
Other adjustments (1)	(209)		(201)
RIC allowance, end of period	$	12,384	$	27,061

(1) Other adjustments primarily reflect changes in foreign currency exchange rates related to Canadian RICs.

During years ended December 31, 2021, 2020 and 2019, the amount of RIC imputed interest income recognized in recurring and other revenue was $7.6 million, $10.6 million and $13.6 million, respectively.

Change in Accounting Estimate in 2019

RIC receivables are recorded at their present value, net of the RIC allowance and imputed interest. The Company records the RIC allowance as an adjustment to deferred revenue and as an adjustment to the face amount of the related receivable. The RIC allowance considers a number of factors, including collection experience, credit quality of the subscriber base and other qualitative considerations such as macro-economic factors.

In the third quarter of 2019, with over two years of RIC customer history, the Company determined that actual RIC write-offs were trending higher than the expected write-offs used in the original estimates. Therefore, the Company determined that it was necessary to adjust the remaining RIC allowance balance primarily associated with subscribers originated in 2017 and 2018, to reflect the new estimate of the present value of cash expected to be collected over the remaining contractual periods.

In accordance with this change in accounting estimate, in 2019 the Company increased the RIC allowance and recognized an adjustment to revenue to record the proportional amount related to performance obligations that have already been delivered and the remaining amount (related to undelivered performance obligations) to deferred revenue. The Company

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recorded a total increase to the RIC allowance and imputed interest of $26.6 million, with a decrease to deferred revenue of $17.5 million and a decrease to recurring and other revenue of $9.1 million. The decrease to revenue resulted in a corresponding increase to net loss for the year ended December 31, 2019. This change in estimate increased basic and diluted net loss per share by $0.10 for the year ended December 31, 2019.

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6. Long-Term Debt

The Company’s debt at December 31, 2021 and 2020 consisted of the following (in thousands):

	December 31, 2021
	Outstanding Principal	Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
6.750% Senior Secured Notes Due 2027	600,000	—		(4,835)		595,165
5.750% Senior Notes Due 2029	800,000	—		(11,154)		788,846
Senior Secured Term Loan - noncurrent	1,333,125	—		(18,291)		1,314,834
Total Long-Term Debt	2,733,125	—		(34,280)		2,698,845
Senior Secured Term Loan - current	13,500	—		—		13,500
Total Debt	2,746,625	$	—	$	(34,280)	$	2,712,345

        

	December 31, 2020
	Outstanding Principal		Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
7.875% Senior Secured Notes Due 2022	$	677,000	$	7,885	$	(4,697)	$	680,188
7.625% Senior Notes Due 2023	400,000		—		(2,241)		397,759
8.500% Senior Secured Notes Due 2024	225,000		—		(3,530)		221,470
6.750% Senior Secured Notes Due 2027	600,000		—		(5,771)		594,229
Senior Secured Term Loan - noncurrent	933,375		—		(10,921)		922,454
Total Long-Term Debt	2,835,375		7,885		(27,160)		2,816,100
Senior Secured Term Loan - current	9,500						9,500
Total Debt	$	2,844,875	$	7,885	$	(27,160)	$	2,825,600

(1) Unamortized deferred financing costs related to the revolving credit facilities included in deferred financing costs, net on the consolidated balance sheets at December 31, 2021 and 2020 was $2.1 million and $1.7 million, respectively.

Notes Payable

2027 Notes

As of December 31, 2021, APX had $600.0 million outstanding aggregate principal amount of 6.750% senior secured notes due 2027 (the “2027 notes”). The 2027 notes are secured, on a pari passu basis, by the collateral securing obligations under the existing senior secured notes, the Revolving Credit Facility and the Term Loan Facility (as defined below), in each case, subject to certain exceptions and permitted liens. Interest accrues at the rate of 6.75% per annum for the 2027 notes. Interest on the 2027 notes is payable semiannually in arrears on February 15 and August 15 each year. APX may redeem the Notes at the prices and on the terms specified in the applicable indenture.

2029 Notes    

As of December 31, 2021, APX had $800.0 million outstanding aggregate principal amount of 5.75% senior notes due 2029 (the “2029 notes” and, together with the 2027 notes the “Notes”). The 2029 notes will mature on July 15, 2029. Interest accrues at the rate of 5.75% per annum for the 2029 notes. Interest on the 2029 notes is payable semiannually in arrears on January 15 and July 15 each year. APX may redeem the Notes at the prices and on the terms specified in the applicable indenture.    

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Senior Secured Credit Facilities

In July 2021, APX amended and restated its existing senior secured term loan credit agreement and existing senior secured revolving credit facility with a new senior secured credit agreement (the “Credit Agreement”) that provides for (i) a term loan facility in an aggregate principal amount of $1,350 million (the “Term Loan Facility”, and the loans thereunder, the “Term Loans”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $370 million (the “Revolving Credit Facility”, and the loans thereunder, the “Revolving Loans”).

As of December 31, 2021, APX had outstanding term loans under the Term Loan Facility in an aggregate principal amount of $1,346.6 million. APX is required to make quarterly amortization payments under the Term Loan in an amount equal to 0.25% of the aggregate principal amount of the Term Loan outstanding on the closing date thereof. The remaining outstanding principal amount of the Term Loans will be due and payable in full on July 9, 2028. APX may prepay the Term Loans on the terms specified in the Credit Agreement. No amortization payments are required under the Revolving Credit Facility.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, APX is required to pay a quarterly commitment fee of 50 basis points (which will be subject to two interest rate step-downs of 12.5 basis points, based on APX meeting consolidated first lien net leverage ratio tests) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. APX also pays customary letter of credit and agency fees. The revolving credit commitments outstanding under the Revolving Credit Facility will be due and payable in full on July 9, 2026.

Borrowings under the amended and restated Term Loan Facility and Revolving Credit Facility bear interest, at APX’s option, at a rate per annum equal to either (a)(i) a base rate determined by reference to the highest of (1) the “Prime Rate” in the United States as published in The Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) the LIBOR rate for a one month interest period plus 1.00%, plus (ii) 2.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 2.50% and 2.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter) or (b)(i) a LIBOR rate determined by reference to the applicable page for the LIBOR rate for the interest period relevant to such borrowing plus (ii) 3.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 3.50% and 3.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter), subject in each case to an agreed interest rate floor.

There were no outstanding borrowings under the Revolving Credit Facility as of December 31, 2021 and December 31, 2020. As of December 31, 2021, the Company had $356.0 million of availability under the Revolving Credit Facility (after giving effect to $14.0 million of letters of credit outstanding and no borrowings).

Debt Modifications and Extinguishments

The Company performs analyses on a creditor-by-creditor basis for debt modifications and extinguishments to determine if repurchased debt was substantially different than debt issued to determine the appropriate accounting treatment of associated issuance costs. As a result of these analyses, the following amounts of other expense and loss on extinguishment and deferred financing costs were recorded (in thousands):

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	Other expense and loss on extinguishment								Deferred financing costs
Issuance	Original premium extinguished		Previously deferred financing costs extinguished		New financing costs		Total other expense and loss on extinguishment		Previously deferred financing rolled over		New deferred financing costs		Total deferred financing costs
For the year ended December 31, 2021
2029 Notes issuance - July 2021	$	(5,656)	$	8,016	$	17,187	$	19,547	$	—	$	11,767	$	11,767
Term Loan issuance - July 2021	—		1,499		9,165		10,664		8,148		11,302		19,450
Total	$	(5,656)	$	9,515	$	26,352	$	30,211	$	8,148	$	23,069	$	31,217
For the year ended December 31, 2020
2027 Notes issuance - February 2020	$	(2,749)	$	4,033	$	6,146	$	7,430	$	205	$	6,346	$	6,551
Term Loan issuance - February 2020	—		235		5,045		5,280		6,973		5,461		12,434
Total	$	(2,749)	$	4,268	$	11,191	$	12,710	$	7,178	$	11,807	$	18,985
For the year ended December 31, 2019
2024 Notes issuance - May 2019	$	(588)	$	1,395	$	—	$	807	$	—	$	4,956	$	4,956

Deferred financing costs are amortized to interest expense over the life of the issued debt.    The following tables present deferred financing activity for the years ended December 31, 2021 and 2020 (in thousands):

	Unamortized Deferred Financing Costs
	Balance December 31, 2020		Additions		Early Extinguishment		Amortized		Balance December 31, 2021
Revolving Credit Facility	$	1,667	$	843	$	—	$	(422)	$	2,088
2022 Notes	4,697		—		(3,314)		(1,383)		—
2023 Notes	2,241		—		(1,681)		(560)		—
2024 Notes	3,530		—		(3,021)		(509)		—
2027 Notes	5,771		—		—		(936)		4,835
2029 Notes	—		11,767		—		(614)		11,153
Term Loan	10,921		11,302		(1,499)		(2,434)		18,290
Total Deferred Financing Costs	$	28,827	$	23,912	$	(9,515)	$	(6,858)	$	36,366

	Unamortized Deferred Financing Costs
	Balance December 31, 2019		Additions		Early Extinguishment		Amortized		Balance December 31, 2020
Revolving Credit Facility	$	1,123	$	1,027	$	—	$	(483)	$	1,667
2020 Notes	1,721		—		(1,565)		(156)		—
2022 Private Placement Notes	451		(205)		(221)		(25)		—
2022 Notes	9,532		—		(2,247)		(2,588)		4,697
2023 Notes	3,081		—		—		(840)		2,241
2024 Notes	4,431		—		—		(901)		3,530
2027 Notes	—		6,551		—		(780)		5,771
Term Loan	$	7,822	$	5,461	$	(235)	$	(2,127)	10,921
Total Deferred Financing Costs	$	28,161	$	12,834	$	(4,268)	$	(7,900)	$	28,827

Guarantees

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All of the obligations under the Credit Agreement and the debt agreements governing the Notes are guaranteed by APX Group Holdings, Inc., each of APX Group's existing and future material wholly owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications) and solely in the case of the Notes, Vivint Smart Home, Inc. However, such subsidiaries shall only be required to guarantee the obligations under the debt agreements governing the Notes for so long as such entities guarantee the obligations under the Revolving Credit Facility, the Term Loan Facility or the Company's other indebtedness. 

7. Business Combination

On January 17, 2020, the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Merger Sub, and Legacy Vivint Smart Home, as amended by the Merger Agreement, dated as of December 18, 2019, by and among the Company, Maiden Sub and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home as the surviving company. At the effective time of the Business Combination (the “Effective Time”), each stockholder of Legacy Vivint Smart Home received 84.5320916792 shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for each share of Legacy Vivint Smart Home common stock, par value $0.01 per share, that such stockholder owned.

Pursuant in each case to a Subscription Agreement entered into in connection with the Merger Agreement, certain investment funds managed by affiliates of Fortress Investment Group LLC (“Fortress”) and certain investment funds affiliated with Blackstone Inc. (“Blackstone”) purchased, respectively, 12,500,000 and 10,000,000 newly-issued shares of Common Stock (such purchases, the “Fortress PIPE” and the “Blackstone PIPE,” respectively, and together, the “PIPE”) concurrently with the completion of the Business Combination (the “Closing”) on the Closing Date for an aggregate purchase price of $125.0 million and $100.0 million, respectively. In connection with the Merger, each of the issued and outstanding Founder Shares was converted into approximately 1.20 shares of Common Stock of the Company. The private placement warrants will expire five years after the Closing or earlier upon redemption or liquidation.

In connection with the execution of the Amendment, the Company entered into a Subscription and Backstop Agreement (the “Fortress Subscription and Backstop Agreement”). On the Closing Date, pursuant to the Fortress Subscription and Backstop Agreement, Fortress purchased 2,698,753 shares of Common Stock for an aggregate of $27.8 million. In addition, the Company entered into an additional subscription agreement (the “Additional Forward Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”). Pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the Effective Time, the Forward Purchaser purchased from us 5,000,000 shares of Common Stock at a purchase price of $10.00 per share. As consideration for the additional investment, concurrently with the Closing, 25% of Mosaic Sponsor LLC’s founder shares (“Forward Shares”) and private placement warrants were forfeited to the Company and the Company issued to the Forward Purchaser a number of shares of Common Stock equal to approximately 1.20 times the number of Founder Shares forfeited and a number of warrants equal to the number of private placement warrants forfeited.

At the Closing, certain investors (including an affiliate of Fortress) received an aggregate of 15,789,474 shares of Common Stock at a purchase price of $9.50 per share (the “IPO Forward Purchaser Investment”) pursuant to the terms of the forward purchase agreements the Company entered into in connection with the Company’s initial public offering.

In connection with the Closing, 31,074,592 shares of Common Stock were redeemed at a price per share of approximately $10.29. In addition, in connection with the Closing, each Founder Share issued and outstanding immediately prior to the Closing (other than the Founder Shares forfeited in connection with the Additional Forward Purchaser Subscription Agreement) converted into approximately 1.2 shares of Common Stock of the Company. Immediately prior to the Effective Time, each issued and outstanding share of Legacy Vivint Smart Home preferred stock (other than shares owned by Legacy Vivint Smart Home as treasury stock) converted into approximately 1.43 shares of Legacy Vivint Smart Home common stock in accordance with the certificate of designations of the Legacy Vivint Smart Home preferred stock.

As part of the Business Combination, the Company assumed the liabilities associated with the outstanding public warrants and private placement warrants. The Company recorded the warrants as a derivative liability at fair value on the date of the Business Combination.

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The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended December 31, 2021:

	Recapitalization
	(in thousands)
Cash - Mosaic (net of redemptions)	$	35,344
Cash - Subscribers and Forward Purchasers	453,221
Less fees to underwriters and other transaction costs	(25,043)
Net cash received from recapitalization	463,522
Less: Warrant derivative liabilities assumed	(40,094)
Less: non-cash net liabilities assumed from Mosaic	(5)
Less: deferred and accrued transaction costs	(1,304)
Net contributions from recapitalization	$	422,119

The number of shares of Common Stock of Vivint Smart Home Inc. issued immediately following the consummation of the Business Combination is summarized as follows:

	Number of Shares
Common Stock outstanding prior to Business Combination	34,500,000
Less redemption of Mosaic Shares	(31,074,592)
Common Stock of Mosaic	3,425,408
Shares issued from Fortress PIPE	12,500,000
Shares from Blackstone PIPE	10,000,000
Shares from Additional Forward Purchaser Subscription Agreement	5,000,000
Shares from IPO Forward Purchaser Investment	15,789,474
Shares from Fortress Subscription and Backstop Agreement	2,698,753
Shares from Mosaic Founder Shares	10,379,386
Recapitalization shares	59,793,021
Legacy Vivint Smart Home equity holders	94,937,597
Total shares	154,730,618

Earnout consideration

Following the closing of the Merger, holders of Vivint common stock and holders of rollover restricted stock units (“Rollover RSUs”), the rollover stock appreciation rights (“Rollover SARs”), the shares of rollover restricted stock (“Rollover Restricted Stock”) and any awards granted under the Company rollover long-term incentive program (“Rollover LTIP Plans”) (together, “Rollover Equity Awards”) had the contingent right to receive, in the aggregate, up to 37,500,000 shares of Common Stock if, from the closing of the Merger until the fifth anniversary thereof, the dollar volume-weighted average price of Common Stock exceeded certain thresholds. The first issuance of 12,500,000 earnout shares occurred when the volume-weighted average price of Common Stock exceeded $12.50 for any 20 trading days within any 30-trading day period (the “First Earnout”). The second issuance of 12,500,000 earnout shares occurred when the volume weighted average price of Common Stock exceeded $15.00 for any 20 trading days within any 30-trading day period (the “Second Earnout”). The third issuance of 12,500,000 earnout shares occurred when the volume weighted average price of Common Stock exceeded $17.50 for any 20-trading days within any 30-trading day period (the “Third Earnout”) (as further described in the Merger Agreement).

Subsequent to the closing of the Merger, the cumulative issuance of 37,323,959 shares of Common Stock occurred after attainment of the First Earnout, Second Earnout and Third Earnout in February, March and September 2020, respectively. The difference in the shares issued in the earnouts and the aggregate amounts defined in the Merger Agreement above are primarily attributable to unissued shares reserved for future issuance to holders of Rollover Equity Awards, which are subject to the same vesting terms and conditions as the underlying Rollover Equity Awards. Additionally, shares were withheld from employees to satisfy the mandatory tax withholding requirements. The Company has determined that the earnout shares issued to non-employee shareholders and to holders of Vivint common stock and vested Rollover Equity Awards qualify for the scope exception in ASC 815-10-15-74(a) and meet the criteria for equity classification under ASC 815-40. These earnout shares were initially measured at fair value at Closing. Upon the attainment of the share price targets, the earnout shares delivered to the

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equity holders are recorded in equity as shares issued, with the appropriate allocation to common stock at par and additional paid-in capital. Since all earnout shares have determined to be equity-classified, there is no remeasurement unless reclassification is required. For the earnout shares associated with unvested Rollover Equity Awards, the Company has determined that they qualify for equity classification and are subject to stock-based compensation expense under ASC 718.

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8. Balance Sheet Components

The following table presents material balance sheet component balances as of December 31, 2021 and December 31, 2020 (in thousands):

	December 31,
	2021		2020
Prepaid expenses and other current assets
Prepaid expenses	$	12,791	$	11,286
Deposits	627		1,308
Other	5,967		1,744
Total prepaid expenses and other current assets	$	19,385	$	14,338
Capitalized contract costs
Capitalized contract costs	$	4,103,683	$	3,491,629
Accumulated amortization	(2,698,241)		(2,173,131)
Capitalized contract costs, net	$	1,405,442	$	1,318,498
Long-term notes receivables and other assets
RIC receivables, gross	$	52,934	$	93,995
RIC allowance	(12,384)		(27,061)
RIC imputed interest	(7,469)		(13,275)
Deferred income tax assets	2,022		—
Other	9,650		4,658
Total long-term notes receivables and other assets, net	$	44,753	$	58,317
Accrued payroll and commissions
Accrued commissions	47,879		46,353
Accrued payroll	$	35,468	$	41,590
Total accrued payroll and commissions	$	83,347	$	87,943
Accrued expenses and other current liabilities
Accrued interest payable	$	40,333	$	33,340
Current portion of derivative liability	140,394		142,755
Service warranty accrual	5,992		5,711
Current portion of warrant derivative liabilities	—		8,063
Accrued taxes	10,758		8,700
Accrued payroll taxes and withholdings	14,392		14,391
Loss contingencies	8,150		26,200
Other	16,231		8,164
Total accrued expenses and other current liabilities	$	236,250	$	247,324

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9. Property Plant and Equipment

Property, plant and equipment is recorded at historical cost less accumulated depreciation, which is calculated using the straight-line method over the estimated useful lives of the related assets, as follows (in thousands):

	December 31,				Estimated Useful Lives
	2021		2020
Vehicles	$	40,103	$	39,735	3-5 years
Computer equipment and software	83,479		72,616		3-5 years
Leasehold improvements	30,087		29,126		2-15 years
Office furniture, fixtures and equipment	22,327		21,394		2-7 years
Construction in process	11,089		6,180
Property, plant and equipment, gross	187,085		169,051
Accumulated depreciation and amortization	(131,637)		(116,672)
Property, plant and equipment, net	$	55,448	$	52,379

Property plant and equipment includes approximately $16.5 million and $17.6 million of assets under finance lease obligations, net of accumulated amortization of $24.5 million and $23.0 million at December 31, 2021 and 2020, respectively. Depreciation and amortization expense on all property plant and equipment was $16.5 million, $20.2 million and $25.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense relates to assets under finance leases as included in depreciation and amortization expense.

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10. Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill during the year ended December 31, 2021 was the result of foreign currency translation adjustments. The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, were as follows (in thousands):

Balance as of January 1, 2020	$	836,540
Effect of Foreign Currency Translation	537
Balance as of December 31, 2020	837,077
Effect of Foreign Currency Translation	76
Balance as of December 31, 2021	$	837,153

Intangible assets, net

The following table presents intangible asset balances as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Estimated Useful Lives
Definite-lived intangible assets:
Customer contracts	$	969,376	$	(920,617)	$	48,759	$	969,158	$	(862,352)	$	106,806	10 years
2GIG 2.0 technology	17,000		(17,000)		—		17,000		(17,000)		—		8 years
Other technology	4,725		(4,725)		—		4,725		(4,309)		416		2 - 7 years
Space Monkey technology	7,100		(7,100)		—		7,100		(7,100)		—		6 years
Patents	11,180		(8,076)		3,104		10,843		(6,656)		4,187		5 years
Total definite-lived intangible assets:	1,009,381		(957,518)		51,863		1,008,826		(897,417)		111,409
Indefinite-lived intangible assets:
Domain names	65		—		65		65		—		65
Total Indefinite-lived intangible assets	65		—		65		65		—		65
Total intangible assets, net	$	1,009,446	$	(957,518)	$	51,928	$	1,008,891	$	(897,417)	$	111,474

During the years ended December 31, 2021 and 2020, the Company added $0.4 million and $3.1 million of intangible assets related to patents, respectively. Amortization expense related to intangible assets was approximately $60.0 million, $69.5 million and $80.5 million for the years ended December 31, 2021, 2020, and 2019, respectively.

As of December 31, 2021, the remaining weighted-average amortization period for definite-lived intangible assets was 1.0 year. Estimated future amortization expense of intangible assets, excluding approximately $0.1 million in patents currently in process, is as follows as of December 31, 2021 (in thousands):

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2022	$	49,889
2023	795
2024	610
2025	514
2026	4
Thereafter	—
Total estimated amortization expense	$	51,812

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11. Financial Instruments

Cash and Cash Equivalents

Cash equivalents are classified as level 1 assets, as they have readily available market prices in an active market. The Company's cash and cash equivalents totaled $208.5 million and $313.8 million as of December 31, 2021 and 2020, respectively.

Corporate Securities

During the three months ended September 30, 2021, the Company obtained corporate securities, which are classified as Level 2 assets. The fair value of these securities was $2.4 million as of December 31, 2021. The fair value of the Company’s Level 2 corporate securities are based on observable prices that are based on inputs not quoted in active markets, but corroborated by market data.

Debt

Components of the Company's debt including the associated interest rates and related fair values (in thousands, except interest rates) are as follows:

Issuance	December 31, 2021				December 31, 2020				Stated Interest Rate
	Face Value		Estimated Fair Value		Face Value		Estimated Fair Value
2022 Notes	—		—		677,000		677,203		7.875	%
2023 Notes	—		—		400,000		415,200		7.625	%
2024 Notes	—		—		225,000		238,545		8.500	%
2027 Notes	600,000		633,660		600,000		645,300		6.750	%
2029 Notes	800,000		795,680		—		—		5.750	%
Term Loan	1,346,625		1,346,625		942,875		942,875		N/A
Total	$	2,746,625	$	2,775,965	$	2,844,875	$	2,919,123

The Notes are fixed-rate debt considered Level 2 fair value measurements as the values were determined using observable market inputs, such as current interest rates, prices observable from less active markets, as well as prices observable from comparable securities. The Term Loan is floating-rate debt and approximates the carrying value as interest accrues at floating rates based on market rates.

Derivative Financial Instruments

Consumer Financing Program

Under the Consumer Financing Program, the Company pays a monthly fee to Financing Providers based on either the average daily outstanding balance of the Loans or the number of outstanding Loans. For certain Loans, the Company incurs fees at the time of the loan origination and receives proceeds that are net of these fees. The Company also shares the liability for credit losses, depending on the credit quality of the customer. Because of the nature of certain provisions under the Consumer Financing Program, the Company records a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments. Changes to the fair value are recorded through other income, net in the Consolidated Statement of Operations. The following represent the contractual future payment obligations with the Financing Providers under the Consumer Financing Program that are components of the derivative:

•The Company pays either a monthly fee based on the average daily outstanding balance of the Loans, or the number of outstanding Loans, depending on the Financing Provider

•The Company shares the liability for credit losses depending on the credit quality of the customer

•The Company pays transactional fees associated with customer payment processing

The derivative is classified as a Level 3 instrument. The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and loss severity rates. These derivatives are priced quarterly using a credit valuation adjustment methodology. In summary, the fair value represents an estimate of the

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present value of the cash flows the Company will be obligated to pay to the Financing Provider for each component of the derivative.

The following table summarizes the fair value and the notional amount of the Company’s outstanding consumer financing program derivative instrument as of December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Consumer Financing Program Contractual Obligations:
Fair value	$	216,795	$	227,896
Notional amount	1,160,278		912,626
Classified on the consolidated balance sheets as:
Accrued expenses and other current liabilities	140,394		142,755
Other long-term obligations	76,401		85,141
Total Consumer Financing Program Contractual Obligation	$	216,795	$	227,896

Changes in Level 3 Fair Value Measurements - Consumer Financing Program

The following table summarizes the change in the fair value of the Level 3 outstanding derivative instrument for the years ended December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Balance, beginning of period	$	227,896	$	136,863
Additions	94,995		167,055
Settlements	(91,826)		(71,962)
Gains included in earnings	(14,270)		(4,060)
Balance, end of period	$	216,795	$	227,896

Warrant Liabilities

As a result of the Business Combination, the Company assumed a derivative warrant liability related to previously issued private placement warrants and public warrants in connection with Mosaic’s initial public offering. The fair value of the Company’s public warrants were measured based on the market price of such warrants and are considered a Level 1 fair value measurement. As of January 7, 2021, all public warrants were exercised or redeemed and none were outstanding as of December 31, 2021. The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the private placement warrants and are considered a Level 3 fair value measurement. The warrants are measured at each reporting period, with changes in fair value recognized in the statement of operations.

The change in the fair value of the derivative warrant liabilities for the years ended December 31, 2021 and 2020 is summarized as follows (in thousands):

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	Public Warrants		Private Placement Warrants		Total Derivative Warrant liability
Warrant liability assumed from the Business Combination	$	9,775	$	30,319	$	40,094
Change in fair value of warrant liability	64,038		45,212		109,250
Reclassification of derivative liabilities for exercised warrants	(65,750)		—		(65,750)
Balance, December 31, 2020	8,063		75,531		83,594
Change in fair value of warrant liability	1,350		$	(50,967)	(49,617)
Write-off fair value of unexercised expired warrants	(490)		$	—	(490)
Reclassification of derivative liabilities for exercised warrants	(8,923)		$	—	(8,923)
Balance, December 31, 2021	—		24,564		24,564

The estimated fair value of the private placement warrant derivative liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes valuation model are assumptions related to expected stock-price volatility, expiration, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expiration of the warrants. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

	As of December 31, 2021			As of December 31, 2020
Number of private placement warrants	5,933,334			5,933,334
Exercise price	$	11.50		$	11.50
Stock price	$	9.78		$	20.75
Expiration term (in years)	3.05			4.05
Volatility	70		%	60		%
Risk-free Rate	0.98		%	0.27		%
Dividend yield	—		%	—		%

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12. Restructuring and Asset Impairment Charges

Restructuring

2020 Cost Reductions

In March 2020, the Company announced a number of cost reduction initiatives that are expected to reduce certain of the Company’s General and Administrative, Customer Service, and Sales Support fixed costs. The Company completed the majority of these cost reduction initiatives in the first quarter of 2020. In addition to resulting in meaningful cost reductions, the Company’s initiatives are expected to streamline operations, focus on engineering and innovation and provide a better focus on driving customer satisfaction. These actions resulted in one-time cash employee severance and termination benefits expenses of $20.9 million during the year ended December 31, 2020. These costs included $11.1 million in stock-based compensation expense associated with the accelerated vesting of stock-based awards to certain executives related to separation agreements.

2019 Wireless Spin-Off

On July 31, 2019, the Company completed a spin-off of its Wireless subsidiary. In connection with the spin-off, the equity interests of Wireless were distributed to the shareholders of Vivint Smart Home pro rata based on their respective holdings. As a result of the spin-off, the Company's additional paid-in capital was decreased by the net assets of Wireless of $4.8 million, as of the effective date of the spin-off. The spin-off does not represent a strategic shift that has (or will have) a major effect on the Company's operations and financial results.

The results of Wireless are reflected in the Company's consolidated financial statement up through July 31, 2019. The following financial information presents the results of operations of Wireless for the year ended December 31, 2019:

	Years Ended December 31,
	2019
Recurring and other revenue	$	2,808
Costs and expenses:
Operating expenses	$	5,455
Selling expenses	$	137
General and administrative expenses	$	5,291
Depreciation and amortization	$	68
Total costs and expenses	$	10,951
Loss from operations	$	(8,143)
Other expenses (income):
Interest expense	—
Other income, net	(2,100)
Net loss	$	(6,043)

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13. Income Taxes

The Company files a consolidated federal income tax return with its wholly owned U.S. subsidiaries.

The income tax expense consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Current income tax:
Federal	$	—	$	—	$	—
State	2,359		2,174		703
Foreign	3,641		764		(2)
Total	6,000		2,938		701
Deferred income tax:
Federal	—		—		(380)
State	(263)		(851)		(73)
Foreign	(3,266)		(1,004)		1,065
Total	(3,529)		(1,855)		612
Income tax expense	$	2,471	$	1,083	$	1,313

The following reconciles the tax benefit computed at the statutory federal rate and the Company’s tax expense (in thousands):

	Year ended December 31,
	2021		2020		2019
Computed expected tax benefit	$	(63,647)	$	(126,472)	$	(82,833)
State income taxes, net of federal tax effect	1,556		882		483
Foreign income taxes	221		(383)		232
Other reconciling items	(1,235)		(714)		2,988
Permanent differences	(8,753)		36,423		5,694
Excess deductible compensation limitation	10,463		9,667		1,313
Change in valuation allowance	63,866		81,680		73,436
Income tax expense	$	2,471	$	1,083	$	1,313

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The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2021			2020
Gross deferred tax assets:
Net operating loss carryforwards	$	546,693		$	558,972
Deferred subscriber income	326,759			254,722
Interest expense limitation	142,919			119,402
Accrued expenses and allowances	56,495			52,031
Lease liabilities	13,356			15,342
Purchased intangibles and deferred financing costs	9,687			13,765
Inventory reserves	1,859			2,801
Research and development credits	41			41
Deferred capitalized contract costs	1,800			—
Property and equipment	1,888			2
Valuation allowance	(740,397)			(664,191)
Total	361,100			352,887
Gross deferred tax liabilities:
Deferred capitalized contract costs	(346,887)			(338,141)
Right of use assets	(11,430)			(13,119)
Purchased intangibles and deferred financing costs	(959)			(2,092)
Property and equipment	(443)			(1,703)
Total	(359,719)		-359719000	(355,055)
Net deferred tax assets (liabilities)	$	1,381		$	(2,168)

The Company had gross operating loss carryforwards as follows (in thousands):

	December 31,
	2021		2020
Net operating loss carryforwards:
Federal	$	2,229,000	$	2,294,340
States	2,036,000		1,996,245
Total	$	4,265,000	$	4,290,585

U.S. federal net operating loss carryforwards will begin to expire in 2029, if not used. State net operating loss carryforwards expire over different periods and some have already begun to expire. The Company had U.S. research and development credits of approximately $41,000 at December 31, 2021, and December 31, 2020, which begin to expire in 2030.

There are no remaining Canadian net operating loss (“NOL”) carryforwards as of December 31, 2021.

Realization of the Company’s federal and state net operating loss carryforwards and tax credits is dependent on generating sufficient taxable income prior to their expiration. The Company performed a study to determine the amount of any limitation on its net operating losses and concluded that as of December 31, 2021 an ownership change had not occurred under the provisions of Internal Revenue Code Section 382, and as of that date the losses were not limited. The future use of the net operating loss carryforwards may have limitations resulting from future ownership changes or other factors under Section 382 of the Internal Revenue Code.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company does not expect that the NOL carryback provision of the CARES Act will result in a material cash benefit. In addition to the NOL changes, the CARES Act contains modifications on the limitation of business interest for tax years beginning in

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2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. This modification increased the allowable interest expense deduction of the Company and resulted in less taxable income for the years ended 2019 and 2020, resulting in less utilization of net operating losses in those years.

At December 31, 2021 and 2020, the Company recorded a valuation allowance against its U.S. federal and state net deferred tax assets as it believes it is more likely than not that these benefits will not be realized. Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against net deferred tax assets and evaluating the Company’s uncertain tax positions. The Company has considered and weighed the available evidence, both positive and negative, to determine whether it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Based on available information, management does not believe it is more likely than not that all of its deferred tax assets will be utilized. The Company recorded a valuation allowance against U.S. net deferred tax assets of approximately $740.4 million and $664.2 million at December 31, 2021 and 2020, respectively.

The Company is no longer subject to income tax examination by the U.S. federal, state or local tax authorities for years ended December 31, 2016 or prior; however, its tax attributes, such as NOL carryforwards and tax credits, are still subject to examination in the year they are used.

As of December 31, 2021, the Company has not recognized any uncertain tax positions.

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14. Stock-Based Compensation and Equity

The Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (the “Plan”) provides for the issuance of stock-based incentive awards to attract, motivate and retain qualified employees and non-employee directors, and to align their financial interests with those of company stockholders. In addition to the rollover awards converted as part of the Business Combination, the Company utilizes a combination of time-based and performance-based restricted stock units.

Tracking Units

The Company issued tracking units to certain executives to align their financial interests with those of company stockholders. The tracking units are recognized as expense over the employee's requisite service period. In 2021, 560,841 tracking units vested that were subject to time-based vesting. In June 2021, the fair value of the unvested tracking units was modified such that at December 31, 2021, 1,121,681 tracking units were unvested, and there was $1.2 million of unrecognized compensation expense of which is expected to be recognized over a weighted-average period of 1.4 years, and are subject to ratable time-based vesting over a five-year period from June 2018.

Rollover SARs

Stock Appreciation Rights (“SARs”) were previously issued to various levels of key employees and board members. As of December 31, 2021, there was no unrecognized compensation expense related to Rollover SARs.

A summary of the Rollover SARs activity for the years ended December 31, 2021 and 2020 is presented below:

	Rollover SARs	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2019	3,603,537	$	18.17	7.86	$	0.9
Forfeited	(1,055,978)	18.03
Exercised	(73,548)	12.35
Outstanding, December 31, 2020	2,474,011	17.59		6.60	7.8
Forfeited	(409,566)	18.50
Exercised	(59,733)	9.32
Outstanding, December 31, 2021	2,004,712	17.65		5.62	—
Unvested Rollover SARs expected to vest after December 31, 2021	—	—		—	—
Exercisable at December 31, 2021	2,004,712	$	17.65	5.62	—

Rollover LTIPs

The Company established four incentive compensation pools with a number of hypothetical SARs with awards to certain employees entitling them to a portion of the proceeds of such hypothetical SARs on certain distribution dates (the “Rollover LTIP Plans”). In February 2020, the board of directors approved the 2020 modification with respect to such shares, such that they would be distributed in January 2021, to the extent not then distributed. Each hypothetical Rollover SAR has a strike price of $7.22 per share. In the first quarter of 2021, the Company made the final distribution of shares of Class A common stock pursuant to the Rollover LTIP Plans resulting in the issuance of 1,609,627 shares of Class A common stock to holders of Rollover LTIP Awards. As a result of this distribution, the Company recorded compensation costs totaling $37.2 million, of which $32.7 million and $4.5 million was included in selling expenses and operating expenses, respectively.

The fair value of the shares distributed pursuant to the Rollover LTIP Plans values were determined based on the stock price of the Company on the date shares were issued to holders of Rollover LTIP Awards, which was $23.08 per share for the January 2021 distribution.

Earnouts

During the year ended December 31, 2021, holders of Rollover Equity Awards became entitled to receive share of our Class A Common Stock as a result of the attainment of the First Earnout, Second Earnout and Third Earnout (see Note 7 Business Combination for further discussion). Such shares were issuable in respect to holders of Rollover Equity Awards, subject to the same vesting terms and conditions as the underlying Rollover Equity Awards. Associated with the Rollover LTIP distribution in 2021, 847,141 shares of related earnouts were issued, resulting in $19.6 million expense. At December 31, 2021,

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there was a de minimis amount of unrecognized compensation expense related to earnouts granted, which is expected to be recognized over a weighted-average period of 1.5 years.

A summary of the earnout share activity for those that were subject to stock-based compensation expense under ASC 718, for the year ended December 31, 2021 is presented below:

	Shares	Weighted Average Grant-Date Fair Value per Share
Unvested at December 31, 2020	412,816	$	21.98
Granted	847,141	23.08
Vested	(1,235,897)	22.73
Unvested at December 31, 2020	24,060	21.98

Restricted Stock Units

During the year ended December 31, 2021, the Company approved grants under the Plan of time-vesting restricted stock units (the “RSUs”) awards (each representing the right to receive one share of Class A common stock of the Company upon the settlement of each restricted stock unit) to various levels of key employees. The RSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date. Additionally, RSUs were granted to non-employee board members which are subject to a one year vesting schedule. All vesting shall be subject to the recipient’s continued employment with Vivint Smart Home, Inc. or its subsidiaries through the applicable vesting dates. Compensation expense associated with the unvested restricted stock units is recognized on a straight-line basis over the vesting period. At December 31, 2021, there was approximately $114.8 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.8 years.

The following summarizes information about RSU transactions for the year ended December 31, 2021:

	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	8,640,418	$	22.76
Modified	(1,842,146)	22.86
Granted	5,865,475	13.33
Vested	(2,162,984)	22.62
Forfeited	(930,096)	20.43
Unvested at December 31, 2021	9,570,667	16.12

Performance Stock Units

During the year ended December 31, 2021, the Company approved grants under the Plan of performance-vesting restricted stock units (the “PSUs”) (each representing the right to receive one share of Class A common stock of the Company upon the settlement of each restricted stock unit).

The PSUs predominately vest based upon the Company’s achievement of specified performance goals through the performance period and the passage of time. The PSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date, subject to continued employment on the applicable vesting date.

During the year ended December 31, 2021, the Company deemed the achievement of certain PSU vesting conditions as being probable, and thus began recognizing stock-based compensation over the service period. At December 31, 2021, there was approximately $61.7 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 1.8 years.

The following summarizes information about PSU transactions for the year ended December 31, 2021:

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	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	4,877,277	$	22.67
Modified	1,842,146	22.86
Granted	5,993,063	15.72
Vested	(2,348,957)	22.83
Forfeited	(719,863)	19.12
Unvested at December 31, 2021	9,643,666	17.23

Stock-based compensation expense in connection with all stock-based awards for the years ended December 31, 2021, 2020 and 2019 is allocated as follows (in thousands):

	Year ended December 31,
	2021		2020		2019
Operating expenses	$	16,567	$	20,157	$	320
Selling expenses	103,239		101,623		508
General and administrative expenses	46,622		76,433		3,413
Total stock-based compensation	$	166,428	$	198,213	$	4,241

Equity

Class A Common Stock—The Company is authorized to issue 3,000,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At December 31, 2021, there were 208,734,193 shares of Class A common stock issued and outstanding.

Preferred stock—The Company is authorized to issue 300,000,000 preferred stock with a par value of $0.0001 per share. At December 31, 2021, there are no preferred stock issued or outstanding.

Warrants—As of December 31, 2021, no public warrants were outstanding. Each whole warrant entitled the holder to purchase one Class A common stock at an exercise price of $11.50 per share, subject to adjustment. Warrants could only be exercised for a whole number of shares. No fractional warrants were issued upon separation of the units and only whole warrants were traded. The warrants became exercisable 30 days after the completion of the Business Combination.

As of December 31, 2021, 5,933,334 private placement warrants were outstanding. The private placement warrants are identical to the public warrants, except that the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private placement warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the private placement warrants are held by someone other than the initial stockholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. The warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

The Company may call the warrants for redemption:

1.For cash:

•in whole and not in part;

•at a price of $0.01 per warrant;

•upon a minimum of 30 days’ prior written notice of redemption; and

•if, and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

2.For Class A common stock:

•in whole and not in part;

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•at a price equal to a number of Class A common stock to be determined by reference to a table included in the warrant agreement, based on the redemption date and the fair market value of the Class A common stock;

• upon a minimum of 30 days’ prior written notice of redemption; and

•if, and only if, the last reported closing price of the common stock equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends notice of redemption to the warrant holders.

In December 2020, after meeting the above requirements for redemption, the Company delivered a notice of redemption to redeem all of its outstanding public warrants for cash, with a redemption date January 7, 2021 (the “Redemption Date”) for a redemption price of $0.01 per public warrant (the “Redemption Price”). Warrants to purchase Common Stock that were issued under the Warrant Agreement in a private placement and still held by the initial holders thereof or their permitted transferees are not subject to this redemption. The public warrants could have been exercised by the holders thereof prior to the Redemption Date to purchase fully paid and non-assessable shares of Common Stock underlying such warrants, at the exercise price of $11.50 per share. All Public Warrants that remained unexercised at 5:00 p.m., New York City time, on the Redemption Date were void and were no longer exercisable, and the holders of those Public Warrants were entitled to receive only the redemption price of $0.01 per warrant.

The exercise price and number of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants shares.

During the year ended December 31, 2021, 825,016 warrants were exercised for Class A common stock, for which the Company received $10.8 million of cash. During the year ended December 31, 2020, 10,504,533 warrants were exercised for Class A common stock, for which the Company received $120.8 million of cash.

Capital Contribution

During the year end December 31, 2019, 313 Acquisition contributed $4.7 million to the Company as capital contributions. During the year ended December 31, 2019 the Company returned capital to 313 Acquisition of $4.8 million.

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15. Commitments and Contingencies

Indemnification

Subject to certain limitations, the Company is obligated to indemnify its current and former directors, officers and employees with respect to certain litigation matters and investigations that arise in connection with their service to the Company. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that the Company is required to pay or reimburse these individuals’ reasonable legal expenses and possibly damages and other liabilities incurred in connection with these matters.

Legal

The Company is named from time to time as a party to lawsuits arising in the ordinary course of business related to its sales, marketing, and the provision of its services and equipment. Actions filed against the Company include commercial, intellectual property, customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In addition, from time to time the Company is subject to examinations, investigations and/or enforcement actions by federal and state licensing and regulatory agencies and may face the risk of penalties for violation of financial services, consumer protections and other applicable laws and regulations. For example, in 2019, the Company received a subpoena in connection with an investigation by the U.S. Department of Justice (“DOJ”) concerning potential violations of the Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”). In January 2021, the Company entered into a settlement agreement with the DOJ that resolved this investigation. As part of this settlement, the Company paid $3.2 million to the U.S. The Company also has received a civil investigative demand from the staff of the Federal Trade Commission (“FTC”) concerning potential violations of the Fair Credit Reporting Act (“FCRA”) and the “Red Flags Rule” thereunder, and the Federal Trade Commission Act (“FTC Act”). In April 2021, the Company entered into a settlement with the FTC that resolved this investigation. As part of this settlement, which was approved by a federal court on May 3, 2021, the Company paid a total of $20 million to the U.S. and agreed to implement various additional compliance related measures. The Company is currently in the process of administering the terms of this settlement, which include multiple undertakings by the Company. The Company has been endeavoring to comply with these undertakings and the demands on management and costs incurred in connection with these undertakings may be substantial. The Company has been engaged in ongoing discussions with the staff of the FTC regarding the Company’s compliance with the terms of the settlement. In addition, in accordance with the settlement, the Company is required to undergo biennial assessments by an independent third-party assessor who will review the Company’s compliance programs and provide a report to the FTC staff on the Company’s ongoing compliance with the settlement. The Company expects to receive the results of the first biennial assessment during the first quarter of 2022. U.S. Customs and Border Protection is investigating the Company’s historical compliance with regulations relating to duties and tariffs in connection with its import of certain products from outside the U.S. The Department of Justice is also investigating potential violations of the False Claims Act relating to similar issues. The Company is cooperating with these investigations. The Company also receives inquiries, including civil investigative demands (“CIDs”), from various State Attorneys General, typically from their respective consumer protection or consumer affairs divisions. In general, litigation and enforcements by regulatory agencies can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings and enforcement actions are difficult to predict and the costs incurred can be substantial. The Company believes the amounts accrued in its financial statements to cover these matters, as disclosed in the following paragraph, are adequate in light of the probable and estimated liabilities. Factors that the Company considers in the determination of the likelihood of a loss and the estimate of the range of that loss in respect of legal and enforcement matters include the merits of a particular matter, the nature of the matter, the length of time the matter has been pending, the procedural posture of the matter, how the Company intends to defend the matter, the likelihood of settling the matter and the anticipated range of a possible settlement. Because such matters are subject to many uncertainties, the ultimate outcomes are not predictable and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in the Company’s financial statements or that the matters will not have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

The Company regularly reviews outstanding legal claims, actions, and enforcement matters to determine if accruals for expected negative outcomes of such matters are probable and can be reasonably estimated. The Company had accruals for all such matters of approximately $8.2 million and $26.2 million as of December 31, 2021 and 2020, respectively. The Company evaluates its outstanding legal and regulatory proceedings and other matters each quarter to assess its loss contingency accruals, and makes adjustments in such accruals, upward or downward, as appropriate, based on management’s best judgment after consultation with counsel. There is no assurance that the Company’s accruals for loss contingencies will not need to be adjusted in the future. The amount of such adjustment could significantly exceed the accruals the Company has recorded.

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16. Leases

The Company has operating leases for corporate offices, warehouse facilities, research and development and other operating facilities and other operating assets. The Company has finance leases for vehicles, office equipment and other warehouse equipment. The leases have remaining terms of 1 year to 7 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.

The components of lease expense were as follows (in thousands):

	Year ended December 31,
	2021		2020
Operating lease cost	$	15,689	$	16,784
Finance lease cost:
Amortization of right-of-use assets	$	2,375	$	5,090
Interest on lease liabilities	264		453
Total finance lease cost	$	2,639	$	5,543

Supplemental cash flow information related to leases was as follows (in thousands):

	Year ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(16,877)	$	(17,635)
Operating cash flows from finance leases	(264)		(453)
Financing cash flows from finance leases	(3,158)		(7,657)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	4,490	$	3,420
Finance leases	1,808		1,228

Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):

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	Year ended December 31,
	2021			2020
Operating Leases
Operating lease right-of-use assets	$	46,000		$	52,880
Current operating lease liabilities	$	12,033		$	12,135
Operating lease liabilities	41,713			49,692
Total operating lease liabilities	$	53,746		$	61,827
Finance Leases
Property, plant and equipment, gross	$	40,939		$	40,571
Accumulated depreciation	(24,465)			(22,976)
Property, plant and equipment, net	$	16,474		$	17,595
Current finance lease liabilities	$	2,854		$	3,356
Finance lease liabilities	1,416			2,460
Total finance lease liabilities	$	4,270		$	5,816
Weighted Average Remaining Lease Term
Operating leases	5 years			5 years
Finance leases	2.7 years			1.6 years
Weighted Average Discount Rate
Operating leases	7		%	7		%
Finance leases	4		%	4		%

Maturities of lease liabilities were as follows (in thousands):

	Operating Leases		Finance Leases
Year Ending December 31,
2022	$	15,858	$	3,025
2023	15,199		847
2024	14,392		514
2025	8,764		—
2026	5,008		—
Thereafter	4,494		—
Total lease payments	63,715		4,386
Less imputed interest	(9,969)		(116)
Total	$	53,746	$	4,270

17. Related Party Transactions

Transactions with Vivint Solar

Vivint Solar, Inc. (“Solar”) has historically been considered a related party of the Company due to the Company and Solar being under the common control of 313 Acquisition. In October 2020 Solar was acquired by SunRun, Inc. in an all-stock transaction (“SunRun Acquisition”). Upon completion of the SunRun Acquisition, the Company and Solar were no longer under the common control of 313 Acquisition and therefore the Company and Solar are no longer related parties.

The Company was a party to a number of agreements with Solar. In August 2017, the Company entered into a sales dealer agreement with Solar, pursuant to which each company agreed to act as a non-exclusive dealer for the other party to

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market, promote and sell each other’s products. Prior to the SunRun Acquisition, net expenses charged to Solar in connection with these agreements was $3.3 million and $9.2 million during the years ended December 31, 2020 and 2019, respectively.

On March 3, 2020, the Company and Solar amended and restated the sales dealer agreement to, among other things, add exclusivity obligations for both companies in certain territories and jurisdictions, expand the types of services each company is permitted to render thereunder, and to permit use of the services offered by Amigo, a wholly-owned subsidiary of the Company, in connection with the submission and processing of leads generated pursuant to the agreement. The amended and restated agreement has a one-year term, which automatically renews for successive one-year terms unless terminated earlier by either party upon 90 days’ prior written notice.

On March 3, 2020, the Company and Solar entered into a recruiting services agreement pursuant to which each company has agreed to assist the other in recruiting sales representatives to its direct-to-home sales force. The parties will pay each other certain fees for these services which will be calculated in accordance with the terms of the agreement. The Company and Vivint Solar have also agreed under the terms of the agreement not to solicit for employment any member of the other’s executive or senior management team, any dealer, or any of the other’s employees who primarily manage sales, installation or services of the other’s products and services. Such obligations will continue throughout the term of the agreement.

On March 3, 2020, Amigo entered into a Subscriber Generation Agreements with Solar and the Company to facilitate the use of the Amigo application for the submission and processing of leads generated pursuant to the amended and restated sales dealer agreement.

In connection with the amendment and restatement of the sales dealer agreement and the execution of the recruiting services agreement, the Company and Solar terminated the Marketing and Customer Relations Agreement, dated September 30, 2014 (as amended from time to time) and the Non-Competition Agreement, dated September 30, 2014 (as amended from time to time), in each case effective as of March 3, 2020.

Other Related-party Transactions

The Company incurred additional expenses during the years ended December 31, 2021, 2020 and 2019, of approximately $0.9 million, $0.6 million, $2.5 million, respectively, for other related-party transactions including contributions to the charitable organization Vivint Gives Back, facility costs, and other services. These expenses were included in selling and general and administrative expenses in the accompanying consolidated statement of operations. Accrued expenses and other current liabilities included on the Company's balance sheets associated with these related-party transactions at December 31, 2021 and 2020 were $0.1 million and $0.1 million, respectively.

On July 31, 2019, in an effort to deliver additional cost savings and cash-flow improvements, the Company completed a spin-off of Wireless, its wireless internet business. Associated with the spin-off, the Company and Wireless entered into a Transition Service Agreement (“TSA”) According to the TSA, Vivint performs specified services for Wireless, including human resources, information technology, and facilities. The Company invoices Wireless on a monthly basis for these agreed upon services. Additionally, Vivint cross charges Wireless for items not included in the TSA but that are paid for by Vivint on behalf of Wireless. There were no transactions associated with these services for the year ended December 31, 2021 and $1.3 million for each of the years ended December 31, 2020 and 2019. There were no balances due to or from Wireless as of December 31, 2021 and 2020.

Transactions with Blackstone

On November 16, 2012, the Company was acquired by an investor group comprised of certain investment funds affiliated with Blackstone Capital Partners VI L.P., and certain co-investors and management investors through certain mergers and related reorganization transactions (collectively, the “Reorganization”). In connection with the Reorganization, the Company engaged Blackstone Management Partners L.L.C. (“BMP”) to provide monitoring, advisory and consulting services on an ongoing basis. In consideration for these services, the Company agreed to pay an annual monitoring fee equal to the greater of (i) a minimum base fee of $2.7 million subject to adjustments if the Company engages in a business combination or disposition that is deemed significant and (ii) the amount of the monitoring fee paid in respect of the immediately preceding fiscal year, without regard to any post-fiscal year “true-up” adjustments as determined by the agreement. The Company incurred expenses for such services of approximately $5.7 million, $8.1 million and $5.6 million during the years ended December 31, 2021, 2020 and 2019, respectively and was included in general and administrative expense in the accompanying consolidated statement of operations. Accounts payable and accrued expenses and other current liabilities at December 31, 2021 and 2020 included liabilities of $0.7 million and $8.1 million, respectively to BMP related to the monitoring fee.

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Under the support and services agreement, the Company also engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period but in no event shall the Company be obligated to pay more than $1.5 million during any calendar year. During the years ended December 31, 2021, 2020 and 2019 the Company incurred no costs associated with such services. Additionally, during the year ended December 31, 2019 the Company agreed to reimburse Blackstone for $1.8 million of certain other fees incurred by Blackstone for activities related to the Company and was included in general and administrative expenses in the accompanying consolidated statement of operations. In October 2020, Blackstone provided an updated amount of fees in the amount of $1.3 million. This amount was paid in the fourth quarter of 2021.

In connection with the execution of the Merger Agreement, the Company and the parties to the support and services agreement entered into an amended and restated support and services agreement with BMP. The amended and restated support and services agreement became effective upon the consummation of the Merger and amended and restated the existing support and services agreement to, upon the consummation of the merger, (a) eliminate the requirement to pay a milestone payment to BMP upon the occurrence of an IPO, (b) for any fiscal year beginning after the consummation of the merger, (i) eliminate the Minimum Annual Fee and (ii) decrease the “true-up” of the annual Monitoring Fee payment to BMP to 1% of consolidated EBITDA and (c) upon the earlier of (1) the completion of Legacy Vivint Smart Home’s fiscal year ending December 31, 2021 or (2) the date upon which Blackstone owns less than 5% of the voting power of all of the shares of capital stock entitled to vote generally in the election of directors of Vivint Smart Home’s or its direct or indirect controlling parent, and such stake has a fair market value (as determined by Blackstone) of less than $25 million (the “Exit Date”), the annual Monitoring Fee payment to BMP otherwise payable in connection with the agreement will cease and no other milestone payment or other similar payment will be owed by the Company to BMP.

Under the amended and restated support and services agreement, the Company and Legacy Vivint Smart Home have, through the Exit Date (or an earlier date determined by BMP), engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP may, at any time, choose not to provide any such services. Such services are provided without charge, other than for the reimbursement of out-of-pocket expenses as set forth in the amended and restated support and services agreement.

From time to time, the Company does business with a number of other companies affiliated with Blackstone.

Related Party Debt     

Affiliates of Blackstone participated as initial purchasers, arrangers, or creditors of the 2027 notes and term loan facility amendment and restatement in February 2020 and again in the 2029 notes and term loan facility amendment and restatement in July 2021 and received approximately $1.3 million and $3.0 million, respectively, of fees associated with these transactions. As of December 31, 2021, affiliates of Blackstone held $201.2 million and $18.5 million in the Term Loan Facility and 2029 Notes, respectively. As of December 31, 2020, affiliates of Blackstone held $166.1 million of outstanding aggregate principal of the Term Loan Facility.

In February 2020 and July 2021, an affiliate of Fortress participated as a lender in the amended and restated term loan facility and received approximately $0.9 million and $0.8 million in lender fees, respectively. As of December 31, 2021, Fortress held $11.7 million and $119.7 million in the 2027 Notes and Term Loan Facility, respectively. As of December 31, 2020, Fortress held $72.5 million, $19.9 million, $11.7 million and $173.7 million in the 2023 Notes, 2024 Notes, 2027 Notes and Term Loan Facility, respectively.

In July 2019, 313 Acquisition LLC contributed $4.7 million to the Company as a capital contribution.

Transactions involving related parties cannot be presumed to be carried out at an arm’s-length basis.

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18. Segment Reporting and Business Concentrations

For the years ended December 31, 2021, 2020 and 2019, the Company conducted business through one operating segment, Vivint. The Company primarily operated in two geographic regions: United States and Canada. Revenues by geographic region were as follows (in thousands):

	United States		Canada		Total
Revenue from external customers
Year ended December 31, 2021	$	1,418,700	$	60,688	$	1,479,388
Year ended December 31, 2020	$	1,186,218	$	66,049	$	1,252,267
Year ended December 31, 2019	$	1,079,246	$	71,854	$	1,151,100

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19. Employee Benefit Plan

The Company offers eligible employees the opportunity to contribute a percentage of their earned income into company-sponsored 401(k) plans.

From January 1, 2018 through May 2, 2020, participants in the 401(k) plans were eligible for the Company's matching program. This matching program was suspended, effective May 2, 2020 and reinstated, effective January 1, 2021. Additionally, at the end of 2020, the Company made a one-time contribution to the matching program.

Under this reinstated program, the Company matches an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 3% of such employee’s eligible earnings and $0.50 for every $1.00 for the next 2% of such employee’s eligible earnings. The maximum match available under the 401(k) plan is 4% of the employee’s eligible earnings. All contributions under the reinstated program vest immediately.

Matching contributions that were made to the plans during the years ended December 31, 2021, 2020 and 2019 totaled $10.3 million and $4.3 million, and $6.5 million, respectively.

20. Basic and Diluted Net Loss Per Share

The Company computes basic loss per share by dividing loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock. The calculation of diluted loss per share requires that, to the extent the average market price of the underlying shares for the reporting period exceeds the exercise price of the warrants, and the presumed exercise of such securities are dilutive to net loss per share for the period, an adjustment to net loss available to common stockholders used in the calculation is required to remove the change in fair value of the warrants from the numerator for the period. Likewise, an adjustment to the denominator is required to reflect the related dilutive shares, if any, under the treasury stock method. As a result of the Business Combination, the Company has retrospectively adjusted the weighted average number of common shares outstanding prior to January 17, 2020 by multiplying them by the exchange ratio used to determine the number of common shares into which they converted.

The following table sets forth the computation of the Company’s basic and diluted net loss attributable per share to common stockholders for the years ended December 31, 2021, 2020 and 2019:

	Year ended December 31,
	2021		2020		2019
Numerator:
Net loss attributable to common stockholders	$	(305,552)	$	(603,331)	$	(400,696)
Gain on change in fair value of warrants, diluted	(50,967)		—		—
Net loss attributable to common stockholders, diluted (in thousands)	(356,519)		(603,331)		(400,696)
Denominator:
Shares used in computing net loss attributable per share to common stockholders, basic and diluted	208,265,631		179,071,278		94,805,201
Weighted-average effect of potentially dilutive shares to purchase common stock	812,536		—		—
Shares used in computing net loss attributable per share to common stockholders, diluted	209,078,167		179,071,278		94,805,201
Net loss attributable per share to common stockholders:
Basic	$	(1.47)	$	(3.37)	$	(4.23)
Diluted	$	(1.71)	$	(3.37)	$	(4.23)

The following table discloses securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for all periods presented:

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	As of December 31,
	2021	2020	2019
Rollover SARs	2,004,712	2,474,011	3,603,537
Rollover LTIPs	—	2,316,869	4,633,738
RSUs	9,570,667	8,692,347	51,929
PSUs	9,643,666	4,877,277	—
Public warrants	—	878,346	—
Private placement warrants	—	5,933,334	—
Earnout shares reserved for future issuance	24,060	1,260,281	—

See Note 7 for additional information regarding the earnout shares and see Note 14 for additional information regarding the terms of the Rollover SARs, Rollover LTIPs, RSUs, PSUs, earnout shares and public and private placement warrants.

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2021 our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Remediation of Previously Disclosed Material Weakness

As previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 we identified a material weakness in our internal controls over financial reporting related to our controls over the timing of revenue recognition. Specifically, we did not properly design and maintain effective controls over revenue in the quarter ended September 30, 2021 and prior periods to accurately determine the appropriate period to recognize revenue associated with certain transactions. These transactions primarily related to specific monthly service charge adjustments and modifications that created a material right to the customer.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

During the fourth quarter of fiscal 2021, we implemented the below changes to our processes and controls to improve our internal control over financial reporting to remediate the control deficiencies that gave rise to the material weakness:

•Implemented formal processes to require accounting approval prior to their entry into our billing system for all new system settings that determine the period over which revenue is recognized (“System Settings”), to ensure appropriate revenue recognition;

•Developed and implemented additional testing and review procedures related to the System Settings, to ensure the revenue recognition settings are correct at the time of input and do not change over time;

•Improved the design and operation of our internal controls related to the testing of customer contracts, to increase the number of contracts tested and perform a comprehensive review of all modifications to the contracts since their inception that could impact the timing of revenue recognition, as well as the inputs that determine the computation of revenue; and

•Provided additional training to the accounting staff on our billing and customer relationship management systems and the processing of customer contracts in those systems.

Internal Control Over Financial Reporting

Management’s Annual Report on Internal Control Over Financial Reporting

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Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our internal control systems include the controls themselves, actions taken to correct deficiencies as identified, an organizational structure providing for division of responsibilities, careful selection and training of qualified financial personnel and a program of internal audits.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Ernst & Young LLP, an independent registered public accounting firm, which has audited and reported on the consolidated financial statements contained in this Form 10-K, has issued its report on the effectiveness of the Company’s internal control over financial reporting which is included in Part II. Item 8 – Financial Statements and Supplementary Data.

Changes in Internal Control Over Financial Reporting

Except for the remediation indicated above, there have been no changes in our control environment (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2021 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B.OTHER INFORMATION

On February 25, 2022, Patrick E. Kelliher, the Company’s Chief Accounting Officer, and the Company reached a mutual agreement that Mr. Kelliher would step down from his position. While the exact timing of Mr. Kelliher’s departure has not been determined, it is anticipated that Mr. Kelliher will continue in his role through some mutually agreed upon transition period.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

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ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Code of Business Conduct and Ethics

We have adopted Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, which is available on our website at www.vivint.com under Investor Relations: Governance: Governance Documents. Our Code of Business Conduct and Ethics is a “code of ethics”, as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our Internet website.

The remaining information required by this item is incorporated herein by reference from the Company’s definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after the end of the Company’s fiscal year on December 31, 2021 (the “Proxy Statement”).

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ITEM 11.EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from the Proxy Statement.

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ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference from the Proxy Statement.

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ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the Proxy Statement.

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ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference from the Proxy Statement.

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PART IV

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ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules

1.Financial Statements:

Included in Part II, Item 8 of this Annual Report.

2.Financial Statement Schedules:

All other financial schedules are omitted because they are not applicable or not required, or because the information is included herein in Part II. Item 8 in our consolidated financial statements or the notes related thereto.

(b) Exhibits

EXHIBIT INDEX
Exhibit      No.	Description
2.1	Agreement and Plan of Merger, dated as of September 15, 2019, by and among the Company, Maiden Merger Sub, Inc. and Legacy Vivint Smart Home, Inc. (incorporated by reference to Exhibit 2.1 of Mosaic Acquisition Corp.'s Form 8-K, filed with the SEC on September 16, 2019).
2.2	Amendment No. 1 to Agreement and Plan of Merger, dated December 18, 2019, by and among the Company, Maiden Merger Sub, Inc. and Legacy Vivint Smart Home, Inc. (incorporated by reference to Exhibit 2.1 of Mosaic Acquisition Corp.'s Form 8-K filed with the SEC on December 19, 2019).
3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K, filed with the SEC on January 24, 2020).
3.2	Certificate of Amendment of Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K filed with the SEC on January 24, 2020).
3.3	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K filed with the SEC on January 24, 2020).
4.1	Indenture, dated as of May 26, 2016, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to the Company’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on May 26, 2016).
4.2	First Supplemental Indenture, dated as of August 17, 2016, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to the Company’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on August 17, 2016).
4.3	Second Supplemental Indenture, dated as of February 1, 2017, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to the Company’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on February 1, 2017).
4.4	Indenture, dated as of August 10, 2017, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee, relating to the Company's 7.625% Senior Notes due 2023 (incorporated by reference to Exhibit 4.1 to the Current Report on From 8-K of APX Group Holdings, Inc. filed on August 10, 2017).
4.5	Indenture, dated as of May 10, 2019, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on May 10, 2019).
4.6	Indenture, dated as of February 14, 2020, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association as trustee and collateral agent relating to APX Group, Inc.’s 6.75% Senior Secured Notes due 2027 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 19, 2020).

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4.7	Form of Note relating to APX Group, Inc.’s 6.75% Senior Secured Notes due 2027 (included in Exhibit 4.6 above).
4.8	Third Supplemental Indenture, dated as of May 6, 2020, among Vivint Smart Home, Inc. and Wilmington Trust, National Association, as trustee relating to APX Group, Inc.’s 7.875% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
4.9	First Supplemental Indenture, dated as of May 6, 2020, among Vivint Smart Home, Inc. and Wilmington Trust, National Association, as trustee relating to APX Group, Inc.’s 7.625% Senior Notes due 2023 (incorporated by reference to Exhibit 4.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
4.1	First Supplemental Indenture, dated as of May 6, 2020, among Vivint Smart Home, Inc., the indirect parent company of APX Group, Inc., and Wilmington Trust, National Association, as trustee relating to APX Group, Inc’s 8.50% Senior Secured Notes due 2024 (incorporated by reference to Exhibit 4.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
4.11	First Supplemental Indenture, dated as of May 6, 2020, among Vivint Smart Home, Inc., the indirect parent company of APX Group, Inc., and Wilmington Trust, National Association, as trustee relating to APX Group, Inc’s 6.75% Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
4.12	Registration Rights Agreement, dated as of May 10, 2019, by and among APX Group, Inc., the guarantors listed on Schedule I thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several initial purchasers of the Notes (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on May 10, 2019).
4.13	Description of the Securities of Vivint Smart Home, Inc. as of December 31, 2021.
4.14	Specimen Warrant Certificate of Mosaic (incorporated by reference to Exhibit 4.3 of Mosaic’s Form S-1 filed with the SEC on September 27, 2017).
4.15	Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.15 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 26, 2021).
4.16	Warrant Agreement, dated as of September 26, 2017, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.4 filed with the Registrant’s Current Report on Form 8-K filed on October 24, 2017).
4.17	Indenture, dated as of July 9, 2021, between APX Group, Inc., as the Issuer, the guarantors party hereto, and Wilmington Trust, National Association, as trustee, payment agent and registrar, relating to the Company's 5.75% Senior Notes due 2029 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 12, 2021).
4.18	Form of Note relating to APX Group, Inc.’s 5.75% Senior Notes due 2029 (included in Exhibit 4.17 above).
10.1	Second Amended and Restated Credit Agreement, dated as of July 9, 2021, among APX Group Holdings, Inc., as Holdings, APX Group, Inc., as the borrower, the guarantors party hereto from time to time, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on July 12, 2021).
10.2	Security Agreement, dated as of November 16, 2012, among the grantors named therein and Wilmington Trust, National Association, as Collateral Agent (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.3	Intercreditor Agreement and Collateral Agency Agreement, dated as of November 16, 2012, among 313 Group Inc., the other grantors named therein, Bank of America, N.A., as Credit Agreement Collateral Agent, Wilmington Trust, National Association, as Notes Collateral Agent, and each Additional Collateral Agent from time to time party thereto (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.4	Amended and Restated Security Agreement, dated as of July 9, 2021, among the grantors identified therein and Bank of America, N.A., as administrative agent.

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10.5	Collateral Agent Joinder Agreement No. 1, dated as of September 6, 2018 to the Intercreditor and Collateral Agency Agreement dated as of November 16, 2012, among APX Group, Inc., the grantors party thereto, Bank of America, N.A. as the Credit Agreement Collateral Agent, Wilmington Trust, National Association, as Notes Collateral Agent, and each additional collateral agent from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018).
10.6	Transaction Agreement, dated September 16, 2012, by and among 313 Acquisition LLC, 313 Group, Inc., 313 Solar, Inc., 313 Technologies, Inc., APX Group, Inc., V Solar Holdings, Inc. and 2GIG Technologies, Inc. (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.7†	Management Subscription Agreement (Co-Investment Units), dated as of November 16, 2012, between 313 Acquisition LLC and Todd Pedersen (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.8†	Management Subscription Agreement (Co-Investment Units), dated as of November 16, 2012, between 313 Acquisition LLC and Alex Dunn (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.9†	Management Subscription Agreement (Incentive Units), dated as of November 16, 2012, between Acquisition LLC and Todd Pedersen (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.10†	Management Subscription Agreement (Incentive Units), dated as of November 16, 2012, between Acquisition LLC and Alex Dunn (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.11†	Form of Management Subscription Agreement (Incentive Units) (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.12†	Form of Management Subscription Agreement (Co-Investment Units) (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-4 of APX Group Holdings, Inc. and the other registrants listed therein).
10.13†	Amended and Restated 313 Acquisition LLC Unit Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of APX Group Holdings, Inc. filed on September 23, 2016).
10.14†	Form of Letter Amendment, dated March 8, 2016, to Management Subscription Agreement (Incentive Units) (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K of APX Group Holdings, Inc. for the fiscal year ended December 31, 2015).
10.15†	Form of Retention Award Agreement (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018).
10.16†	Form of Restricted Stock Unit Award Agreement under the Vivint Group, Inc. Amended and Restated 2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q of APX Group Holdings, Inc. for the quarterly period ended September 30, 2018).
10.17	Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc. (Portions of this exhibit have been omitted pursuant to confidential treatment order) (incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K of APX Group Holdings, Inc. for the fiscal year ended December 31, 2017).
10.18†	Incentive Compensation Plan originally adopted on March 4, 2019 and assumed by Vivint Smart Home, Inc. on February 29, 2020 (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 26, 2021).
10.19	Registration Rights Agreement, dated September 15, 2019, between the Company, Legacy Vivint Smart Home and the holders party thereto (incorporated by reference to Exhibit 10.19 of the Company’s Form S-4, filed with the SEC on September 24, 2019).

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10.20	Stockholders Agreement, dated as of September 15, 2019, among the Company, Legacy Vivint Smart Home and the other parties thereto (incorporated by reference to Exhibit 10.20 of the Company’s Form S-4 filed with the SEC on September 24, 2019).
10.21	Subscription Agreement, by and among the Company, Legacy Vivint Smart Home and Fayerweather Fund Eiger, L.P., dated December 18, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the SEC on December 19, 2019).
10.22†	Amended and Restated Support and Services Agreement, among Mosaic, APX, Blackstone Management Partners L.L.C., Blackstone Capital Partners VI L.P. and 313 Acquisition, dated September 15, 2019 and effective as of January 17, 2020 (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-4 filed with the SEC on September 24, 2019).
10.23†	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 the Registrant’s Current Report on Form 8-K/A filed on January 27, 2020).
10.24†	Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.4 to the Registrant’s Post-Effective Amendment on Form S-8 to Registration Statement on Form S-4 filed on March 24, 2020).
10.25†	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
10.26†	Form of Performance Stock Unit Grant Notice and Performance Stock Unit Award Agreement under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
10.27†	Employment Agreement, dated March 2, 2020, between Vivint Smart Home, Inc. and Dale R. Gerard (incorporated by reference to Exhibit 10.35 to the Registration Statement on Form S-4/A of APX Group Holdings, Inc. filed on March 23, 2020).
10.28†	Employment Agreement, dated March 2, 2020, between Vivint Smart Home, Inc., APX Group, Inc., and Todd M. Santiago (incorporated by reference to Exhibit 10.36 to the Registration Statement on Form S-4/A of APX Group Holdings, Inc. filed on March 23, 2020).
10.29†	Separation Agreement, dated March 2, 2020, between Vivint Smart Home, Inc., ADDD Trust, 313 Acquisition LLC, and Alex J. Dunn (incorporated by reference to Exhibit 10.37 to the Registration Statement on Form S-4/A of APX Group Holdings, Inc. filed on March 23, 2020).
10.30†	Separation Agreement, dated March 13, 2020, between Vivint Smart Home, Inc. and Matthew J. Eyring (incorporated by reference to Exhibit 10.38 to the Registration Statement on Form S-4/A of APX Group Holdings, Inc. filed on March 23, 2020).
10.31†	Employment agreement dated March 2, 2020, between Vivint Smart Home, Inc., APX Group, Inc. and JT Hwang (incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 26, 2021).
10.32†	First Amendment to Stockholders Agreement, dated as of April 24, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 27, 2020).
10.33†	Form of Director Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020).
10.34	First Amendment, effective May 29, 2018, to Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2021).
10.35	Second Amendment, effective February 26, 2019, to Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc. (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2021).

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10.36	Third Amendment, effective March 31, 2021, to Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc. (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2021).
10.37	Fourth Amendment, effective March 31, 2021, to Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 4, 2021).
10.38	Fifth Amendment, effective January 25, 2022, to Second Amended and Restated Consumer Financing Services Agreement, dated May 31, 2017, between Citizens Bank, N.A. and APX Group, Inc.
10.39	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (2021 Time-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2021).
10.40	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (2021 Performance-Based Restricted Stock Units) (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on May 14, 2021).
10.41†	Transition and Consulting Agreement, dated June 17, 2021, by and among Vivint Smart Home, Inc. and Shawn J. Lindquist (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 21, 2021).
10.42†	Amended and Restated Employment Agreement, dated February 27, 2022, between Vivint Smart Home, Inc. and David Bywater.
10.43†	Employment Agreement, dated July 22, 2022, between Vivint Smart Home, Inc. and Daniel Garen.
21.1	Subsidiaries of Vivint Smart Home, Inc.
23.1	Consent of Independent Registered Public Accounting Firm.
31.1	Certification of the Registrant’s Chief Executive Officer, David Bywater, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
31.2	Certification of the Registrant’s Chief Financial Officer, Dale Gerard, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
32.1	Certification of the Registrant’s Chief Executive Officer, David Bywater, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Registrant’s Chief Financial Officer, Dale Gerard, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	The following materials are formatted in iXBRL (inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity information.
104.1	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101.1).

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†

Identifies exhibits that consist of a management contract or compensatory plan or arrangement.

Certain portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information (i) is not material and (ii) is the type that the Registrant treats as private or confidential. The agreements and other documents filed as exhibits to this Annual Report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs at the date they were made or at any other time.

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ITEM 16.FORM 10-K SUMMARY

None

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VIVINT SMART HOME, INC.
By:	/s/ DALE R. GERARD
	Dale R. Gerard
	Chief Financial Officer
	Date: March 1, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of March 1, 2022.

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Name	Title
/s/ David H. Bywater	Chief Executive Officer and Director
DAVID H. BYWATER	(Principal Executive Officer and Director)
/s/ Dale R. Gerard	Chief Financial Officer
DALE R. GERARD	(Principal Financial Officer)
/s/ Patrick E. Kelliher	Chief Accounting Officer
PATRICK E. KELLIHER	(Principal Accounting Officer)
/s/ David F. D'Alessandro	Director
DAVID F. D’ALESSANDRO
/s/ Barbara J. Comstock	Director
BARBARA J. COMSTOCK
/s/ Paul S. Galant	Director
PAUL S. GALANT
/s/ Jay D. Pauley	Director
JAY D. PAULEY
/s/ Todd R. Pedersen	Director
TODD R. PEDERSEN
/s/ Michael Staub	Director
MICHAEL STAUB
/s/ Joseph S. Tibbetts, Jr.	Director
JOSEPH S. TIBBETTS, JR.
/s/ Peter F. Wallace	Director
PETER F. WALLACE

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EX-4.13

Exhibit 4.13

VIVINT SMART HOME, INC. DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT

The following is a brief description of the material terms of the Class A common stock, $0.0001 par value per share (the “Class A common Stock”) of Vivint Smart Home, Inc., a Delaware corporation, which is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The summary is not intended to be complete and is qualified by reference to the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”), our Amended and Restated Certificate of Incorporation, as amended by the Certificate of Amendment of Certificate of Incorporation (as amended, the “Certificate of Incorporation”) and our Amended and Restated Bylaws (the “Bylaws”). For a complete description of the Class A common stock, you should read the Certificate of Incorporation and the Bylaws described herein in their entirety, each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.

References herein to “Vivint Smart Home, Inc.,” “we,” “us,” “our” and “Company” refer to Vivint Smart Home, Inc. and not to any of its subsidiaries.

The Class A common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “VVNT.”

In connection with the initial public offering of our predecessor, Mosaic Acquisition Corp., the Company issued warrants, with each warrant conferring the right to purchase a share of Class A common stock at a price of $11.50 per share (the “Warrants”). As of December 31, 2021, there were 5,933,334 Warrants outstanding. The summary of the Warrants is not intended to be complete and is qualified by reference to the applicable provisions of the Warrant Agreement, dated September 26, 2017, between Continental Stock Transfer & Trust Company, as warrant agent, and the Company, as the successor to Mosaic Acquisition Corp. (the “Warrant Agreement”), which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.

Authorized Capital

The Certificate of Incorporation authorizes the issuance of 3,300,000,000 shares, consisting of (i) 300,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”) and (ii) 3,000,000,000 shares of Class A common stock, par value $0.0001 per share.

Class A Common Stock

Holders of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, including the election or removal of directors. The holders of the Company’s Class A common stock do not have cumulative voting rights in the election of directors. Upon the Company’s liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of the Company’s Class A common stock are be entitled to receive pro rata the Company’s remaining assets available for distribution. Holders of the Company’s Class A common stock do not have preemptive, subscription, redemption or conversion rights. The Class A common stock is not subject to further calls or assessment by the Company. There are no redemption or sinking fund provisions applicable to the Class A common stock. The rights, powers, preferences and privileges of holders of the Company’s Class A common stock are subject to those of the holders of any shares of the Company’s preferred stock the Company may authorize and issue in the future.

Preferred Stock

The Certificate of Incorporation authorizes the Company’s Board of Directors (“Board”) to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by the NYSE, the authorized shares of preferred stock will be available for issuance without further action by the holders of the Class A common stock. The Board has the discretion to determine the powers, preferences and relative, participating,

optional and other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation, voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock, including, without limitation:

•the designation of the series;

•the number of shares of the series, which the Board may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

•whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

•the dates at which dividends, if any, will be payable;

•the redemption rights and price or prices, if any, for shares of the series;

•the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

•the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company’s affairs;

•whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

•restrictions on the issuance of shares of the same series or of any other class or series; and

•the voting rights, if any, of the holders of the series.

The Company could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of the Company’s Class A common stock might believe to be in their best interests or in which the holders of the Company’s Class A common stock might receive a premium for the Class A common stock over the market price of the common stock. Additionally, the issuance of preferred stock could adversely affect the rights of holders of the Company’s Class A common stock by restricting dividends on the Class A common stock, diluting the voting power of the Class A common stock or subordinating the liquidation rights of the Class A common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of the Company’s Class A common stock. At present, we have no plans to issue any preferred stock.

As of December 31, 2021, there were no shares of preferred stock outstanding.

Warrants

Pursuant to the Warrant Agreement, a holder of Warrants may exercise its Warrants only for a whole number of shares of Class A common stock of the Company. If, upon exercise of the Warrants, a holder would be entitled to receive a fractional interest in a share (as a result of a subsequent share dividend payable in shares of common stock, or by a split up of the Class A common stock or other similar event), the Company will, upon exercise, round down to the nearest whole number the number of Class A common stock to be issued to such holder. Each Warrant entitles the holder thereof to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment as described in the Warrant Agreement.

No Warrant is exercisable and the Company is not obligated to issue shares of Class A common stock until such shares have been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of the state of residence of the Warrant holder. If a registration statement covering the Class A common stock issuable upon exercise of the Warrants is not effective (with a current prospectus relating thereto), Warrant holders may, until such time as there is an effective registration statement, exercise Warrants only on a “cashless basis” pursuant to an available exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). In such event, each holder would pay the exercise price by surrendering the Warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares underlying the Warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the Warrants by (y) the fair market value. The “fair market value” will mean the average reported last sale price of the Class A common stock for the ten (10) trading days ending on the trading day prior to the date

on which the notice of exercise is received by the warrant agent from the holder of such Warrants or its securities broker or intermediary.

The exercise price and number of Class A common stock issuable on exercise of the Warrants may be adjusted in certain circumstances as described in the Warrant Agreement, including in the event of a share dividend, extraordinary dividend or the Company’s recapitalization, reorganization, merger or consolidation. The Company is also permitted, in its sole discretion, to lower the exercise price at any time prior to the expiration date for a period of not less than 20 business days, provided that the Company provides at least 20 days prior written notice of such reduction to registered holders of the Warrants and that any such reduction will be applied consistently to all of the Warrants. Any such reduction in the exercise price will comply with any applicable regulations under the Federal securities laws, including Rule 13e-4 under the Exchange Act generally and Rule 13e-4(f)(1)(i) specifically.

The Warrants may be exercised so long as certain conditions set forth in the Warrant Agreement (including, without limitation, with respect to an effective registration statement) are satisfied. The Warrants will expire at 5:00 p.m., New York City time on the earlier to occur of (x) the date that is five years from the completion of the Company’s initial Business Combination (as defined in the Warrant Agreement) or (y) the redemption date as fixed by the Company pursuant to the Warrant Agreement, if the Company elects to redeem all Warrants as described below. Each outstanding Warrant not exercised on or before the expiration date will become void, and all rights under the Warrants and the Warrant Agreement will cease as of the expiration date.

So long as the Warrants are held by the initial purchasers or such purchasers’ permitted transferees, the Warrants will be non-redeemable by the Company. If the Warrants are held by someone other than the initial stockholders or their permitted transferees, the Warrants will be redeemable by the Company, in whole and not in part, at a price of $0.01 per Warrant:

•at any time while the Warrants are exercisable and prior to their expiration,

•upon not less than 30 days’ prior written notice of redemption to each Warrant holder,

•if the reported last sale price of the shares of the Company’s Class A common stock equals or exceeds $18.00 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to Warrant holders, and

•if there is an effective registration statement (and a current prospectus relating thereto) with respect to the Company’s Class A common stock underlying such Warrants at the redemption date and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

In addition, subject to certain exceptions for the Warrants, the Company may call the Warrants for redemption, in whole and not in part, at a price equal to a specified number of Class A common stock per Warrant:

•commencing 90 days after the Warrants are exercisable and prior to their expiration,

•upon not less than 30 days’ prior written notice of redemption to each Warrant holder,

•if the reported last sale price of the shares of the Company’s Class A common stock equals or exceeds $10.00 per share on the trading day prior to the notice of redemption to Warrant holders, and

•if there is an effective registration statement (and a current prospectus relating thereto) with respect to the Company’s Class A common stock underlying such Warrants at the redemption date and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.

If the Company calls the Warrants for redemption as described above, the Company will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” Whether the Company will exercise its option to require all holders to exercise their Warrants on a “cashless basis” will depend on a variety of factors including the price of the Class A common stock at the time the Warrants are called for redemption, the Company’s cash needs at such time and concerns regarding dilutive share issuances.

A Warrant holder will not have the rights or privileges of holders of Class A common stock and any voting rights with respect to the shares underlying any Warrants until they exercise such Warrants and receive Class A common stock. After the issuance of Class A common stock upon exercise of the Warrants, each holder will be entitled to such rights with respect to such shares of Class A common stock as provided by applicable law, the Company’s organizational documents and any other applicable agreement.

Warrant holders may elect, at their sole option and discretion, to be subject to a restriction on the exercise of their Warrants such that an electing Warrant holder (and his, her or its affiliates) would not be able to exercise their Warrants to the extent that, after giving effect to such exercise, such holder (and his, her or its affiliates) would beneficially own in excess of 9.8% of the Class A common stock outstanding.

The Company may lower the exercise price or extend the duration of the exercise period of the Warrants in accordance with the Warrant Agreement, without the consent of any holder.

Dividends

The DGCL permits a corporation to declare and pay dividends out of “surplus” or, if there is no “surplus,” out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors. The capital of the corporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.

The Company has not paid any cash dividends on its Class A common stock to date. Declaration and payment of any dividend in the future will be subject to the discretion of the Board. The time and amount of dividends will be dependent upon the Company’s financial condition, operations, cash requirements and availability, debt repayment obligations, capital expenditure needs and restrictions in the Company’s debt instruments, industry trends, the provisions of Delaware law affecting the payment of distributions to stockholders and any other factors the Board may consider relevant. In addition, the Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, the Company’s ability to declare dividends may be limited by restrictive covenants contained in the agreements governing the indebtedness of the Company’s subsidiaries.

Anti-Takeover Effects of the Certificate of Incorporation, the Bylaws and Certain Provisions of Delaware Law

The Certificate of Incorporation, the Bylaws and the DGCL contain provisions, which are summarized in the following paragraphs, which are intended to enhance the likelihood of continuity and stability in the composition of the Board and to discourage certain types of transactions that may involve an actual or threatened acquisition of the Company. These provisions are intended to avoid costly takeover battles, reduce the Company’s vulnerability to a hostile change of control or other unsolicited acquisition proposal, and enhance the ability of the Board to maximize stockholder value in connection with any unsolicited offer to acquire the Company. However, these provisions may have the effect of delaying, deterring or preventing a merger or acquisition of the Company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including attempts that might result in a premium over the prevailing market price for the shares of Class A common stock.

Authorized but Unissued Capital Stock

Delaware law does not require stockholder approval for any issuance of authorized shares.

However, the listing requirements of the NYSE, which would apply if and so long as the Class A common stock remains listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of Class A common stock. Additional shares that may be issued in the future may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

The Company may generally issue preferred shares on terms calculated to discourage, delay or prevent a change of control of the Company or the removal of the Company’s management. Moreover, the Company’s authorized but unissued shares of preferred stock will be available for future issuances without stockholder approval

and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, to facilitate acquisitions and employee benefit plans.

One of the effects of the existence of unissued and unreserved Class A common stock or preferred stock could be to enable the Board to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of the Company’s management and possibly deprive the Company’s stockholders of opportunities to sell their shares of Class A common stock at prices higher than prevailing market prices.

Classified Board of Directors

The Certificate of Incorporation provides that the Board will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with each director serving a three-year term. As a result, approximately one-third of the Board is elected each year. The classification of directors has the effect of making it more difficult for stockholders to change the composition of the Board. The Certificate of Incorporation and Bylaws provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the Board.

Business Combinations

The Company has opted out of Section 203 of the DGCL; however, the Certificate of Incorporation contains similar provisions providing that the Company may not engage in certain “business combinations” (as defined in the Certificate of Incorporation) with any “interested stockholder” for a three-year period following the time that such stockholder became an interested stockholder, unless:

•prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the Company outstanding at the time the transaction commenced, excluding certain shares; or

•at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662⁄3% of the outstanding voting stock of the Company which is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of the Company’s outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with the Company for a three-year period. This provision may encourage companies interested in acquiring the Company to negotiate in advance with the Board because the stockholder approval requirement would be avoided if the Board approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in the Board and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.

The Certificate of Incorporation provides that certain investment funds affiliated with The Blackstone Group Inc. (“Blackstone”), and their affiliates and any of their respective direct or indirect transferees and any group as to which such persons are a party do not constitute “interested stockholders” for purposes of this provision.

Removal of Directors; Vacancies

Under the DGCL, unless otherwise provided in the Certificate of Incorporation, a director serving on a classified board may be removed by the stockholders only for cause. The Certificate of Incorporation provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class; provided, however, at any time when 313 Acquisition, LLC (“313 Acquisition”), certain stockholders of 313 Acquisition, Mosaic Sponsor, LLC, Fortress Mosaic Sponsor LLC (collectively, the “Stockholder Parties”) and their affiliates beneficially own in the aggregate, less than 30% of the total voting power of all outstanding shares of the Company’s stock entitled to vote generally in the election of directors, directors may only be removed for cause, and only upon the affirmative vote of holders of at least 662⁄3% of the voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.

In addition, the Certificate of Incorporation also provides that that, subject to the rights granted to one or more series of preferred stock then outstanding and the rights granted pursuant to the stockholders agreement (the “Stockholders Agreement”) that the Company entered into with the Stockholder Parties, any newly created directorship on the Board that results from an increase in the number of directors and any vacancies on the Board will be filled only by the affirmative vote of a majority of the remaining directors (other than directors elected by the holders of any series of preferred stock, voting separately as a series or together with one or more series, as the case may be), even if less than a quorum, by a sole remaining director or by the stockholders; provided, however, that subject to the rights of the holders of preferred stock or those granted pursuant to the Stockholders Agreement, at any time when the Stockholder Parties and their affiliates beneficially own, in the aggregate, less than 30% of the total voting power of all then outstanding shares of stock of the Company entitled to vote generally in the election of directors, any newly created directorship on the Board that results from an increase in the number of directors and any vacancy occurring on the board of directors may only be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (other than directors elected by the holders of any series of preferred stock, by voting separately as a series or together with one or more series, as the case may be) (and not by the stockholders).

Quorum

The Bylaws provide that at any meeting of the Board, a majority of the total number of directors then in office constitutes a quorum for all purposes.

No Cumulative Voting

Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation expressly authorizes cumulative voting. The Certificate of Incorporation does not authorize cumulative voting.

Special Stockholder Meetings

The Certificate of Incorporation provides that special meetings of the Company’s stockholders may be called at any time only by or at the direction of the Board or the chairperson of the Board; provided, however, at any time when the Stockholder Parties and their affiliates beneficially own, in the aggregate, at least 30% in voting power of the stock entitled to vote generally in the election of directors, special meetings of the Company’s stockholders shall also be called by or at the direction of the Board or the chairperson of the Board at the request of Blackstone and its affiliates. The Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of the Company.

Requirements for Advance Notification of Stockholder Meetings, Nominations and Proposals

The Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the Board or a committee of the Board. In order for any matter to be “properly brought” before a meeting, a stockholder has to comply with advance notice requirements and provide the Company with certain information. Generally, to be timely, a

stockholder’s notice must be received at the Company’s principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. The Bylaws also specify requirements as to the form and content of a stockholder’s notice. The Bylaws allow the chairperson of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of the Company.

Consent of Stockholders in Lieu of Meeting

Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of the Company’s stock entitled to vote thereon were present and voted, unless the Company’s charter provides otherwise. The Certificate of Incorporation precludes stockholder action by any consent in lieu of a meeting at any time when the Stockholder Parties and their affiliates own, in the aggregate, less than 30% in voting power of the Company’s stock entitled to vote generally in the election of directors.

Supermajority Provisions

The Certificate of Incorporation and the Bylaws provide that the Board is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, the Bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware or the Certificate of Incorporation. So long as the Stockholder Parties beneficially own, in the aggregate, less than 30% of the total voting power of all the then outstanding shares of stock of the Company, any amendment, alteration, rescission or repeal of the Bylaws by the Company’s stockholders requires the affirmative vote of the holders of at least 662⁄3% in voting power of all the then outstanding shares of stock entitled to vote thereon, voting together as a single class.

The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage. The Certificate of Incorporation provides that, so long as the Stockholder Parties beneficially own, in the aggregate, less than 30% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, the following provisions therein may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 662⁄3% in voting power all the then outstanding shares of the Company’s stock entitled to vote thereon, voting together as a single class:

•the provision requiring a 662⁄3% supermajority vote for stockholders to amend the Bylaws;

•the provisions providing for a classified Board (the election and term of directors);

•the provisions regarding filling vacancies on the Board and newly created directorships;

•the provisions regarding resignation and removal of directors;

•the provisions regarding calling special meetings of stockholders;

•the provisions regarding stockholder action by written consent;

•the provisions eliminating monetary damages for breaches of fiduciary duty by a director;

•the provisions regarding the election not to be governed by Section 203 of the DGCL;

•the provisions regarding competition and corporate opportunities; and

•the amendment provision requiring that the above provisions be amended only with an 662⁄3% supermajority vote.

The combination of the lack of cumulative voting and the supermajority voting requirements make it more difficult for the Company’s existing stockholders to replace the Board as well as for another party to obtain control of the Company by replacing the Board. Because the Board has the power to retain and discharge the Company’s officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management.

These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control of the Company or its management, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of the Board and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of the Company. These provisions are designed to reduce the Company’s vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for the Company’s shares and, as a consequence, may inhibit fluctuations in the market price of the Company’s shares that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in management.

Dissenters’ Rights of Appraisal and Payment

Under the DGCL, with certain exceptions, the Company’s stockholders have appraisal rights in connection with a merger or consolidation of the Company. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.

Stockholders’ Derivative Actions

Under the DGCL, any of the Company’s stockholders may bring an action in the Company’s name to procure a judgment in the Company’s favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of the Company’s shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.

Exclusive Forum

The Certificate of Incorporation provides that, unless the Company consents to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of the Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company or its officers or directors arising pursuant to any provision of the DGCL or the Certificate of Incorporation or the Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine will, to the fullest extent permitted by law, be solely and exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction. To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company will be deemed to have notice of and consented to the forum provisions in the Certificate of Incorporation. However, it is possible that a court could find the Company’s forum selection provisions to be inapplicable or unenforceable. Although the Company believes this provision benefits it by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against Company’s directors and officers.

Conflicts of Interest

Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. The Certificate of Incorporation, to the maximum extent permitted from time to time by Delaware law, renounces any interest or expectancy that the Company has in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to the Company’s officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are employees of the Company or its subsidiaries. The Certificate of Incorporation provides that, to the fullest extent permitted by law, none of the Stockholder Parties or any of their affiliates or any non-employee directors will have any duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which the Company or its affiliates now engage or propose to engage or (ii) otherwise competing with the Company or its affiliates. In addition, to the fullest extent permitted by law, in the event that the Stockholder Parties or any of their affiliates or

any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or herself or its or his or her affiliates or for the Company or its affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to the Company or any of its affiliates and they may take any such opportunity for themselves or offer it to another person or entity. The Certificate of Incorporation does not renounce the Company’s interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the Company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for the Company unless (i) the Company is neither financially or legally able, nor contractually permitted to undertake, (ii) from its nature, the business opportunity is not in the line of the Company’s business or is of no practical advantage to the Company or (iii) the business opportunity is one in which the Company has no interest or reasonable expectancy.

Limitations on Liability and Indemnification of Officers and Directors

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. The Certificate of Incorporation includes a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of the Company and its stockholders, through stockholders’ derivative suits on the Company’s behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

The Bylaws provide that the Company must indemnify and advance expenses to directors and officers to the fullest extent authorized by the DGCL. The Company is also expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for directors, officers and certain employees for some liabilities. The Company believes that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability, indemnification and advancement provisions in the Certificate of Incorporation and the Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit the Company and its stockholders. In addition, your investment may be adversely affected to the extent the Company pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. The Company believes that these provisions, liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Company’s directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

There is currently no pending material litigation or proceeding involving any of the Company’s directors, officers or employees for which indemnification is sought.

Stockholders Agreement

Pursuant to the Stockholders Agreement that the Company entered into with the Stockholder Parties, Blackstone has the right to designate nominees for election to the Company’s Board at any meeting of its stockholders. The number of Blackstone Designees (as defined in the Stockholders Agreement) will be equal to (a) a majority of the total number of directors in the event that 313 Acquisition, Blackstone and their respective affiliates (collectively, the “313 Acquisition Entities”) beneficially own in the aggregate 50% or more of the outstanding

shares of Class A common stock, (b) 40% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 40%, but not 50% or more, of the outstanding shares of Class A common stock, (c) 30% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 30%, but not more than 40%, of the outstanding shares of Class A common stock, (d) 20% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 20%, but not more than 30%, of the outstanding shares of Class A common stock and (e) 10% of the total number of directors in the event that the 313 Acquisition Entities beneficially own in the aggregate more than 5%, but not more than 20% of the outstanding shares of Class A common stock.

Under the Stockholders Agreement, the Company agreed to nominate one director designated by Fortress Mosaic Investor LLC to the Company’s Board (the “Fortress Designee”) so long as the Fortress Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of the Company’s Class A common stock the Fortress Holders own immediately following the consummation of the initial Business Combination; provided that the Fortress Designee must be an employee or principal of The SoftBank Vision Fund unless otherwise agreed in writing by the Blackstone Designator (as defined in the Stockholders Agreement) and the Company.

Under the Stockholders Agreement, the Company agreed to nominate one director designated by the Summit Designator (as defined in the Stockholders Agreement) to the Company’s Board so long as the Summit Holders (as defined in the Stockholders Agreement) beneficially own at least 50% of the shares of the Company’s Class A Common Stock they own immediately following the consummation of the initial Business Combination.

Registration Rights

313 Acquisition, certain stockholders of 313 Acquisition, Legacy Vivint Smart Home, Inc., Mosaic Sponsor, LLC, Fortress Mosaic Sponsor, LLC and certain other stockholders named therein are parties to a registration rights agreement dated as of September 15, 2019, which provides for customary “demand” and “piggyback” registration rights in respect of its Class A common stock for certain stockholders.

Rule 144

Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company, such as the Company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

•the issuer of the securities that was formerly a shell company has ceased to be a shell company;

•the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

•the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and

•at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.

Upon the consummation of the initial Business Combination, the Company ceased to be a shell company and on January 24, 2020, the Company filed current Form 10 information with the SEC reflecting its status as an entity that is not a shell company.

Subject to the availability of Rule 144 for the resale of our securities, a person who has beneficially owned restricted shares of our Class A common stock or Warrants for at least six months would be entitled to sell their securities, provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.

Persons who have beneficially owned restricted shares of our Class A common stock or Warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

•one percent (1%) of the total number of shares of common stock then outstanding; or

•the average weekly reported trading volume of the Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by our affiliates under Rule 144 will also be limited by manner of sale provisions and notice requirements and to the availability of current public information about us.

Transfer Agent, Warrant Agent and Registrar

The transfer agent, warrant agent and registrar for our Class A common stock and Warrants is Continental Stock Transfer & Trust Company.

EX-10.4

Exhibit 10.4

AMENDED AND RESTATED SECURITY AGREEMENT

dated as of

July 9, 2021

among

THE GRANTORS IDENTIFIED HEREIN

and

BANK of AMERICA, N.A.,
as Administrative Agent

Reference is made to the Intercreditor and Collateral Agency Agreement, dated as of November 16, 2012, among APX Group, Inc., a Delaware corporation, the other grantors party thereto, Bank of America, N.A., in its capacity as collateral agent for the Credit Agreement Secured Parties (as defined therein) and Wilmington Trust, National Association, in its capacity as collateral agent for the Senior Secured Notes Secured Parties (as defined therein), and each additional collateral agent from time to time party thereto as collateral agent for any First Lien Obligations (as defined therein) of any other Class (as defined therein), and as it may be amended from time to time in accordance with the Credit Agreement (as defined below) (the “Closing Date Intercreditor Agreement”). Each Secured Party (as defined in the Credit Agreement referred to below) (a) consents to the terms of the Closing Date Intercreditor Agreement, including the priority of payment provisions of such Closing Date Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Closing Date Intercreditor Agreement and (c) authorizes and instructs the Administrative Agent to enter into the Closing Date Intercreditor Agreement as “Collateral Agent,” and on behalf of such Secured Party.

TABLE OF CONTENTS

Page

ARTICLE I Definitions
SECTION 1.01    Credit Agreement	1
SECTION 1.02    Other Defined Terms	1
ARTICLE II Pledge of Securities
SECTION 2.01    Pledge	4
SECTION 2.02    Delivery of the Pledged Equity	5
SECTION 2.03    Representations, Warranties and Covenants	6
SECTION 2.04    Certification of Limited Liability Company and Limited Partnership Interests	7
SECTION 2.05    Registration in Nominee Name; Denominations	8
SECTION 2.06    Voting Rights; Dividends and Interest	8
ARTICLE III Security Interests in Personal Property
SECTION 3.01    Security Interest	10
SECTION 3.02    Representations and Warranties	12
SECTION 3.03    Covenants	14
ARTICLE IV Remedies
SECTION 4.01    Remedies Upon Default	16
SECTION 4.02    Application of Proceeds	18
SECTION 4.03    Grant of License to Use Intellectual Property	19
ARTICLE V Subordination
SECTION 5.01    Subordination	20
ARTICLE VI Miscellaneous
SECTION 6.01    Notices	20
SECTION 6.02    Waivers; Amendment	20
SECTION 6.03    Administrative Agent’s Fees and Expenses; Indemnification	21
SECTION 6.04    Successors and Assigns	21
SECTION 6.05    Survival of Agreement	21

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SECTION 6.06    Counterparts; Effectiveness; Several Agreement	21
SECTION 6.07    Severability	22
SECTION 6.08    Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process	22
SECTION 6.09    Headings	22
SECTION 6.10    Security Interest Absolute	22
SECTION 6.11    Termination or Release	23
SECTION 6.12    Additional Grantors	23
SECTION 6.13    Administrative Agent Appointed Attorney-in-Fact	23
SECTION 6.14    General Authority of the Administrative Agent	24
SECTION 6.15    Reasonable Care	24
SECTION 6.16    Delegation; Limitation	25
SECTION 6.17    Reinstatement	25
SECTION 6.18    Miscellaneous	25
SECTION 6.19    Intercreditor Agreement	25
SECTION 6.20    Amendment and Restatement; No Novation	25

Schedules

Schedule I    Subsidiary Parties

Schedule II    Pledged Equity and Pledged Debt

Schedule III    Commercial Tort Claims

Exhibits

Exhibit I    Form of Security Agreement Supplement

Exhibit II    Perfection Certificate

Exhibit III    Form of Patent Security Agreement
Exhibit IV    Form of Trademark Security Agreement
Exhibit V    Form of Copyright Security Agreement

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27846446_9

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AMENDED AND RESTATED SECURITY AGREEMENT dated as of July 9, 2021, among the Grantors (as defined below) and Bank of America, N.A., as Administrative Agent for the Secured Parties (in such capacity, the “Administrative Agent”).

Reference is made to (i) the Second Amended and Restated Credit Agreement dated as of July 9, 2021 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among APX Group Inc., a Delaware corporation, (the “Borrower”), APX Group Holdings, Inc., a Delaware corporation, (“Holdings”), the other Guarantors party thereto from time to time, each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer and (ii) that certain Security Agreement, dated as of September 6, 2018 (the “Original Security Agreement”) among the Grantors party thereto and the Administrative Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Holdings and the Subsidiary Parties are affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement, and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree to amend and restate the Original Security Agreement in its entirety as follows:

ARTICLE I

Definitions

SECTION 1.01Credit Agreement.

(a)Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; the term “instrument” shall have the meaning specified in Article 9 of the UCC.

(b)The rules of construction specified in Article I of the Credit Agreement also apply to this Agreement.

SECTION 1.02Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Account Debtor” means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

“Accounts” has the meaning specified in Article 9 of the UCC.

“Administrative Agent” has the meaning assigned to such term in the recitals of the Agreement.

“Agreement” means this Security Agreement.

“Article 9 Collateral” has the meaning assigned to such term in Section 3.01(a).

“Borrower” has the meaning assigned to such term in the recitals of this Agreement.

“Collateral” means the Article 9 Collateral and the Pledged Collateral.

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“Copyright License” means any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States, including registrations, recordings, supplemental registrations and pending applications for registration in the USCO.

“Credit Agreement” has the meaning assigned to such term in the preliminary statement of this Agreement.

“General Intangibles” has the meaning specified in Article 9 of the UCC.

“Grantor” means the Borrower, each Guarantor that is a party hereto, and each Guarantor that becomes a party to this Agreement after the Closing Date.

“Intellectual Property” means all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, the intellectual property rights in software and databases and related documentation and all additions and improvements to the foregoing.

“Intellectual Property Security Agreements” means the short-form Patent Security Agreement, short-form Trademark Security Agreement, and short-form Copyright Security Agreement, each substantially in the form attached hereto as Exhibits III, IV and V, respectively.

“License” means any Patent License, Trademark License, Copyright License or other Intellectual Property license or sublicense agreement to which any Grantor is a party, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder or with respect thereto including damages and payments for past, present or future infringements or violations thereof, and (iii) rights to sue for past, present and future violations thereof.

“Original Security Agreement” has the meaning assigned to such term in the preliminary statement of this Agreement.

“Patent License” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any Grantor: (a) all letters Patent of the United States in or to which any Grantor now or hereafter has any right, title or interest therein, all registrations and recordings thereof, and all applications for letters Patent of the United States, including registrations, recordings and pending applications in the USPTO, and (b) all reissues, continuations, divisions, continuations-in-part, renewals,

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improvements or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“Perfection Certificate” means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer of each of the Grantors.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt” has the meaning assigned to such term in Section 2.01.

“Pledged Equity” has the meaning assigned to such term in Section 2.01.

“Pledged Securities” means the Pledged Equity and Pledged Debt.

“Secured Obligations” means the “Obligations” (as defined in the Credit Agreement).

“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the Hedge Banks and each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.02 of the Credit Agreement.

“Security Agreement Supplement” means an instrument substantially in the form of Exhibit I hereto.

“Subsidiary Parties” means (a) the Restricted Subsidiaries identified on Schedule I and (b) each other Restricted Subsidiary that becomes a party to this Agreement as a Subsidiary Party after the Closing Date.

“Trademark License” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.

“Trademarks” means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, trade dress, logos, designs, fictitious business names other source or business identifiers, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the USPTO or any similar offices in any State of the United States or any political subdivision thereof, and all extensions or renewals thereof, as well as any unregistered trademarks and service marks used by a Grantor and (b) all goodwill connected with the use of and symbolized thereby.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“USCO” means the United States Copyright Office.

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“USPTO” means the United States Patent and Trademark Office.

ARTICLE IIPledge of Securities

SECTION 2.01 Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, including the Guarantees, each of the Grantors hereby assigns and pledges to the Administrative Agent, its successors and assigns and confirms its prior assignment and pledge to the Administrative Agent, its successors and assigns, in each case, for the benefit of the Secured Parties, and hereby grants to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest in all of such Grantors’ right, title and interest in, to and under:

(i)all Equity Interests held by it that are listed on Schedule II and any other Equity Interests obtained in the future by such Grantor and the certificates representing all such Equity Interests (the “Pledged Equity”); provided that the Pledged Equity shall not include (A) Excluded Assets or (B) for the avoidance of doubt, Equity Interests in excess of 65% of the issued and outstanding Equity Interests of (1) any Restricted Subsidiary that is a wholly owned Material Domestic Subsidiary that is directly owned by the Borrower or by any Subsidiary Guarantor and that (x) is treated as a disregarded entity for federal income tax purposes and (y) substantially all of the assets of which consist of the Equity Interests and/or Indebtedness of one or more CFCs and any other assets incidental thereto and (2) any Restricted Subsidiary that is a wholly owned Material Foreign Subsidiary that is directly owned by the Borrower or by any Subsidiary Guarantor;

(ii)(A) the debt securities owned by it and listed opposite the name of such Grantor on Schedule II, (B) any debt securities obtained in the future by such Grantor and (C) the promissory notes and any other instruments evidencing such debt securities (the “Pledged Debt”); provided that the Pledged Debt shall not include any Excluded Assets;

(iii)all other property that may be delivered to and held by the Administrative Agent pursuant to the terms of this Section 2.01;

(iv)subject to Section 2.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (i) and (ii) above;

(v)subject to Section 2.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (i), (ii), (iii) and (iv) above; and

(vi)all Proceeds of any of the foregoing

(the items referred to in clauses (i) through (vi) above being collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, forever, subject, however, to the terms, covenants and conditions hereinafter set forth.

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SECTION 2.02 Delivery of the Pledged Equity.

(a)Each Grantor agrees promptly (but in any event within 30 days after receipt by such Grantor or such longer period as the Administrative Agent may agree in its reasonable discretion) to deliver or cause to be delivered to the Administrative Agent, for the benefit of the Secured Parties, any and all (i) Pledged Equity to the extent certificated and (ii) to the extent required to be delivered pursuant to paragraph (b) of this Section 2.02, Pledged Debt.

(b)Each Grantor will cause any Indebtedness for borrowed money having an aggregate principal amount in excess of $5,000,000 owed to such Grantor by any Person that is evidenced by a duly executed promissory note to be pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, pursuant to the terms hereof.

(c)Upon delivery to the Administrative Agent, any Pledged Securities shall be accompanied by stock or security powers duly executed in blank or other instruments of transfer reasonably satisfactory to the Administrative Agent and by such other instruments and documents as the Administrative Agent may reasonably request (other than instruments or documents governed by or requiring actions in any non-U.S. jurisdiction related to Equity Interests of Foreign Subsidiaries). Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be deemed to supplement Schedule II and made a part hereof; provided that failure to supplement Schedule II shall not affect the validity of such pledge of such Pledged Equity. Each schedule so delivered shall supplement any prior schedules so delivered.

SECTION 2.03 Representations, Warranties and Covenants. Each Grantor represents, warrants and covenants to and with the Administrative Agent, for the benefit of the Secured Parties, that:

(a)As of the date hereof, Schedule II includes all Equity Interests, debt securities and promissory notes required to be pledged by such Grantor hereunder in order to satisfy the Collateral and Guarantee Requirement;

(b)the Pledged Equity issued by the Borrower, each other Borrower, or a wholly-owned Restricted Subsidiary have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable;

(c)except for the security interests granted hereunder, such Grantor (i) is, subject to any transfers made in compliance with the Credit Agreement, the direct owner, beneficially and of record, of the Pledged Equity indicated on Schedule II, (ii) holds the same free and clear of all Liens, other than (A) Liens created by the Collateral Documents and any Liens expressly permitted by Section 7.01 of the Credit Agreement that are governed by any Intercreditor Agreement and (B) nonconsensual Liens expressly permitted pursuant to Section 7.01 of the Credit Agreement, and (iii) if requested by the Administrative Agent, will defend its title or interest thereto or therein against any and all Liens (other than the Liens permitted pursuant to this Section 2.03(c)), however arising, of all Persons whomsoever;

(d)except for restrictions and limitations (i) that are imposed or permitted by the Loan Documents or securities laws generally, (ii) in the case of Pledged Equity of Persons that are not Subsidiaries, that are transfer restrictions that exist at the time of acquisition of Equity Interests in such Persons, and (iii) that are described in the Perfection Certificate, dated as of September 6, 2018, the Pledged Collateral is freely transferable and assignable, and none of the Pledged Collateral is subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual

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restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner material and adverse to the Secured Parties the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Administrative Agent of rights and remedies hereunder;

(e)the execution and performance by the Grantors of this Agreement are within each Grantor’s corporate or limited liability company powers and have been duly authorized by all necessary corporate or limited liability company action or other organizational action;

(f)no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby, except for (i) filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Administrative Agent (for the benefit of the Secured Parties) and (ii) approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect (except to the extent not required to be obtained, taken, given, or made or to be in full force and effect pursuant to the Collateral and Guarantee Requirement);

(g)by virtue of the execution and delivery by each Grantor of this Agreement, and delivery of the Pledged Securities to and continued possession by the Administrative Agent or its bailee pursuant to the Closing Date Intercreditor Agreement, the Administrative Agent for the benefit of the Secured Parties has a legal, valid and perfected lien upon and security interest in such Pledged Security as security for the payment and performance of the Secured Obligations to the extent such perfection is governed by the UCC, subject only to nonconsensual Liens permitted by Section 7.01 of the Credit Agreement and any Lien expressly permitted by Section 7.01 of the Credit Agreement that are governed by any Intercreditor Agreement; and

(h)the pledge effected hereby is effective to vest in the Administrative Agent, for the benefit of the Secured Parties, the rights of the Administrative Agent in the Pledged Collateral to the extent intended hereby.

Subject to the terms of this Agreement, each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with instructions of the Administrative Agent with respect to the Equity Interests in such Grantor that constitute Pledged Equity hereunder that are not certificated without further consent by the applicable owner or holder of such Equity Interests.

Notwithstanding anything to the contrary in this Agreement, to the extent any provision of this Agreement or the Credit Agreement excludes any assets from the scope of the Pledged Collateral, or from any requirement to take any action to perfect any security interest in favor of the Administrative Agent for the benefit of the Secured Parties in the Pledged Collateral, the representations, warranties and covenants made by any relevant Grantor in this Agreement with respect to the creation, perfection or priority (as applicable) of the security interest granted in favor of the Administrative Agent for the benefit of the Secured Parties (including, without limitation, this Section 2.03) shall be deemed not to apply to such excluded assets.

SECTION 2.04 Certification of Limited Liability Company and Limited Partnership Interests. No interest in any limited liability company or limited partnership controlled by any Grantor that constitutes Pledged Equity shall be represented by a certificate unless (i) the limited liability company agreement or partnership agreement expressly provides that such interests shall be a “security” within the meaning of Article 8 of the UCC of the applicable jurisdiction, and (ii) such certificate shall

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be delivered to the Administrative Agent in accordance with Section 2.02. Any limited liability company and any limited partnership controlled by any Grantor shall either (a) not include in its operative documents any provision that any Equity Interests in such limited liability company or such limited partnership be a “security” as defined under Article 8 of the Uniform Commercial Code or (b) certificate any Equity Interests in any such limited liability company or such limited partnership. To the extent an interest in any limited liability company or limited partnership controlled by any Grantor and pledged under Section 2.01 is certificated or becomes certificated, (i) each such certificate shall be delivered to the Administrative Agent, pursuant to Section 2.02(a) and (ii) such Grantor shall fulfill all other requirements under Section 2.02 applicable in respect thereof. Such Grantor hereby agrees that if any of the Pledged Collateral are at any time not evidenced by certificates of ownership, then each applicable Grantor shall, to the extent permitted by applicable law, if necessary or, upon the request of the Administrative Agent, desirable to perfect a security interest in such Pledged Collateral, cause such pledge to be recorded on the equity holder register or the books of the issuer, execute any customary pledge forms or other documents necessary or appropriate to complete the pledge and give the Administrative Agent the right to transfer such Pledged Collateral under the terms hereof.

SECTION 2.05 Registration in Nominee Name; Denominations. If an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given the Borrower prior written notice of its intent to exercise such rights, (a) the Administrative Agent, on behalf of the Secured Parties, shall have the right to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Administrative Agent and each Grantor will promptly give to the Administrative Agent copies of any written notices or other written communications received by it with respect to Pledged Equity registered in the name of such Grantor and (b) the Administrative Agent shall have the right to exchange the certificates representing Pledged Equity for certificates of smaller or larger denominations for any purpose consistent with this Agreement, to the extent permitted by the documentation governing such Pledged Securities.

SECTION 2.06 Voting Rights; Dividends and Interest.

(a)Unless and until an Event of Default shall have occurred and be continuing and the Administrative Agent shall have provided prior notice to the Borrower that the rights of the Grantor under this Section 2.06 are being suspended:

(i)Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof and each Grantor agrees that it shall exercise such rights for purposes consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents.

(ii)The Administrative Agent shall promptly (after reasonable advance notice) execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above.

(iii)Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable Laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any

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part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Secured Parties and shall be promptly (and in any event within 10 Business Days or such longer period as the Administrative Agent may agree in its reasonable discretion) delivered to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent). So long as no Default or Event of Default has occurred and is continuing, the Administrative Agent shall promptly deliver to each Grantor any Pledged Securities in its possession if requested to be delivered to the issuer thereof in connection with any exchange or redemption of such Pledged Securities permitted by the Credit Agreement in accordance with this Section 2.06(a)(iii).

(b)Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Borrower of the suspension of the Grantors’ rights under paragraph (a)(iii) of this Section 2.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.06 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions subject to the terms of the Closing Date Intercreditor Agreement. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 2.06 shall be held in trust for the benefit of the Administrative Agent, shall be segregated from other property or funds of such Grantor and shall be promptly (and in any event within 10 days or such longer period as the Administrative Agent may agree in its reasonable discretion) delivered to the Administrative Agent upon demand in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent). Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the Administrative Agent in an account to be established by the Administrative Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived, the Administrative Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.06 and that remain in such account.

(c)Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have provided the Borrower with notice of the suspension of its rights under paragraph (a)(i) of this Section 2.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.06, and the obligations of the Administrative Agent under paragraph (a)(ii) of this Section 2.06, shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that the Borrower would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above, and the obligations of the Administrative Agent under paragraph (a)(ii) of this Section 2.06 shall be reinstated.

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(d)Any notice given by the Administrative Agent to the Borrower under Section 2.05 or Section 2.06 (i) shall be given in writing, (ii) may be given with respect to one or more Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) of this Section 2.06 in part without suspending all such rights (as specified by the Administrative Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Administrative Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

ARTICLE IIISecurity Interests in Personal Property

SECTION 3.01 Security Interest.

(a)As security for the payment or performance, as the case may be, in full of the Secured Obligations, including the Guarantees, each Grantor hereby assigns and pledges to the Administrative Agent, its successors and assigns and confirms its prior assignment and pledge to the Administrative Agent, its successors and assigns, in each case, for the benefit of the Secured Parties, and hereby grants to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in, all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i)all Accounts;

(ii)all Chattel Paper;

(iii)all Documents;

(iv)all Equipment;

(v)all General Intangibles;

(vi)all Goods;

(vii)all Instruments;

(viii)all Inventory;

(ix)all Investment Property;

(x)all books and records pertaining to the Article 9 Collateral;

(xi)all Fixtures;

(xii)all Letter-of-Credit Rights, but only to the extent constituting a supporting obligation for other Article 9 Collateral as to which perfection of security interests in such Article 9 Collateral is accomplished by the filing of a UCC financing statement;

(xiii)all Intellectual Property;

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(xiv)all Commercial Tort Claims listed on Schedule III and on any supplement thereto received by the Administrative Agent pursuant to Section 3.03(g); and

(xv)to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing;

provided that, notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in any Excluded Assets and the term “Article 9 Collateral” shall not include any Excluded Assets.

(b)Subject to Section 3.01(e), each Grantor hereby irrevocably authorizes the Administrative Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant jurisdiction any initial financing statements with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Article 9 Collateral as “all assets” or “all personal property” of such Grantor or words of similar effect as being of an equal or lesser scope or with greater detail and (ii) contain the information required by Article 9 of the Uniform Commercial Code or the analogous legislation of each applicable jurisdiction for the filing of any financing statement or amendment, including whether such Grantor is an organization, the type of organization and, if required, any organizational identification number issued to such Grantor. Each Grantor agrees to provide such information to the Administrative Agent promptly upon any reasonable request.

(c)The Security Interest is granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

(d)Each Grantor hereby further authorizes the Administrative Agent to file with the USPTO or the USCO (or any successor office) one or more Intellectual Property Security Agreements substantially in the form of Exhibits III, IV or V, as applicable, and such other documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in United States Intellectual Property of each Grantor in which a security interest has been granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantor as debtors and the Administrative Agent as secured party. No Grantor shall be required to complete any filings governed by non-United States laws or take any other action with respect to the perfection of the Security Interests created hereby in any Intellectual Property subsisting in any non-United States jurisdiction.

(e)Notwithstanding anything to the contrary in the Loan Documents, none of the Grantors shall be required, nor is the Administrative Agent authorized, (i) to perfect the Security Interests granted by this Security Agreement (including Security Interests in Investment Property and Fixtures) by any means other than by (A) filings pursuant to the Uniform Commercial Code in the office of the secretary of state (or similar central filing office) of the relevant State(s), and filings in the applicable real estate records with respect to any fixtures relating to Mortgaged Properties, (B) filings in United States government offices with respect to Intellectual Property of Grantor as expressly required elsewhere herein, (C) delivery to the Administrative Agent to be held in its possession of all Collateral consisting of Instruments and certificated Pledged Equity as expressly required elsewhere herein or (D) other methods expressly provided herein, (ii) to enter into any deposit account control agreement, securities account control agreement or any other control agreement with respect to any deposit account, securities account or any other Collateral that requires perfection by “control” except as otherwise set forth in this Section 3.01(e), (iii) to take any action (other than the actions listed in clauses (i)(A) and (C) above) with respect to any assets located outside of the United States, (iv)

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to perfect in any assets subject to a certificate of title statute or (v) to deliver any Equity Interests except as expressly provided in Section 2.01.

SECTION 3.02 Representations and Warranties. Each Grantor jointly and severally represents and warrants, as to itself and the other Grantors, to the Administrative Agent and the Secured Parties that:

(a)Subject to Liens permitted by Section 7.01 of the Credit Agreement, each Grantor has good and valid rights in and title (except as otherwise permitted by the Loan Documents) to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Administrative Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.

(b)The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein is correct and complete in all material respects (except the information therein with respect to the exact legal name of each Grantor which shall be correct and complete in all respects) as of the Original Closing Date. Subject to Section 3.01(e), the Uniform Commercial Code financing statements or other appropriate filings, recordings or registrations prepared by the Administrative Agent based upon the information provided to the Administrative Agent in the Perfection Certificate for filing in the applicable filing office (or specified by notice from the Borrower to the Administrative Agent after the Closing Date in the case of filings, recordings or registrations (other than filings required to be made in the USPTO and the USCO in order to perfect the Security Interest in Article 9 Collateral consisting of United States Patents, Trademarks and Copyrights), in each case, as required by Section 6.11 of the Credit Agreement), are all the filings, recordings and registrations that are necessary to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code, and no further or subsequent filing, re-filing, recording, rerecording, registration or re-registration is necessary in any such jurisdiction, except as provided under applicable Law with respect to the filing of continuation statements.

(c)Each Grantor represents and warrants that short-form Intellectual Property Security Agreements containing a description of all Article 9 Collateral consisting of material United States registered Patents (and Patents for which United States registration applications are pending), United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights, respectively (other than, in each case, any Excluded Assets), have been delivered to the Administrative Agent for recording by the USPTO and the USCO pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable, (for the benefit of the Secured Parties) in respect of all Article 9 Collateral consisting of registrations and applications for Patents, Trademarks and Copyrights. To the extent a security interest may be perfected by filing, recording or registration in USPTO or USCO under the Federal intellectual property laws, then no further or subsequent filing, re-filing, recording, rerecording, registration or re-registration is necessary (other than (i) such filings and actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof)

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acquired or developed by any Grantor after the date hereof and (ii) the UCC financing and continuation statements contemplated in Section 3.02(b)).

(d)The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations and (ii) subject to the filings described in Section 3.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code. Subject to Section 3.01(e) of this Agreement, the Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than any Liens expressly permitted pursuant to Section 7.01 of the Credit Agreement.

(e)The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 7.01 of the Credit Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable Laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the USPTO or the USCO or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 7.01 of the Credit Agreement and assignments permitted by the Credit Agreement.

(f)As of the date hereof, no Grantor has any Commercial Tort Claim in excess of $8,000,000 other than the Commercial Tort Claims listed on Schedule III.

SECTION 3.03 Covenants.

(a)The Borrower agrees to notify the Administrative Agent in writing promptly, but in any event within 60 days (or such longer period as the Administrative Agent may agree in its reasonable discretion), after any change in (i) the legal name of any Grantor, (ii) the identity or type of organization or corporate structure of any Grantor, (iii) the jurisdiction of organization of any Grantor or (iv) the organizational identification number of such Grantor, if any.

(b)Subject to Section 3.01(e), each Grantor shall, at its own expense, upon the reasonable request of the Administrative Agent, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral against all Persons and to defend the Security Interest of the Administrative Agent in the Article 9 Collateral and the priority thereof against any Lien not expressly permitted pursuant to Section 7.01 of the Credit Agreement; provided that, nothing in this Agreement shall prevent any Grantor from discontinuing the operation or maintenance of any of its assets or properties if such discontinuance is (x) determined by such Grantor to be desirable in the conduct of its business and (y) permitted by the Credit Agreement.

(c)Subject to Section 3.01(e), each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in

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connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including amendments or continuations thereof) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Article 9 Collateral that is in excess of $5,000,000 shall be or become evidenced by any promissory note, other instrument or debt security, such note, instrument or debt security shall be promptly (and in any event within 30 days of its acquisition or such longer period as the Administrative Agent may agree in its reasonable discretion) pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, duly endorsed in a manner reasonably satisfactory to the Administrative Agent.

(d)At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not permitted pursuant to Section 7.01 of the Credit Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or any other Loan Document and within a reasonable period of time after the Administrative Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Administrative Agent within 10 Business Days after demand for any payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization; provided, however, the Grantors shall not be obligated to reimburse the Administrative Agent with respect to any Intellectual Property that any Grantor has failed to maintain or pursue, or otherwise allowed to lapse, terminate, expire or be put into the public domain in accordance with Section 3.03(f)(iv). Nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(e)Each Grantor (rather than the Administrative Agent or any Secured Party) shall remain liable (as between itself and any relevant counterparty) to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof.

(f)If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person the value of which is in excess of $5,000,000 to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Administrative Agent for the benefit of the Secured Parties provided that, notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in any Excluded Assets. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.

(g)Intellectual Property Covenants.

(i)Other than to the extent not prohibited herein or in the Credit Agreement or with respect to registrations and applications no longer used or useful, except to the extent failure to act would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, with respect to registration or pending application of each item of its Intellectual Property for which such Grantor has standing to do so, each Grantor agrees to take, at its expense, all reasonable steps, including, without limitation, in the USPTO, the USCO and any other governmental authority located in the United States, to pursue the registration and maintenance of each Patent, Trademark, or

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Copyright registration or application now or hereafter included in the Intellectual Property of such Grantor that are not Excluded Assets.

(ii)Other than to the extent not prohibited herein or in the Credit Agreement, or with respect to registrations and applications no longer used or useful, or except as would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, no Grantor shall do or permit any act or knowingly omit to do any act whereby any of its Intellectual Property, excluding Excluded Assets, may lapse, be terminated, or become invalid or unenforceable or placed in the public domain (or in the case of a trade secret, become publicly known).

(iii)Other than as excluded or as not prohibited herein or in the Credit Agreement, or with respect to Patents, Copyrights or Trademarks which are no longer used or useful in the applicable Grantor’s business operations or except where failure to do so would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, each Grantor shall take all reasonable steps to preserve and protect each item of its Intellectual Property, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the Trademarks, consistent with the quality of the products and services as of the date hereof, and taking reasonable steps necessary to ensure that all licensed users of any of the Trademarks abide by the applicable license’s terms with respect to standards of quality.

(iv)Notwithstanding any other provision of this Agreement, nothing in this Agreement or any other Loan Document prevents or shall be deemed to prevent any Grantor from disposing of, discontinuing the use or maintenance of, failing to pursue, or otherwise allowing to lapse, terminate or be put into the public domain, any of its Intellectual Property to the extent permitted by the Credit Agreement if such Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.

(v)Within the same delivery period as required for the delivery of the annual Compliance Certificate required to be delivered under Section 6.02(a) of the Credit Agreement the Borrower shall provide a list of any additional registrations of Intellectual Property of all Grantors not previously disclosed to the Administrative Agent including such information as is necessary for such Grantor to make appropriate filings in the USPTO and USCO.

(h)Commercial Tort Claims. If the Grantors shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated by such Grantor to exceed $5,000,000 for which this clause has not been satisfied and for which a complaint in a court of competent jurisdiction has been filed, such Grantor shall within 45 days (or such longer period as the Administrative Agent may agree in its reasonable discretion) after the end of the fiscal quarter in which such complaint was filed notify the Administrative Agent thereof in a writing signed by such Grantor including a summary description of such claim and grant to the Administrative Agent, for the benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement.

ARTICLE IVRemedies

SECTION 4.01 Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Administrative Agent shall have the right to exercise any and all rights afforded to a secured party with respect to the Secured Obligations, including the Guarantees, under the Uniform Commercial Code or other applicable Law and also may (i) require each Grantor to, and each Grantor agrees that it will at its expense and upon request of the

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Administrative Agent, promptly assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place and time to be designated by the Administrative Agent that is reasonably convenient to both parties; (ii) occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under Law, without obligation to such Grantor in respect of such occupation; provided that the Administrative Agent shall provide the applicable Grantor with notice thereof prior to such occupancy; (iii) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral; provided that the Administrative Agent shall provide the applicable Grantor with notice thereof prior to such exercise; and (iv) subject to the mandatory requirements of applicable Law and the notice requirements described below, sell or otherwise dispose of all or any part of the Collateral securing the Secured Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate. The Administrative Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by Law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any Law now existing or hereafter enacted.

The Administrative Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by Law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to

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such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at Law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the UCC or its equivalent in other jurisdictions.

Each Grantor irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) during the continuance of an Event of Default (provided that the Administrative Agent shall provide the applicable Grantor with notice thereof prior to, to the extent reasonably practicable, or otherwise promptly after, exercising such rights), for the purpose of (i) making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies if insurance, (ii) making all determinations and decisions with respect thereto and (iii) obtaining or maintaining the policies of insurance required by Section 6.07 of the Credit Agreement or to pay any premium in whole or in part relating thereto. All sums disbursed by the Administrative Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, within 10 days of demand, by the Grantors to the Administrative Agent and shall be additional Secured Obligations secured hereby.

SECTION 4.02 Application of Proceeds. The Administrative Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash in accordance with Section 8.04 of the Credit Agreement.

The Administrative Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Administrative Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Administrative Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Administrative Agent or such officer or be answerable in any way for the misapplication thereof.

The Administrative Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations, provided that nothing in this sentence shall prevent any Grantor from contesting any amounts claimed by any Secured Party in any information so supplied. All distributions made by the Administrative Agent pursuant to this Section 4.02 shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error).

SECTION 4.03 Grant of License to Use Intellectual Property. For the exclusive purpose of enabling the Administrative Agent to exercise rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies at any time after and during the continuance of an Event of Default, each Grantor hereby grants to the Administrative Agent a non-exclusive, royalty-free, limited license (until the termination or cure of the Event of Default) for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate to use, license or sublicense any of the Intellectual Property now owned or hereafter

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acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof; provided, however, that all of the foregoing rights of the Administrative Agent to use such licenses, sublicenses and other rights, and (to the extent permitted by the terms of such licenses and sublicenses) all licenses and sublicenses granted thereunder, shall expire immediately upon the termination or cure of all Events of Default and shall be exercised by the Administrative Agent solely during the continuance of an Event of Default and upon 10 Business Days’ prior written notice to the applicable Grantor, and nothing in this Section 4.03 shall require Grantors to grant any license that is prohibited by any rule of law, statute or regulation, or is prohibited by, or constitutes a breach or default under or results in the termination of any contract, license, agreement, instrument or other document evidencing, giving rise to or theretofore granted, to the extent permitted by the Credit Agreement, with respect to such property or otherwise unreasonably prejudices the value thereof to the relevant Grantor; provided, further, that any such license and any such license granted by the Administrative Agent to a third party shall include reasonable and customary terms and conditions necessary to preserve the existence, validity and value of the affected Intellectual Property, including without limitation, provisions requiring the continuing confidential handling of trade secrets, requiring the use of appropriate notices and prohibiting the use of false notices, quality control and inurement provisions with regard to Trademarks, patent designation provisions with regard to Patents, copyright notices and restrictions on decompilation and reverse engineering of copyrighted software (it being understood and agreed that, without limiting any other rights and remedies of the Administrative Agent under this Agreement, any other Loan Document or applicable Law, nothing in the foregoing license grant shall be construed as granting the Administrative Agent rights in and to such Intellectual Property above and beyond (x) the rights to such Intellectual Property that each Grantor has reserved for itself and (y) in the case of Intellectual Property that is licensed to any such Grantor by a third party, the extent to which such Grantor has the right to grant a sublicense to such Intellectual Property hereunder). For the avoidance of doubt, the use of such license by the Administrative Agent may be exercised, at the option of the Administrative Agent, only during the continuation of an Event of Default. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may also exercise the rights afforded under Section 4.01 of this Agreement with respect to Intellectual Property contained in the Article 9 Collateral.

ARTICLE VSubordination

SECTION 5.01 Subordination.

(a)Notwithstanding any provision of this Agreement to the contrary, all rights of the Grantors to indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Secured Obligations. No failure on the part of the Borrower or any Grantor to make the payments required under applicable law or otherwise shall in any respect limit the obligations and liabilities of any Grantor with respect to its obligations hereunder, and each Grantor shall remain liable for the full amount of the obligations of such Grantor hereunder.

(b)Each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default and after notice from the Administrative Agent, all Indebtedness owed to it by any other Grantor shall be fully subordinated to the payment in full in cash of the Secured Obligations.

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ARTICLE VIMiscellaneous

SECTION 6.01 Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.02 of the Credit Agreement. All communications and notices hereunder to the Borrower or any other Grantor shall be given to it in care of the Borrower as provided in Section 10.02 of the Credit Agreement.

SECTION 6.02 Waivers; Amendment.

(a)No failure or delay by any Secured Party in exercising any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges of the Secured Parties herein provided, and provided under each other Loan Document, are cumulative and are not exclusive of any rights, remedies, powers and privileges provided by Law. No waiver of any provision of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 6.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan, the issuance of a Letter of Credit or the provision of services under Treasury Services Agreements or Secured Hedge Agreements shall not be construed as a waiver of any Default, regardless of whether any Secured Party may have had notice or knowledge of such Default at the time.

(b)Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.01 of the Credit Agreement.

SECTION 6.03 Administrative Agent’s Fees and Expenses; Indemnification.

(a)The parties hereto agree that the Administrative Agent shall be entitled to reimbursement of its reasonable out-of-pocket expenses incurred hereunder and indemnity for its actions in connection herewith as provided in Sections 10.04 and 10.05 of the Credit Agreement.

(b)Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Collateral Documents. The provisions of this Section 6.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or any other Secured Party. All amounts due under this Section 6.03 shall be payable within 30 days of written demand therefor.

SECTION 6.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 6.05 Survival of Agreement. All covenants, agreements, representations and warranties made by the Grantors hereunder and in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery

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of the Loan Documents, the making of any Loans and issuance of any Letters of Credit and the provision of services under Treasury Services Agreements or Secured Hedge Agreements, regardless of any investigation made by any Secured Party or on its behalf and notwithstanding that any Secured Party may have had notice or knowledge of any Default at the time any credit is extended under the Credit Agreement, and shall continue in full force and effect as long as this Agreement has not been terminated or released pursuant to Section 6.11 below.

SECTION 6.06 Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by facsimile or other electronic communication of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Grantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

SECTION 6.07 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 6.08 Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process.

(a)The terms of Sections 10.15 and 10.16 of the Credit Agreement with respect to governing law, submission of jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

(b)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 6.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

SECTION 6.09 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 6.10 Security Interest Absolute. To the extent permitted by Law, all rights of the Administrative Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or

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guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement.

SECTION 6.11 Termination or Release.

(a)This Agreement, the Security Interest and all other security interests granted hereby shall terminate with respect to all Secured Obligations and any Liens arising therefrom shall be automatically released upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (i) obligations under Treasury Services Agreements or obligations under Secured Hedge Agreements not yet due and payable and (ii) contingent obligations not yet accrued and payable).

(b)A Subsidiary Party shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Party shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Subsidiary Party ceases to be a Subsidiary of the Borrower or becomes an Excluded Subsidiary; provided that the Required Lenders shall have consented to such transaction (if and to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.

(c)Upon any sale or transfer by any Grantor of any Collateral that is permitted under the Credit Agreement (other than a sale or transfer to another Loan Party), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 10.01 of the Credit Agreement, the security interest in such Collateral shall be automatically released.

(d)In connection with any termination or release pursuant to paragraph (a), (b) or (c) of this Section 6.11, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release and shall perform such other actions reasonably requested by such Grantor to effect such release, including delivery of certificates, securities and instruments. Any execution and delivery of documents pursuant to this Section 6.11 shall be without recourse to or warranty by the Administrative Agent.

SECTION 6.12 Additional Grantors. Pursuant to Section 6.11 of the Credit Agreement, certain additional Restricted Subsidiaries of the Grantors may be required to enter in this Agreement as Grantors. Upon execution and delivery by the Administrative Agent and a Restricted Subsidiary of a Security Agreement Supplement, such Restricted Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

SECTION 6.13 Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Administrative Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Administrative Agent shall have the right, upon the occurrence and during the continuance of an Event of Default and notice by the Administrative Agent to the applicable Grantor of the Administrative Agent’s intent to exercise such rights, with full power of substitution either in the Administrative Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,

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money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of Accounts Receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at Law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Administrative Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Administrative Agent were the absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Administrative Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith, or willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a final non-appealable judgment of a court of competent jurisdiction.

SECTION 6.14 General Authority of the Administrative Agent. By acceptance of the benefits of this Agreement and any other Collateral Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment of the Administrative Agent as its agent hereunder and under such other Collateral Documents, (b) to confirm that the Administrative Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provisions of this Agreement and such other Collateral Documents against any Grantor, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or any Grantor’s obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Collateral Document against any Grantor, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Collateral Document and (d) to agree to be bound by the terms of this Agreement and any other Collateral Documents.

SECTION 6.15 Reasonable Care. The Administrative Agent is required to use reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Administrative Agent shall be deemed to have used reasonable care in the custody and preservation of any of the Collateral, if such Collateral is accorded treatment substantially similar to that which the Administrative Agent accords its own property.

SECTION 6.16 Delegation; Limitation. The Administrative Agent may execute any of the powers granted under this Agreement and perform any duty hereunder either directly or by or through agents or attorneys-in-fact, and shall not be responsible for the gross negligence or willful misconduct of any agents or attorneys-in-fact selected by it with reasonable care and without gross negligence or willful misconduct.

SECTION 6.17 Reinstatement. The obligations of the Grantors under this Security Agreement shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Secured Obligations is rescinded or must

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be otherwise restored by any holder of any of the Secured Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

SECTION 6.18 Miscellaneous. The Administrative Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Administrative Agent shall have received a notice of Event of Default or a notice from the Grantor or the Secured Parties to the Administrative Agent in its capacity as Administrative Agent indicating that an Event of Default has occurred.

SECTION 6.19 Intercreditor Agreement. Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Closing Date Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of this Agreement and the Closing Date Intercreditor Agreement, the provisions of the Closing Date Intercreditor Agreement shall control.Notwithstanding anything herein to the contrary, requirements of this Agreement to deliver or grant control (to the extent that only one person can have control of such Collateral) with respect to Collateral to the Administrative Agent shall be deemed satisfied by delivery of such Collateral or grant of control with respect to Collateral to a Bailee Administrative Agent (as defined in the Closing Date Intercreditor Agreement) as required pursuant to Section 4.01 of the Closing Date Intercreditor Agreement.

SECTION 6.20 Amendment and Restatement; No Novation.

(a)This Agreement amends and restates the Original Security Agreement in its entirety. The Original Security Agreement, as amended and restated by this Agreement, and each of the other Loan Documents are and shall continue to be in full force and effect.  Each Loan Party hereby expressly acknowledges, ratifies and confirms the terms of this Agreement and the amendment and restatement of the Original Security Agreement occurring on the Closing Date and reaffirms, as of the Closing Date, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to the amendments and the transactions contemplated hereby on the Closing Date and (ii) its guarantee of the Obligations under the Guaranty, as applicable, and its grant of Liens on the Collateral to secure the Obligations pursuant to the Collateral Documents.  Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all of the respective Obligations of Holdings, the Borrower and other Grantors.

(b)The execution, delivery and effectiveness of this Agreement does not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Secured Party or the Administrative Agent under any of the Loan Documents nor constitute a waiver of any provision of any of the Loan Documents.  This Agreement shall not constitute a novation of the Original Security Agreement.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

APX HOLDINGS, INC.

By:    /s/ Dale R. Gerard
    Name: Dale R. Gerard
    Title: Chief Financial Officer

APX GROUP, INC.

By:    /s/ Dale R. Gerard
    Name: Dale R. Gerard
    Title: Chief Financial Officer

VIVINT, INC.

SMART HOME PROS, INC.

VIVINT PURCHASING, LLC

313 AVIATION, LLC

AP AL LLC

FARMINGTON IP LLC

IPR LLC

SPACE MONKEY, LLC

VIVINT GROUP, INC.

VIVINT LOUISIANA LLC

VIVINT WARRANTY AND HOME INSURANCE, LLC

VIVINT AMIGO, INC.

By:    /s/ Dale R. Gerard
    Name: Dale R. Gerard
    Title: Chief Financial Officer

[Signature Page to Amended and Restated Security Agreement]

BANK OF AMERICA, N.A., as Administrative Agent

By:    /s/ Ronaldo Naval
    Name: Ronaldo Naval
    Title: Vice President

[Signature Page to Amended and Restated Security Agreement]

Exhibit I to the
Security Agreement

SUPPLEMENT NO. ___ dated as of [●] (the “Supplement”), to the Amended and Restated Security Agreement (the “Security Agreement”), dated as of July 9, 2021, among the Grantors identified therein and Bank of America, N.A., as Administrative Agent.

A.    Reference is made to that certain Second Amended and Restated Credit Agreement dated as of July 9, 2021 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among APX Group, Inc., a Delaware corporation, (the “Borrower”), APX Group Holdings, Inc., a Delaware corporation (“Holdings”), the other Guarantors party thereto from time to time, each Lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, and the other agents named therein.

B.    Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement and the Security Agreement.

C.    The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans. Section 6.12 of the Security Agreement provides that additional Restricted Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned (the “New Grantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement in order to induce the Lenders to make additional Loans and as consideration for Loans previously made.

Accordingly, the Administrative Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 6.12 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become

effective when the Administrative Agent shall have received a counterpart of this Supplement that bears the signature of the New Grantor and the Administrative Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission or other electronic communication shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the information required by Schedules II and III to the Security Agreement applicable to it and (b) set forth under its signature hereto is the true and correct legal name of the New Grantor, its jurisdiction of formation and the location of its chief executive office.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

SECTION 7. If any provision of this Supplement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Supplement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 6.01 of the Security Agreement.

SECTION 9. The New Grantor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with the execution and delivery of this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

[Signature pages follow.]

IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[NAME OF NEW GRANTOR]

By:    

Name:    

Title:    

Legal Name:

Jurisdiction of Formation:

Location of Chief Executive office:

[Signature Page – Security Agreement Supplement]

BANK OF AMERICA, N.A.,
as Administrative Agent

By:    

Name:    

Title:    

[Signature Page – Security Agreement Supplement]

Schedule I
to the Supplement No __ to the
Security Agreement

PLEDGED EQUITY AND PLEDGED DEBT

1.     Pledged Equity:

Current Legal Entities Owned Record Owner Certificate No.
(to the extent certificated) No. Shares

2.     Pledged Debt:

[List]

Schedule I
to the Supplement No __ to the
Security Agreement

COMMERCIAL TORT CLAIMS

[List]

2

Exhibit II to the
Security Agreement

PERFECTION CERTIFICATE

[Attached]

3

4

Exhibit III to the
Security Agreement

FORM OF
PATENT SECURITY AGREEMENT (SHORT FORM)

PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS OF NOVEMBER 16, 2012 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG APX GROUP, INC., THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT COLLATERAL AGENT (AS DEFINED THEREIN), AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS NOTES COLLATERAL AGENT (AS DEFINED THEREIN), AND EACH ADDITIONAL COLLATERAL AGENT (AS DEFINED THEREIN) FROM TIME TO TIME PARTY THERETO.

Patent Security Agreement, dated as of [ ], by [ ] and [_________] (individually, a “Grantor”, and, collectively, the “Grantors”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W i t n e s s e t h:

    Whereas, the Grantors are party to the Amended and Restated Security Agreement dated as of July 9, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) and related Intellectual Property Security Agreements (as defined therein) in favor of the Administrative Agent pursuant to which the Grantors are required to execute and deliver this Patent Security Agreement;

    Now, Therefore, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Administrative Agent as follows:

    SECTION 1.    Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

    SECTION 2.    Grant of Security Interest in Patent Collateral. Each Grantor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Collateral (excluding any Excluded Assets) of such Grantor:

    (a) Patents of such Grantor listed on Schedule I attached hereto.

    SECTION 3.    The Security Agreement. The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Administrative Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise determine.

    SECTION 4.    Termination. Upon the termination of the Security Agreement in accordance with Section 6.13 thereof, the Administrative Agent shall, at the expense of such

Grantor, execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the lien on and security interest in the Patents under this Patent Security Agreement.

    SECTION 5.    Counterparts. This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.

[Signature pages follow.]

[GRANTOR]

By:    

Name:    

Title:    

BANK OF AMERICA, N.A.,
as Administrative Agent

By:    

Name:    

Title:

Schedule I

to
PATENT SECURITY AGREEMENT
PATENT REGISTRATIONS AND PATENT APPLICATIONS

Patents:

OWNER REGISTRATION NUMBER DESCRIPTION

Patent Applications:

OWNER APPLICATION NUMBER DESCRIPTION

Exhibit IV to the

Security Agreement

FORM OF
TRADEMARK SECURITY AGREEMENT (SHORT FORM)

TRADEMARK SECURITY AGREEMENT

THIS TRADEMARK SECURITY AGREEMENT IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS OF NOVEMBER 16, 2012 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG APX GROUP, INC., THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT COLLATERAL AGENT (AS DEFINED THEREIN), AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS NOTES COLLATERAL AGENT (AS DEFINED THEREIN), AND EACH ADDITIONAL COLLATERAL AGENT (AS DEFINED THEREIN) FROM TIME TO TIME PARTY THERETO.

    Trademark Security Agreement, dated as of [ ], by [ ] and [_________] (individually, a “Grantor”, and, collectively, the “Grantors”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W i t n e s s e t h:

    Whereas, the Grantors are party to the Amended and Restated Security Agreement dated as of July 9, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) and related Intellectual Property Security Agreements (as defined therein) in favor of the Administrative Agent pursuant to which the Grantors are required to execute and deliver this Trademark Security Agreement;

    Now, Therefore, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Administrative Agent as follows:

    SECTION 1.    Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

    SECTION 2.    Grant of Security Interest in Trademark Collateral. Each Grantor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Collateral (excluding any Excluded Assets) of such Grantor:

    (a) registered Trademarks of such Grantor listed on Schedule I attached hereto.

    SECTION 3.    The Security Agreement. The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Administrative Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise determine.

    SECTION 4.    Termination. Upon the termination of the Security Agreement in accordance with Section 6.13 thereof, the Administrative Agent shall, at the expense of such Grantor, execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the lien on and security interest in the Trademarks under this Trademark Security Agreement.

SECTION 5.    Counterparts. This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.

[Signature pages follow.]

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[GRANTOR]

By:    

Name:    

Title:    

[Trademark Security Agreement]

BANK OF AMERICA, N.A.,
as Administrative Agent

By:    

Name:    

Title:    

[Trademark Security Agreement]

Schedule I
Trademark Registrations and Use Applications

Registrations:

OWNER REGISTRATION NUMBER TRADEMARK

Applications:

OWNER APPLICATION NUMBER TRADEMARK

Exhibit V to the

Security Agreement

FORM OF
COPYRIGHT SECURITY AGREEMENT (SHORT FORM)

COPYRIGHT SECURITY AGREEMENT

THIS COPYRIGHT SECURITY AGREEMENT IS SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS OF NOVEMBER 16, 2012 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME), AMONG APX GROUP, INC., THE GRANTORS PARTY THERETO, BANK OF AMERICA, N.A., AS CREDIT AGREEMENT COLLATERAL AGENT (AS DEFINED THEREIN), AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS NOTES COLLATERAL AGENT (AS DEFINED THEREIN), AND EACH ADDITIONAL COLLATERAL AGENT (AS DEFINED THEREIN) FROM TIME TO TIME PARTY THERETO.

    Copyright Security Agreement, dated as of [ ], by [ ] and [_________] (individually, a “Grantor”, and, collectively, the “Grantors”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

W i t n e s s e t h:

    Whereas, the Grantors are party to the Amended and Restated Security Agreement dated as of July 9, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) and related Intellectual Property Security Agreements (as defined therein) in favor of the Administrative Agent pursuant to which the Grantors are required to execute and deliver this Copyright Security Agreement;

    Now, Therefore, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Grantors hereby agree with the Administrative Agent as follows:

    SECTION 1.    Defined Terms. Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

    SECTION 2.    Grant of Security Interest in Copyright Collateral. Each Grantor hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Collateral (excluding any Excluded Assets) of such Grantor:

    (a) registered Copyrights of such Grantor listed on Schedule I attached hereto.

    SECTION 3.    The Security Agreement. The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that the rights and remedies of the Administrative Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise determine.

    SECTION 4.    Termination. Upon termination of the Security Agreement in accordance with Section 6.13 thereof, the Administrative Agent shall, at the expense of such Grantor,

execute, acknowledge, and deliver to the Grantors an instrument in writing in recordable form releasing the lien on and security interest in the Copyrights under this Copyright Security Agreement.

    SECTION 5.    Counterparts. This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.

[Signature pages follow.]

[GRANTOR]

By:    

Name:    

Title:    

[Copyright Security Agreement]

BANK OF AMERICA, N.A.,
as Administrative Agent

By:    

Name:    

Title:    

[Copyright Security Agreement]

Schedule I

Copyright Registrations

OWNER TITLE REGISTRATION NUMBER

S-1

EX-10.38

Exhibit 10.38

FIFTH AMENDMENT

TO SECOND AMENDED & RESTATED CONSUMER FINANCING SERVICES AGREEMENT

Effective Date: January 25, 2022

WHEREAS, APX Group, Inc. (“Vivint” or “Company”) and Citizens Bank, N.A. (“Citizens” or “Supplier”, and together with Vivint, the “Parties”) entered into that certain Second Amended and Restated Consumer Financing Services Agreement dated as of May 31, 2017 (as amended, the “Agreement”);

WHEREAS, the Parties desire to amend the Agreement;

NOW, THEREFORE, for valid and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.Change of Reference Dates. Each of the five references to “February 1, 2022” in Sections 2.4.2, 2.4.4 and 2.4.5 of the Agreement is hereby deleted and replaced with the following new reference: “February 15, 2022 (or, if such 15th day of the month is not feasible due to cycle time, then on the next Business Day)”.

2.Except as explicitly set forth in this Fifth Amendment, the Agreement is not amended or modified hereby. Section references used herein are to sections of the Agreement. Defined terms used herein without definition shall have the meanings ascribed to them in the Agreement.

IN WITNESS WHEREOF, the Parties hereto have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first written above.

APX GROUP, INC.	CITIZENS BANK, N.A.
/s/ Dale R. Gerard	/S/ Andrew Rostami
Name: Dale R. Gerard	Name: Andrew Rostami
Title: Chief Financial Officer	Title: President, Citizens Pay

EX-10.42

Exhibit 10.42

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(David Bywater)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated February 27, 2022 (the “Effective Date”) by and among Vivint Smart Home, Inc., a Delaware corporation (the “Company”) and David Bywater (“Executive”).

WHEREAS, the Company and Executive previously entered into an employment agreement, dated as of June 6, 2021, that governs Executive’s employment with the Company (the “Original Employment Agreement”)

WHEREAS, the Company and Executive desire to amend and restate the Original Employment Agreement in its entirety as forth herein;

WHEREAS, the Company desires for one or more of the Company or its subsidiaries to continue to employ Executive and Executive desires to continue to be employed; and

WHEREAS, the Company and Executive desire to enter into this Agreement embodying the terms of such continued employment.

NOW, THEREFORE, effective as of the Effective Date, this Agreement will supersede the Original Employment Agreement in its entirety; and

THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.Term of Employment. Subject to the provisions of Section 5 of this Agreement, Executive commenced employment with the Company and/or one or more of its subsidiaries on June 15, 2021 (the “Commencement Date”) and shall continue to be employed by the Company and/or one or more of its subsidiaries ending on the third anniversary of the Commencement Date (the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement; provided, however, the Employment Term shall be automatically extended for an additional one-year period commencing with the third anniversary of the Commencement Date and, thereafter, on each such successive anniversary of the Commencement Date thereafter (each an “Extension Date”), unless the Company or Executive provides the other party hereto at least 90 days prior written notice before the next Extension Date that the Employment Term shall not be so extended (a “Non-Renewal”). Executive’s termination of employment upon expiration of the Employment Term due to the Company’s notice of Non-Renewal will be treated as a termination by the Company without Cause for purposes of Section 5 of this Agreement. Executive shall be employed at the Company’s headquarters in Provo, Utah, subject to any restrictions related to Covid-19 that the Company may implement from time to time, although Executive understands and agrees that he may be reasonably required to travel from time to time for business reasons in the course of the performance of his duties and responsibilities hereunder.

2.Position, Duties and Authority.

(a)During the Employment Term, Executive shall serve as the Company’s Chief Executive Officer. In such position, Executive shall have such duties, functions, responsibilities and authority as shall be determined from time to time by the Board of Directors of the Company (the “Board”) and be consistent with the duties, functions, responsibilities and

authority of an individual in Executive’s position. Executive shall report directly and solely to the Board. Executive shall also serve as a member of the Board without additional compensation.

(b)Executive will devote substantially all of Executive’s business time and reasonable best efforts to the operation and oversight of the Company’s businesses and performance of Executive’s duties hereunder (excluding periods of vacation and sick leave) and will not engage in any other business activities that could conflict with his duties or services to the Company; provided that nothing herein shall preclude Executive, subject to obtaining consent of the Board (not to be unreasonably withheld), from (i) accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation, (ii) serving as an officer or director or otherwise participating in non-profit educational, welfare, social, religious and civil organizations, (iii) managing Executive’s personal investments, (iv) continuing to sit on the boards of SavATree, Mariani, and the national advisory board of Brigham Young University, and (v) continuing to provide limited advisory time to another chief executive officer as previously disclosed to and approved by the Board; provided, that such activities do not (x) violate the terms of this Agreement, (y) interfere, either individually or in the aggregate, with the performance of Executive’s duties under this Agreement or (z) create a potential business or fiduciary conflict.

3.Compensation.

(a)Base Salary. During the Employment Term, the Company shall pay Executive a base salary (“Base Salary”) at the annual rate of $1,021,200, payable in regular installments in accordance with the Company’s usual payment practices. Executive’s Base Salary shall be subject to annual review and subject to increase, if any, as may be determined from time to time in the sole discretion of the Board or the Compensation Committee of the Board, but in no event shall the Company reduce Executive’s Base Salary.

(b)Annual Bonus. During the Employment Term, Executive shall be eligible to earn an annual bonus award (an “Annual Bonus”) with a target amount equal to 100% of Executive’s Base Salary at the end of the performance period (the “Annual Target Bonus”). The percentage for Executive’s Annual Target Bonus shall be subject to annual review and subject to increase, if any, as may be determined from time to time in the sole discretion of the Board or the Compensation Committee of the Board, but in no event shall the Company be entitled to reduce such percentage. Each Annual Bonus shall be determined based on the achievement of performance objectives and targets established by the Board for the applicable year. For 2021, the Company shall pay Executive an Annual Bonus in a cash lump sum no later than December 31, 2021 of not less than $1,021,200 (the “2021 Guaranteed Bonus”). Except as provided above, the Annual Bonus (which may include amounts for 2021 in excess of the 2021 Guaranteed Bonus based on the achievement of performance objectives and targets established by the Board for 2021), if any, shall be paid to Executive within two and one-half months after the end of the applicable fiscal year. Except as provided in Section 5, no Annual Bonus shall be payable in respect of any fiscal year in which Executive’s employment is terminated.

(c)Sign-on Equity Grant. In recognition of the commencement of Executive’s employment and the value of forfeited incentive compensation from Executive’s prior employer, the Company awarded to Executive a one-time equity-based stock incentive grant (the “Sign-on Grant”).

(i)The Sign-on Grant consists of a number of shares of the Company’s Class A common stock (each, a “Share”) equal to the quotient of (x) $15,000,000 divided by (y) the closing price per Share, as reported on the New York Stock Exchange (the “NYSE”), on the last trading day prior to the announcement of Executive’s employment with the Company (the “Share Price”).

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(ii)One-third (1/3rd) of the Sign-on Grant shall vest based upon Executive’s continued service with the Company through the applicable vesting dates (the “Time-Based Sign-on Grant”), except as provided below, with 33.34% of the Time-Based Sign-on Grant vesting on the one-year anniversary of the Commencement Date, and 33.33% vesting on each of the second and third anniversaries of the Commencement Date. Any portion of the Time-Based Sign-on Grant that becomes vested shall be settled as soon as practicable, but no later than thirty (30) days following the applicable vesting date.

(iii)Two-thirds (2/3rd) of the Sign-on Grant shall become earned based upon certain performance targets being satisfied as set forth below and shall be subject to certain vesting conditions (the “Performance-Based Sign-on Grant”).

(A)Fifty percent (50%) of the Shares underlying the Performance-Based Sign-on Grant shall become “earned shares” in the event both (x) the average closing price of a Share (as listed on the NYSE) exceeds 200% of the Share Price for 20 consecutive trading days during Executive’s employment and (y) the Company’s consolidated adjusted EBITDA (as determined by the Compensation Committee as part of the Company’s annual compensation review process) for any fiscal year during which such 20 consecutive trading days begins or ends equals or exceeds the Company’s consolidated target adjusted EBITDA (with the Compensation Committee establishing such targets as part of the annual compensation review process no later than the 90th day following the start of such fiscal year).

(B)The remaining fifty percent (50%) of the Shares underlying the Performance-Based Sign-on Grant shall become “earned shares” in the event both (x) the average closing price of a Share (as listed on the NYSE) exceeds 300% of the Share Price for 20 consecutive trading days during Executive’s employment and (y) the Company’s consolidated adjusted EBITDA (as determined by the Compensation Committee as part of the Company’s annual compensation review process) for any fiscal year during which such 20 consecutive trading days begins or ends equals or exceeds the Company’s consolidated target adjusted EBITDA (with the Compensation Committee establishing such targets as part of the annual compensation review process no later than the 90th day following the start of such fiscal year).

(iv)Any “earned shares” underlying the Performance-Based Sign-on Grant shall become vested and settled on the third anniversary of the Commencement Date (or, if such underlying shares became “earned shares” after such third anniversary, immediately upon becoming “earned shares”).

(v)Upon a termination of Executive’s employment by the Company without Cause (including a termination of employment upon expiration of the Employment Term due to the Company’s notice of Non-Renewal), due to Executive’s death or Disability or Executive’s resignation with Good Reason (each, a “Good Leaver Termination”), (A) the Time-Based Sign-On Grant will, upon such employment termination date, fully vest as to one-hundred percent (100%) of the underlying Shares and (B) the Performance-Based Sign-on Grant shall become “earned shares” and vested to the extent that both (i) the average closing price of a Share (as listed on the NYSE) during the 20 consecutive trading days immediately preceding the date of termination of Executive’s employment (the “Termination Price”) exceeds the Share Price, and (ii) (x) in the event that the Company’s consolidated target adjusted EBITDA for the fiscal year in which such termination occurs has been established by the Compensation Committee

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as of the termination date, the Company’s consolidated adjusted EBITDA for the period from the beginning of the fiscal year in which such termination occurs through the termination date (as determined reasonably and in good faith by the Compensation Committee) equals or exceeds the Company’s consolidated target adjusted EBITDA for the period through the termination date (as established by the Compensation Committee pursuant to the terms of Section 3(c)(iii) above), or (y) in the event that the Company’s consolidated target adjusted EBITDA for the fiscal year in which such termination occurs has not been established by the Compensation Committee as of the termination date, the Company’s consolidated adjusted EBITDA for the fiscal year to the date of termination (as determined reasonably and in good faith by the Compensation Committee) equals or exceeds the Company’s consolidated target adjusted EBITDA for such immediately preceding fiscal year applied to the fiscal year in which the termination occurs through the termination date (as established by the Compensation Committee pursuant to the terms of Section 3(c)(iii) above), with the percentage of the Shares earned under the Performance-Based Sign-on Grant (not to exceed 100%) equal to the quotient of (I) the excess of (x) the Termination Price less (y) the Share Price, divided by (II) the product of (x) two (2) times (y) the Share Price (the Shares earned based upon such calculation, the “Earned Performance-Based Termination Shares”). Any such Earned Performance-Based Termination Shares will be settled within sixty (60) days following the termination date.

(vi)Immediately prior to a Change in Control of the Company (as defined under the Company’s 2020 Omnibus Incentive Plan) (a “Change in Control”), the Performance-Based Sign-on Grant shall become “earned shares” and vested to the extent that the last closing price of a Share immediately prior to the closing of the Change in Control (the “CIC Price”) exceeds 100% of the Share Price (and without regard to the Company’s consolidated adjusted EBITDA), with the percentage of the Shares earned under the Performance-Based Sign-on Grant (not to exceed 100%) equal to the quotient of (I) the excess of (x) the CIC Price less (y) the Share Price, divided by (II) the product of (x) two (2) times (y) the Share Price (the Shares earned pursuant to such calculation, the “Earned Performance-Based CIC Shares”). Any Earned Performance-Based CIC Shares shall be delivered to Executive when other Company PSUs or RSUs are settled upon a Change in Control, but no later than ten (10) days following the consummation of such Change in Control.

(d)Annual Equity Grants. During the Employment Term, Executive shall be eligible to receive annual grants of equity under the Company’s long-term equity incentive plan in place from time to time (“LTI”), as determined by the Board in its sole discretion. Notwithstanding the foregoing, for each of calendar years 2021, 2022, and 2023 (each, an “Award Year”), subject to continued employment, the Company shall grant Executive LTI grants of a number of Shares equal to the quotient of (x) $10,000,000 divided by (y) the applicable share price on the date of grant. For each of calendar years 2021, 2022 and 2023, the LTI shall be in the form of (i) 50% restricted stock units (the “LTI RSUs”) that vest annually over three years, subject to continued employment (except as provided herein), and (ii) 50% performance stock units (assuming target performance) that vest annually over one year, following the annual performance period, subject to continued employment and the achievement of performance metrics determined by the Board and/or Compensation Committee (such targets established in a manner consistent with other senior executives of the Company), which performance metrics shall be consistent with the performance metrics established for other senior executives of the Company and shall be established and delivered to Executive in a manner consistent with the process for other senior executives of the Company. Executive’s 2021, 2022 and 2023 outstanding LTI RSUs shall fully vest one-hundred percent (100%) upon a Good Leaver Termination, and, for each Award Year for which Executive’s LTI RSUs have not been granted to Executive prior to the date of such Good Leaver Termination, Executive shall receive from the

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Company, on or within 30 days following the termination date, fully vested Shares having an aggregate fair market value equal to the quotient of (x) $5,000,000 divided by (y) the applicable Share price on the last trading date immediately prior to Executive’s termination date. The annual grants for 2022 and 2023 shall be made at the same time annual equity grants are made to senior executives of the Company. Following 2023 and during the Employment Term, the Company shall grant Executive equity awards commensurate with his position as Chief Executive Officer of the Company.

4.Benefits.

(a)General. During the Employment Term, Executive shall be entitled to participate in the Company’s employee benefit, fringe and perquisite plans, practices, policies and arrangements as in effect from time to time (collectively, “Employee Benefits”), on generally the same terms and conditions as each of the Employee Benefits are made available to other senior executives of the Company (other than with respect to annual bonuses, incentive plans and severance plans (as well as any other terms and conditions specifically determined under this Agreement), the benefits for each which shall be determined instead in accordance with this Agreement); provided that Executive shall be entitled to no less than four (4) weeks’ vacation per calendar year, with unused vacation accruing in accordance with the Company policy that applies to its senior executives. The Company shall provide Executive with perquisites no less favorable than provided to other senior executives of the Company and which under all circumstances shall include an automobile allowance in accordance with the Company’s policies as in effect from time to time for its senior executives.

(b)The Company shall permit Executive to establish a 10b5-1 trading plan and sell Company securities in accordance therewith and all applicable securities laws, subject to the Company’s stock ownership guidelines and Executive’s obligations thereunder.

(c)Reimbursement of Business Expenses. During the Employment Term, the Company shall reimburse Executive for reasonable and necessary business expenses incurred by Executive in the performance of Executive’s duties hereunder in accordance with its then prevailing policy for senior executives (which shall include appropriate itemization and substantiation of expenses incurred).

(d)Indemnification. Without limit on Section 9(a) of this Agreement, the Company agrees to the indemnification terms set forth on Exhibit I hereto (the “IndemnificationAgreement”).

(e)Aircraft Use. Each calendar year during the Employment Term, the Company shall provide Executive with up to seventy (70) hours of private aircraft use and/or commercial flights for personal use in accordance with the Company’s aircraft use policies that may be in place from time to time. The Company shall pay (i) any withholding tax required to be withheld with respect to such aircraft use to the applicable governmental authority and (ii) such additional amounts to Executive to ensure that after withholding, Executive receives the full amount required to be paid before giving effect to such withholding.

5.Termination.

(a)The Employment Term and Executive’s employment hereunder may be terminated by either party at any time and for any reason, subject to the notice and cure provisions set forth below. Notwithstanding any other provision of this Agreement, the provisions of this Section 5 shall exclusively govern Executive’s severance rights upon termination of employment with the Company and its affiliates.

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(b)By the Company for Cause or by Executive other than with Good Reason.

(i)The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause and shall terminate automatically upon the effective date of Executive’s resignation other than with Good Reason (as defined in Section 5(d)(i)).

(ii)Definition of Cause. For purposes of this Agreement, “Cause” shall mean (A) Executive’s continued refusal to perform Executive’s employment duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 days following written notice by the Company to Executive of such failure, (B) dishonesty in the performance of Executive’s employment duties that is materially injurious to the Company, (C) (x) conviction of or plea of nobo contendere to a felony charge under the laws of the United States or any state thereof (other than (1) an offense solely related to operation of a motor vehicle resulting in only a fine, license suspension or other non-custodial penalty or (2) any vicarious liability solely as a result of Executive’s position as Chief Executive Officer and not due to any willful acts or omissions by Executive) or (y) a misdemeanor charge involving moral turpitude, (D) Executive’s willful malfeasance or willful misconduct in connection with Executive’s employment duties which causes substantial injury to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates or (E) Executive’s material breach of any of the covenants set forth in Section 6 (other than any action taken in good faith and in a manner not opposed to the best interests of the Company, and which is promptly remedied by Executive upon notice by the Board); provided that none of the foregoing events shall constitute Cause unless (x) Executive is given the reasonable opportunity to be heard before the Board with his counsel present and (y) Executive fails to cure such event and remedy any adverse or injurious consequences arising from such events within 10 days after receipt from the Company of written notice of the event which constitutes Cause (except that no cure or remedy period shall be provided if the event or such consequences are not capable of being cured and remedied). No action or inaction shall be treated as willful unless done or not done in bad faith and without reasonable belief it was in the best interests of the Company or its affiliates. Neither poor performance by itself nor actions or inactions based upon the lawful direction of the Board shall constitute Cause.

(iii)If Executive’s employment is terminated by the Company for Cause, the Company shall provide Executive with:

(A)no later than 10 days following the date of termination, the Base Salary through the date of termination;

(B)reimbursement, within 60 days following receipt by the Company of Executive’s claim for such reimbursement (including appropriate supporting documentation), for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to Executive’s termination; provided that such claims for such reimbursement are submitted to the Company within 90 days following the date of Executive’s termination of employment; and

(C)such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company, payable in accordance with the terms and conditions of such tax qualified employee benefit plans including accrued vacation to be payable on the next scheduled payroll date

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(the amounts described in clauses (A) through (C) hereof being referred to as the “Accrued Rights”).

(D)For the avoidance of doubt, in any legal proceeding to determine whether grounds for Cause existed on any date that the Company took action on the basis of the existence of Cause, the Company shall bear the burden of demonstrating grounds for Cause existed on such date.

Following such termination of Executive’s employment by the Company for Cause, except as set forth in this Section 5(b)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(iv)If Executive resigns other than with Good Reason (which shall include, for the avoidance of doubt, Executive’s termination of employment due to Executive’s notice of Non-Renewal to terminate the Employment Term), provided that Executive will be required to give the Company at least 60 days advance written notice of any resignation of Executive’s employment (other than with Good Reason), Executive shall be entitled to receive the Accrued Rights and any earned but unpaid Prior Year Bonus (as defined below). Following such resignation by Executive other than with Good Reason, except as set forth in this Section 5(b)(iv), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(c)Disability or Death.

(i)Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness or injury (the “Disability Period”), Executive shall continue to receive his full Base Salary set forth in Section 3(a) until his employment is terminated pursuant to Section 5(a). The Employment Term and Executive’s employment hereunder may be terminated immediately by the Company due to Executive’s Disability and will terminate immediately upon Executive’s death. For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform, with or without reasonable accommodation, Executive’s duties under this Agreement due to a physical or mental illness or injury for a period of six consecutive months or for an aggregate of 12 months in any consecutive 24-month period. Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third physician who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of this Agreement.

(ii)Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate, survivors or beneficiaries (as the case may be) shall be entitled to receive:

(A)the Accrued Rights;

(B)any Annual Bonus earned, but unpaid, as of the date of termination for the immediately preceding fiscal year (with any subjective and/or individual performance targets determined in a manner consistent with other senior executives of the Company), paid in accordance with Section 3(b) (the “Prior Year Bonus”) (except to the extent payment is otherwise deferred pursuant

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to any applicable deferred compensation arrangement with the Company, in which case such payment shall be made in accordance with the terms and conditions of such deferred compensation arrangement);

(C)no later than 10 days following the date of termination, a pro rata portion of the Annual Target Bonus payable for the fiscal year in which such termination occurs, based on a fraction, the numerator of which is the number of days during the fiscal year up to and including the date of termination of Executive’s employment and the denominator of which is the number of days in such fiscal year (the “Pro-Rated Bonus”);

(D)no later than 10 days following the date of termination, a lump sum in cash equal to the product of (x) the monthly COBRA costs of providing health and welfare benefits for Executive and Executive’s dependents under the plans in which Executive was participating on the date of the applicable “COBRA qualifying event” at the time of such event, times (y) 24; and

(E)death or disability benefits under any applicable plans and programs of the Company in accordance with the terms and provisions of such plans and programs (with treatment of equity awards as set forth above).

(d)By the Company Without Cause, Expiration following Company Notice of Non-Renewal of Employment Term or Resignation by Executive with Good Reason.

(i)“Good Reason” shall be deemed to exist upon the occurrence of (A) a reduction in Executive’s Base Salary or Annual Target Bonus; (B) a material diminution in Executive’s title or Executive’s duties, authority or responsibilities (including Executive being required to report to anyone other than directly and solely to the Board, removal of Executive from the Board or failure to nominate Executive to the Board); (C) the relocation of Executive’s primary office location to a location that is more than 50 miles from Executive’s primary office location, in each case without Executive’s prior written consent; or (D) the Company’s material breach of any of the provisions of this Agreement or any other material agreement to which Executive is party with the Company; provided that none of the foregoing events shall constitute Good Reason unless the Company fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason and Executive actually terminates employment within thirty (30) days following the expiration of the Company’s thirty (30)-day cure period (otherwise, any claim of such circumstances as Good Reason shall be deemed irrevocably waived by Executive); and provided, further, that “Good Reason” shall cease to exist for an event on the 60th day following Executive’s knowledge of its occurrence, unless Executive has given the Company written notice thereof prior to such date. Notwithstanding the foregoing and any terms of this Agreement, if the Company modifies Executive’s duties or responsibilities pursuant to a Changed Role Period as set forth in Exhibit I it is understood and agreed that such modification will not constitute Good Reason or a breach of this Agreement and that Executive’s compliance with such modification will not constitute Cause or a breach of this Agreement.

(ii)If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability), upon expiration of the Employment Term following the Company’s notice of Non-Renewal under Section 1 or if Executive resigns with Good Reason, then the Company shall provide Executive with:

(A)the Accrued Rights and the Prior Year Bonus;

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(B)the Pro-Rated Bonus;

(C)subject to Executive’s continued material compliance with Section 6 and material compliance with Section 7 hereof, and the execution and non-revocation of the Release (as defined below), a lump-sum cash payment within 55 days after such termination and effectiveness of the Release equal to the sum of (x) 200% of Executive’s Base Salary as of the date immediately prior to Executive’s termination of employment (not taking into account any reductions which would constitute Good Reason or which were made within six months prior to Executive’s employment termination) and (y) 200% of the actual Annual Bonus paid in respect of the immediately preceding fiscal year (or, if such termination occurs prior to the first date on which an Annual Bonus would have been paid had any payment been due, the Annual Target Bonus for the immediately preceding fiscal year), and (z) the monthly COBRA costs of providing health and welfare benefits for Executive and Executive’s dependents under the plans in which Executive was participating on the date of the applicable “COBRA qualifying event” at the time of such event, times 24; and

(D)Executive’s equity awards will be treated as set forth in Section 3 above.

(iii)Release. Amounts payable to Executive under Section 5(c)(ii)(C) or Sections 5(d)(ii)(B) and 5(d)(ii)(C) (collectively, the “Conditioned Benefits”) are subject to (i) Executive’s execution and non-revocation of a release of claims, substantially in the form attached hereto as Exhibit II (the “Release”), within 60 days of the date of termination and (ii) the expiration of any revocation period contained in such Release. Further, to the extent that any of the Conditioned Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60th) day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day, after which any remaining Conditioned Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein.

(e)Expiration of Employment Term. Unless the parties otherwise agree in writing, continuation of Executive’s employment with the Company following the expiration of the Employment Term following a notice of Non-Renewal by Executive shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement and Executive’s employment may thereafter be terminated at will by either Executive or the Company; provided that the provisions of Sections 6, 7 and 8 of this Agreement shall survive any termination of this Agreement or Executive’s termination of employment hereunder.

(f)Notice of Termination; Board/Committee Resignation. Any purported termination of employment by the Company or by Executive (other than due to Executive’s death) pursuant to Section 5 of this Agreement shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the Company’s affiliates (except to the

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extent Executive is otherwise entitled pursuant to a separate contractual arrangement to continue to serve as a member of the Board).

6.Non-Competition; Non-Solicitation. Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its affiliates and accordingly agrees as follows:

(a)Non-Competition.

(i)During Executive’s employment hereunder and, for a period of two years following the date Executive ceases to be employed by the Company (the “Restricted Period”), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly, solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Executive (or Executive’s direct reports) had personal contact or dealings on behalf of the Company during the one-year period preceding Executive’s termination of employment.

(ii)During the Restricted Period, Executive will not directly or indirectly:

(A)engage in the Business anywhere in the United States, or in any geographical area that is within 100 miles of any geographical area where the Restricted Group engages in the Business, including, for the avoidance of doubt, by entering into the employment of or rendering any services to a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(B)acquire a financial interest in, or otherwise become actively involved with, any Person engaged in the Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or

(C)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.

(iii)Notwithstanding anything to the contrary in this Agreement, Executive may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Core Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market (or which are not publicly traded, but are owned solely on a passive basis) if Executive (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 2% or more of any class of securities of such Person.

(b)Non-Solicitation. During Executive’s employment hereunder and the Restricted Period, Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

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(i)solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

(ii)hire any executive-level employee who was employed by the Restricted Group as of the date of Executive’s termination of employment with the Company or who left the employment of the Restricted Group coincident with, or within one year prior to or one year after, the date of Executive’s termination of employment with the Company; or

(iii)encourage any material consultant of the Restricted Group to cease working with the Restricted Group.

(iv)For purposes of this Agreement:

(A)“Business” shall mean (1) origination, installation, or monitoring services related to residential or commercial security, life-safety, energy management, cloud storage or smart home automation services, including cloud-enabled software solutions related thereto, (2) installation or servicing of residential or commercial solar panels or sale of electricity generated by solar panels, (3) design, engineering or manufacturing of technology or products related to residential or commercial security, life-safety, energy management or cloud storage, smart home automation services, including cloud-enabled software solutions related thereto, and/or (4) provision of wireless voice or data services and cloud storage, including internet, into the home.

(B)“Core Competitor” shall mean ADT Inc. , Protection 1, Inc., Protect America, Inc., Stanley Security Solutions, Inc., Vector Security, Inc., Slomins, Inc., Monitronics International, Inc. (Brinks Home Security), Life Alert, Comcast Corporation, AT&T Inc., Verizon Communications, Inc., DISH Network Corp., Pinnacle, Microsoft Corporation, Amazon.com, Inc., Alphabet, Inc., Arlo Technologies, Inc., SimpliSafe, Inc. Control4 Corp., Alarm.com, Inc., Tyco Integrated Security, Resideo Technologies, Inc., Honeywell International Inc., Sungevity, Inc., RPS, Solar City, Clean Power Finance, SunPower Corporation, Corbin Solar Solutions LLC and Galkos Construction, Inc, and each of their respective affiliates, provided that Executive will not be deemed to be working for a Core Competitor in violation of this Agreement solely as a result of any company he is affiliated with being acquired by or merged with any of the foregoing.

(C)“Restricted Group” shall mean, collectively, the Company and its subsidiaries and, to the extent engaged in the Business, their respective affiliates.

(c)During the Restricted Period, Executive agrees not to make, or cause any other person to make, any communication that is intended to criticize or disparage, or has the effect of criticizing or disparaging, the Company or any of its affiliates, agents or advisors, or any of its or their respective employees, officers or directors (it being understood that comments made in Executive’s good faith performance of his duties hereunder shall not be deemed disparaging or defamatory for purposes of this Agreement). During the Restricted Period, the Company shall instruct its executive officers and directors to refrain from intentionally making any communication that is intended to criticize or disparage, or has the effect of criticizing or disparaging, Executive (it being understood that comments made in the good faith performance of their ordinary course duties to the Company or its affiliates shall not be deemed disparaging or defamatory for purposes of this Agreement), and the Company agrees not to make, or cause any

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other person to make, any official communication, press release or other public statement that criticizes or disparages Executive. Nothing set forth herein shall be interpreted to prohibit either party from responding truthfully to incorrect public statements, making truthful statements when reasonably appropriate in connection with any litigation Executive and the Company or any of its affiliates or required by law, subpoena or court order and/or from responding to any inquiry by any regulatory or investigatory organization.

(d)It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 6 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Section 6 is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Section 6 is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(e)The period of time during which the provisions of this Section 6 shall be in effect shall be extended by the length of time during which Executive is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.

(f)The provisions of this Section 6 shall survive the termination of Executive’s employment for any reason, including but not limited to, any termination other than for Cause.

7.Confidentiality; Intellectual Property.

(a)Confidentiality.

(i)Executive will not at any time (whether during or after Executive’s employment with the Company), (x) retain or use for the benefit, purposes or account of Executive or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than Executive’s professional advisers who are bound by confidentiality obligations or otherwise in performance of Executive’s duties under Executive’s employment and pursuant to customary industry practice), any non-public, proprietary or confidential information — including, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals — concerning the past, current or future business, activities and operations of the Company, its subsidiaries or affiliates and/or any third party that has disclosed or provided any of same to the Company, its subsidiaries or affiliates on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Executive’s breach of this covenant; (b) made legitimately available to Executive by a third party without breach of any confidentiality obligation of which Executive has knowledge; or (c) required by law, court order or subpoena, or inquiry by any regulatory or

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investigatory organization, to be disclosed; provided that with respect to subsection (c) Executive shall, to the extent legally permitted, give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment. Subject to Executive using reasonable efforts to ensure that all Confidential Information is properly protected from public disclosure, Executive may also disclose Confidential Information if and to the extent reasonably appropriate pursuant to any litigation or arbitration between Executive and the Company or any of its affiliates.

(iii)Upon termination of Executive’s employment with the Company for any reason, Executive shall (A) except as provided above, cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its subsidiaries or affiliates; and (B) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information. Notwithstanding the foregoing, Executive shall be permitted to retain his contacts, calendar and personal correspondence and any information needed for personal tax preparation purposes, and any iPads or mobile phones or similar equipment and his mobile number that, in each case, has been wiped of all Confidential Information by the Company.

(iv)Nothing in this Agreement shall prohibit or impede Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Executive understands and acknowledges that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Except as otherwise provided in this paragraph, paragraph (ii) above or under applicable law, under no circumstance is Executive authorized to disclose any information covered by the Company’s attorney-client privilege or attorney work product or the Company’s trade secrets, without the prior written consent of the Company. Executive does not need the prior authorization of (or to give notice to) the Company regarding any communication, disclosure or activity described in this paragraph.

(b)Intellectual Property.

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(i)If Executive creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, at any time during Executive’s employment by the Company (or any of its subsidiaries) and within the scope of such employment and/or with the use of any of the Company resources (such Works, “Company Works”), Executive shall promptly disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all of Executive’s right, title, and interest therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition, other intellectual property laws, and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company. If Executive creates any written records (in the form of notes, sketches, drawings, or any other tangible form or media) of any Company Works, Executive will keep and maintain same. The records will be available to and remain the sole property and intellectual property of the Company at all times.

(ii)Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) reasonably requested by the Company and at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Company Works.

(iii)Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Executive shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Executive, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest.

(iv)The provisions of Section 7 hereof shall survive the termination of Executive’s employment for any reason.

8.Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 6 and Section 7 of this Agreement could be inadequate and the Company could suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Executive agrees that, in the event of such a breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled, in addition to any other remedy available at law or equity, to cease making any payments or providing any benefit otherwise required by this Agreement and, in the event of such a breach or threatened breach, to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. In addition, upon any final judicial determination of any breach of Section 6 or any material breach of Section 7 of this Agreement which occurs during the Restricted Period, Executive shall promptly return to the Company upon request all cash payments made to Executive pursuant to Section 5 (if any), less any amounts paid by Executive as taxes in respect of such payments (unless such taxes are actually recovered by Executive from the relevant governmental authority, in which case such tax amounts also shall be returned to the Company). Any determination under this Section 8 of whether Executive is in compliance with Section 6 hereof and material compliance with Section

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7 hereof shall be determined based solely on the contractual provisions provided therein and the facts and circumstances of Executive’s actions without regard to whether the Company could obtain an injunction or other relief under the law of any particular jurisdiction.

9.Miscellaneous.

(a)Indemnification; Directors’ and Officers’ Insurance. The Company shall indemnify and hold Executive harmless for all acts and omissions occurring during his employment with the Company and/or its affiliates or service as a member of the Board to the extent provided under the Company’s charter, by-laws and applicable law, and shall promptly advance to Executive or Executive’s heirs or representatives all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Expenses”) as a result of any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information (collectively, a “Claim”) or any proceeding (whether civil, criminal, administrative or investigative), or any threatened Claim or proceeding (whether civil, criminal, administrative or investigative), against Executive that arises out of or relates to Executive’s service as an officer, director or employee, as the case may be, of the Company, or Executive’s service in any such capacity or similar capacity with an affiliate of the Company or other entity at the request of the Company, upon receipt by the Company of a written request with appropriate documentation of such Expenses, and an undertaking by Executive to repay the amount advanced if it shall ultimately be determined by final judicial determination that Executive is not entitled to be indemnified by the Company against such Expenses. During the Employment Term and for a term of six years thereafter (or later while potential liability exists), the Company, or any successor to the Company, shall purchase and maintain, at its own expense, directors and officers liability insurance providing coverage for Executive in the same amount as for members of the Board.

(b)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, without regard to conflicts of laws principles thereof.

(c)Jurisdiction; Venue. Except as otherwise provided in Section 8 in connection with equitable remedies, each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any federal or state court sitting in the State of Utah over any suit, action or proceeding arising out of or relating to this Agreement and each of the parties agrees that any action relating in any way to this Agreement must be commenced only in the courts of the State of Utah, federal or state. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each of the parties hereto hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by certified mail, return receipt requested, or by recognized overnight courier service, to the address of such party set forth in Section 9(j). The Company shall promptly (and in any event within thirty (30) days following receipt of an invoice) reimburse Executive’s reasonably incurred legal fees if Executive prevails on a material issue in any such dispute.

(d)Entire Agreement; Amendments. This Agreement (including, without limitation, the schedules and exhibits attached hereto) contains the entire understanding of the parties with respect to the employment of Executive by the Company and/or its affiliates, and supersedes all prior agreements and understandings (including verbal agreements and the Original Employment Agreement) between Executive and the Company and/or its current or former affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its current or former affiliates. There are no restrictions, agreements, promises, warranties,

15

covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement (including, without limitation, the schedules and exhibits attached hereto) may not be altered, modified, or amended except by written instrument signed by the parties hereto.

(e)No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

(f)Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(g)Assignment. This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive (other than amounts owed to Executive which to be payable to his estate or beneficiaries following his death). Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement shall be assigned by the Company to a person or entity which is a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

(h)Set Off; No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment, and such payments shall not be reduced by any compensation or benefits received from any subsequent employer or other endeavor. Any amounts due under Section 5 of this Agreement are considered reasonable by the Company and are not in the nature of a penalty.

(i)Compliance with Code Section 409A.

(i)The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any additional tax or interest under Code Section 409A, the Company shall, after consulting with and receiving the approval of Executive, reform such provision in a manner intended to avoid the incurrence by Executive of any such additional tax or interest while endeavoring to retain the intended economic benefits of this Agreement.

(ii)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A, and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” The determination of whether and when a separation from service has occurred for proposes of this Agreement shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.

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(iii)Any provision of this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service, the Company determines that Executive is a “specified employee,” within the meaning of Code Section 409A, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement on account of such separation from service would be considered nonqualified deferred compensation under Code Section 409A, such payment or benefit shall be paid or provided at the date which is the earlier of (i) six (6) months and one day after such separation from service and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 9(i) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or provided to Executive in a lump-sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(iv)Any reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation within the meaning of Code Section 409A shall be made or provided in accordance with the requirements of Code Section 409A, including that (A) in no event shall any fees, expenses or other amounts eligible to be reimbursed by the Company under this Agreement be paid later than the last day of the calendar year next following the calendar year in which the applicable fees, expenses or other amounts were incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits that the Company is obligated to pay or provide, in any given calendar year shall not affect the expenses that the Company is obligated to reimburse, or the in-kind benefits that the Company is obligated to pay or provide, in any other calendar year, provided that the foregoing clause (B) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect; and (C) Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit.

(v)For purposes of Code Section 409A, Executive’s right to receive any installment payments shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (for example, “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement, to the extent such payment is subject to Code Section 409A.

(j)Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Vivint Smart Home, Inc.
4931 North 300 West

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Provo, Utah 84604
Attention: General Counsel

If to Executive:

To the most recent address of Executive set forth in the personnel records of the Company.

(k)Section 280G. If any payment or benefit Executive will or may receive from the Company under this Agreement or otherwise would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code (a “280G Payment”) and, (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to be determined, before any amounts of the 280G Payment are paid to Executive, which of the following two amounts would maximize Executive’s after-tax proceeds: (i) payment in full of the entire amount of the 280G Payment (a “Full Payment”), or (ii) payment of only a part of the 280G Payment, so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”), whichever amount results in Executive’s receipt, on an after-tax basis, of the greater amount of the 280G Payment notwithstanding that all or some portion of the 280G Payment may be subject to the Excise Tax. For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If a Reduced Payment is made, (A) the 280G Payment shall be paid only to the extent permitted under the Reduced Payment alternative, and Executive shall have no rights to any additional payments and/or benefits constituting the 280G Payment, and (B) reduction in payments and/or benefits shall occur in the manner that results in the greatest economic benefit for Executive, as determined in the Company’s reasonable good faith discretion. All determinations required to be made under this Section 9(k), including whether an Excise Tax would otherwise be imposed, whether the Payments shall be reduced, the amount of any such reduction and the assumptions to be utilized in arriving at such determinations not expressly provided for herein, shall be made by an independent, nationally recognized accounting firm or compensation consulting engaged by the Company and reasonably acceptable to Executive (the “Determination Firm”) which shall provide detailed supporting calculations both to the Company and Executive. All reasonable fees and expenses of the Determination Firm shall be borne solely by the Company. Any determination by the Determination Firm shall be binding upon the Company and Executive, absent manifest error. For purposes of determining whether and the extent to which the payments will be subject to the Excise Tax: (i) no portion of the payments shall be taken into account which does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including, without limitation, by reason of Section 280G(b)(4)(A) of the Code) and (ii) in calculating the Excise Tax, no portion of such payments shall be taken into account which constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to such reasonable compensation.

(l)Withholding Taxes. The Company shall withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(m)Legal Fees. The Company shall pay directly or reimburse Executive within 30 days following receipt of an invoice for Executive’s legal fees reasonably incurred in connection with the negotiation of this Agreement and any ancillary agreements, in an amount not to exceed $100,000.

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(n)Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signatures Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

VIVINT SMART HOME, INC.

/s/ Dale R. Gerard    

By: Dale R. Gerard

Title: Chief Financial Officer

EXECUTIVE

/s/ David Bywater    

David Bywater

[Signature Page to Employment Agreement]

Exhibit I

PRIOR EMPLOYER INDEMNIFICATION PROVISIONS

(o)Executive will not take any grossly negligent action or inaction if such action or inaction would be reasonably expected to violate any restrictive covenants with his prior employer. (The Company and Executive acknowledge and agree that accepting the CEO position with the Company and being employed with the Company is not an action or inaction that would be reasonably expected to violate any restrictive covenants with his prior employer.) The Company shall not knowingly cause Executive to take any action or inaction that would be reasonably expected to violate any restrictive covenant with his prior employer. Any act, or failure to act, by Executive based upon (A) authority given pursuant to a resolution duly adopted by the Board or (B) the advice of counsel for the Company shall be conclusively presumed to be in compliance with the first sentence of this subsection. The Company shall indemnify, defend, and hold Executive harmless from and against any claims (and any resulting liabilities, forfeitures, claw backs and/or damages, including legal fees and reasonable out of pocket expenses) by Executive’s prior employer that Executive, in connection with his employment with the Company, has breached any restrictive covenant owed by Executive to his prior employer (collectively, the “Indemnified Claims”), and any Indemnified Claims shall be paid by the Company to Executive within 30 days of written demand by Executive; provided, however, that no grossly negligent action or inaction by Executive in breach of any such restrictive covenants shall be an Indemnified Claim. With respect to any Indemnified Claim, Executive agrees to the following terms: (1) the Company shall have control of the defense, provided such defense is diligently made with reasonably sophisticated counsel; (2) separate counsel for Executive may be engaged by the Company, either in the Company’s discretion or by Executive’s request, which the Company shall not unreasonably deny, and in either event such separate counsel shall be at the expense of the Company and pursuant to a mutually agreeable joint defense agreement between Executive and the Company; and (3) both Executive and the Company shall mutually cooperate in good faith in the operation of this Exhibit I, including with respect to the defense and/or settlement of any such Indemnified Claim. This Exhibit I shall survive the termination of Executive’s employment.

(p)Notwithstanding anything in this Agreement to the contrary, the Company and Executive may reasonably determine in good faith after discussions that it is reasonably necessary and advisable for (x) the Company to disengage from any businesses which would result in Executive violating any restrictive covenants from Executive’s prior employer and/or (y) (i) for Executive to serve in a role within the Company that has duties, positions, authority or responsibilities different from Executive’s duties, positions, authority or responsibilities as chief executive officer, but at a senior executive level, for a period of time equal to the applicable period of the restrictions from Executive’s prior employer related to non-competition, but not longer than such period of time (such period, “Changed Role Period”) provided, that, in all circumstances Executive shall report to the Board, (ii) the Company acknowledges and agrees that for any such Changed Role Period, Executive shall continue to receive the compensation and vesting as set forth in this Agreement and any applicable equity award agreement; (iii) immediately upon expiration of the Changed Role Period, Executive shall be reinstated to the duties, positions, authority and responsibilities set forth in this Agreement and (iv) in the event Executive is terminated by the Company without Cause during any such Changed Role Period (including if the Company does not permit Executive to commence employment in such changed role), Executive will be entitled to the severance payments in the Agreement and the immediate grant and vesting of the Sign-on Grant and the Sign-on Cash Award.

Exhibit II

RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims (this “Release”) is entered into and delivered to Vivint Smart Home, Inc. (the “Company”) as of this [●] day of , 202[_], by David Bywater (the “Executive”). The Executive agrees as follows:

1.The employment relationship between the Executive and the Company and its subsidiaries and affiliates, as applicable, terminated on the [●] day of , 202[_] (the “Termination Date”) pursuant to Section [ ] of the Amended and Restated Employment Agreement between the Company and Executive dated February [-], 2022 (“Employment Agreement”).

2.In consideration of the payments, rights and benefits provided for in Section [5(c)(ii)(C) or Sections 5(d)(ii)(B) and 5(d)(ii)(C)] of the Employment Agreement (collectively, as applicable, the “Separation Terms”) and this Release, the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of himself and his agents, representatives, attorneys, administrators, heirs, executors and assigns (collectively, the “Employee Releasing Parties”), hereby releases and forever discharges the Company Released Parties (as defined below), from all claims, charges, causes of action, obligations, expenses, damages of any kind (including attorneys’ fees and costs actually incurred) or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, arising from or relating to Executive’s employment or termination from employment with the Company or otherwise, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”); the Older Workers Benefit Protection Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Family and Medical Leave Act of 1993; Section 1981 of the Civil Rights Act of 1866; Section 1985(3) of the Civil Rights Act of 1871; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; any other federal, state or local laws against discrimination; or any other federal, state, or local statute, regulation or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release by the Executive of any and all claims or rights arising under contract (whether written or oral, express or implied), covenant, public policy, tort or otherwise. For purposes hereof, “Company Released Parties” shall mean the Company and any of its past or present employees, agents, insurers, attorneys, administrators, officials, directors, shareholders, divisions, parents, members, subsidiaries, affiliates, predecessors, successors, employee benefit plans, and the sponsors, fiduciaries, or administrators of the Company’s employee benefit plans; provided, that, Company Released Parties in respect of any past or present employees, agents, insurers, attorneys, administrators, shareholders, sponsors, fiduciaries, and administrators shall only be in their capacities as such.

3.The Executive acknowledges that the Executive is waiving and releasing rights that the Executive may have under the ADEA and other federal, state and local statutes contract and the common law and that this Release is knowing and voluntary. The Executive and the Company agree that this Release does not apply to any rights or claims that may arise after the date of execution by Executive of this Release. The Executive acknowledges that the consideration given for this Release is in addition to anything of value to which the Executive is already entitled. The Executive further acknowledges that the Executive has been advised by this writing that: (i) the Executive should consult with an attorney prior to executing this Release; (ii) the Executive has up to 21 days within which to consider this Release, although the Executive may, at the Executive’s discretion, sign and return this Release at an earlier time, in which case the Executive waives all rights to the balance of this 21 day review period; and (iii) for a period

of seven days following the execution of this Release in duplicate originals, the Executive may revoke this Release in a writing delivered to the Chairman of the Board of Directors of the Company, and this Release shall not become effective or enforceable until the revocation period has expired.

4.This Release does not release the Company Released Parties from (i) any obligations due to the Executive under the Separation Terms, (ii) any rights Executive has to indemnification by the Company and to directors and officers liability insurance coverage, (iii) any vested rights the Executive has under the Company’s employee pension benefit and group healthcare benefit plans as a result of Executive’s actual service with the Company, (iv) any fully vested and nonforfeitable rights of the Executive as a shareholder or member of the Company or its affiliates, (v) any rights of the Executive pursuant to any equity or incentive award agreement with the Company, or (vi) any rights which cannot be waived by an employee under applicable law.

5.Nothing in this Release shall prohibit or impede Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Executive understands and acknowledges that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is Executive authorized to disclose any information covered by the Company’s attorney-client privilege or attorney work product or the Company’s trade secrets, without the prior written consent of the Company. Executive does not need the prior authorization of (or to give notice to) the Company regarding any communication, disclosure or activity described in this paragraph.

6.The Executive represents and warrants that he has not filed any action, complaint, charge, grievance, arbitration or similar proceeding against the Company Released Parties relating to the claims released under Section 2.

7.This Release is not an admission by the Company Released Parties or the Employee

Releasing Parties of any wrongdoing, liability or violation of law.

8.The Executive shall continue to be bound by the restrictive covenants contained in the Employment Agreement which are incorporated herein by reference.

9.This Release shall be governed by and construed in accordance with the laws of the State of Utah, without reference to the principles of conflict of laws.

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10.Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.

11.The Executive acknowledges that the Executive has carefully read and understands this Release, that the Executive has the right to consult an attorney with respect to its provisions and that this Release has been entered into knowingly and voluntarily. The Executive acknowledges that no representation, statement, promise, inducement, threat or suggestion has been made by any of the Company Released Parties to influence the Executive to sign this Release except such statements as are expressly set forth herein or in the Employment Agreement.

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Executive has executed this Release as of the day and year first written above.

EXECUTIVE

David Bywater

EX-10.43

Exhibit 10.43

EMPLOYMENT AGREEMENT
(Daniel Garen)

EMPLOYMENT AGREEMENT (the “Agreement”) dated July 22, 2021 (the “Effective Date”) by and between Vivint Smart Home, Inc., a Delaware corporation (the “Company”) and Daniel Garen (“Executive”).

WHEREAS, the Company desires for one or more of the Company or its subsidiaries to employ Executive and Executive desires to be employed in such capacities, on the terms set forth in this Agreement; and

WHEREAS, the Company and Executive desire to enter into this Agreement embodying the terms of such employment which shall be effective as of the Effective Date.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.Term of Employment. Subject to the provisions of Section 5 of this Agreement, Executive shall be employed by the Company and/or one or more of its subsidiaries for a period commencing on or around August 16, 2021 (such date, the “Commencement Date”) and ending on the first anniversary of the Commencement Date (the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement; provided, however, the Employment Term shall be automatically extended for an additional one-year period commencing with the first anniversary of the Commencement Date and, thereafter, on each such successive anniversary of the Commencement Date thereafter (each an “Extension Date”), unless the Company or Executive provides the other party hereto at least 90 days prior written notice before the next Extension Date that the Employment Term shall not be so extended.

2.Position, Duties, Authority and Location.

(a)During the Employment Term, Executive shall serve as the Company’s Chief Ethics and Compliance Officer. In such position, Executive shall have such duties, functions, responsibilities and authority as shall be determined from time to time by the Chief Executive Officer (the “CEO”) of the Company and/or the Audit Committee of the Board of Directors of the Company (the “Board”). Executive shall report directly to the CEO and the Audit Committee. If requested by the Board, Executive shall also serve as a member of the Board without additional compensation.

(b)Executive will devote substantially all of Executive’s business time and reasonable best efforts to the operation and oversight of the Company’s businesses and performance of Executive’s duties hereunder (excluding periods of vacation and sick leave) and will not engage in any other business activities that could conflict with his duties or services to the Company; provided that nothing herein shall preclude Executive, subject to obtaining consent of the Board (not to be unreasonably withheld), from (i) accepting appointment to or continuing to serve on any board of directors or trustees of any business corporation, and (ii) serving as an officer or director or otherwise participating in non-profit educational, welfare, social, religious and civil organizations.

(c)Executive will provide services to the Company in the Company’s offices in or around Provo, Utah, subject to customary Company travel. Executive is expected to be in the Company’s office five (5) days a week (subject to customary Company travel) for the first six (6) months immediately following the Commencement Date and at least fifty (50%) percent

of Executive’s business time thereafter, and the Company will pay for reasonable costs of airfare to and from Utah and New York in accordance with the Company’s then prevailing policy for senior executives, which shall include appropriate itemization and substantiation of airfare expenses incurred.

3.Compensation.

(a)Base Salary. During the Employment Term, the Company shall pay Executive a base salary (“Base Salary”) at the annual rate of $600,000, payable in regular installments in accordance with the Company’s usual payment practices. Executive’s Base Salary shall be subject to annual review and subject to increase, if any, as may be determined from time to time in the sole discretion of the Board or the Compensation Committee of the Board, but in no event shall the Company be entitled to reduce Executive’s Base Salary.

(b)Annual Bonus. During the Employment Term, Executive shall be eligible to earn an annual bonus award (an “Annual Bonus”) with a target amount equal to 60% of Executive’s Base Salary at the end of the performance period (the “Annual Target Bonus”). The Annual Bonus, if any, shall be paid to Executive within two and one-half months after the end of the applicable fiscal year. Except as provided in Section 5, no Annual Bonus shall be payable in respect of any fiscal year in which Executive’s employment is terminated.

(c)Sign-on Equity Grant. In recognition of the commencement of Executive’s employment, the Company shall, within thirty days following the Commencement Date, subject to Board approval, award to Executive a one-time equity-based stock incentive grant (the “Sign-on Grant”) consisting of a number of shares of the Company’s Class A common stock (each, a “Share”) equal to the quotient of (x) $4,000,000 divided by (y) the closing price per Share, as reported on the New York Stock Exchange, on the Commencement Date. The Sign-on Grant shall vest annually based upon Executive’s continued service with the Company through the applicable vesting dates, with 25% of the Sign-on Grant vesting on each of the first four anniversaries of the Commencement Date. Any portion of the Sign-on Grant that becomes vested shall be settled as soon as practicable, but no later than thirty (30) days following the applicable vesting date. The Sign-on Grant shall be subject to the term and conditions set forth in definitive documentation.

(d)Sign-on Bonus. No later than 30 days following the Commencement Date, the Company shall pay Executive a cash sign-on bonus in the amount of $300,000 (the “Sign-On Bonus”); provided, that in the event that Executive’s employment is terminated by the Company for Cause (as defined below), or as a result of Executive’s voluntary resignation for any reason, prior to the first anniversary of the Commencement Date, Executive shall forfeit any right to the Sign-On Bonus and Executive shall repay such amount to the Company within 30 days of Executive’s termination of employment.

4.Benefits.

(a)General. During the Employment Term, Executive shall be entitled to participate in the Company’s employee benefit, fringe and perquisite plans, practices, policies and arrangements as in effect from time to time (collectively, “Employee Benefits”), on generally the same terms and conditions as each of the Employee Benefits are made available to other senior executives of the Company (other than with respect to annual bonuses, incentive plans and severance plans (as well as any other terms and conditions specifically determined under this Agreement), the benefits for each which shall be determined instead in accordance with this Agreement); provided that Executive shall be entitled to no less than four (4) weeks’ vacation per calendar year.

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(b)Reimbursement of Business Expenses. During the Employment Term, the Company shall reimburse Executive for reasonable and necessary business expenses incurred by Executive in the performance of Executive’s duties hereunder in accordance with its then prevailing policy for senior executives (which shall include appropriate itemization and substantiation of expenses incurred).

5.Termination.

(a)The Employment Term and Executive’s employment hereunder may be terminated by either party at any time and for any reason, subject to the notice and cure provisions set forth below. Notwithstanding any other provision of this Agreement, the provisions of this Section 5 shall exclusively govern Executive’s rights upon termination of employment with the Company and its affiliates.

(b)By the Company for Cause or by Executive for any reason.

(i)The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause and shall terminate automatically upon the effective date of Executive’s resignation for any reason.

(ii)Definition of Cause. For purposes of this Agreement, “Cause” shall mean (A) Executive’s continued failure substantially to perform Executive’s employment duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 days following written notice by the Company to Executive of such failure, (B) dishonesty in the performance of Executive’s employment duties that is materially injurious to the Company, (C) an act or acts on Executive’s part constituting (x) a felony charge under the laws of the United States or any state thereof or (y) a misdemeanor charge involving moral turpitude, (D) Executive’s willful malfeasance or willful misconduct in connection with Executive’s employment duties which causes substantial injury to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates or (E) Executive’s breach of any of the covenants set forth in Section 6 (other than any action taken in good faith and in a manner not opposed to the best interests of the Company, and which is promptly remedied by Executive upon notice by the Board); provided that none of the foregoing events shall constitute Cause unless Executive fails to cure such event and remedy any adverse or injurious consequences arising from such events within 10 days after receipt from the Company of written notice of the event which constitutes Cause (except that no cure or remedy period shall be provided if the event or such consequences are not capable of being cured and remedied).

(iii)If Executive’s employment is terminated by the Company for Cause, Executive shall be entitled to receive:

(A)no later than 10 days following the date of termination, the Base Salary through the date of termination;

(B)reimbursement, within 60 days following receipt by the Company of Executive’s claim for such reimbursement (including appropriate supporting documentation), for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to Executive’s termination; provided that such claims for such reimbursement are submitted to the Company within 90 days following the date of Executive’s termination of employment; and

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(C)such Employee Benefits, if any, as to which Executive may be entitled under the tax qualified employee benefit plans of the Company, payable in accordance with the terms and conditions of such tax qualified employee benefit plans (the amounts described in clauses (A) through (C) hereof being referred to as the “Accrued Rights”).

For the avoidance of doubt, in any legal proceeding to determine whether grounds for Cause existed on any date that the Company took action on the basis of the existence of Cause, the Company shall bear the burden of demonstrating grounds for Cause existed on such date. Following such termination of Executive’s employment by the Company for Cause, except as set forth in this Section 5(b)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(iv)If Executive resigns for any reason, provided that Executive will be required to give the Company at least 60 days advance written notice of such resignation of Executive’s employment, Executive shall be entitled to receive the Accrued Rights. Following such resignation by Executive for any reason, except as set forth in this Section 5(b)(iv), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

(c)Disability or Death.

(i)Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness or injury (the “Disability Period”), Executive shall continue to receive his full Base Salary set forth in Section 3(a) until his employment is terminated pursuant to Section 5(a). The Employment Term and Executive’s employment hereunder may be terminated immediately by the Company due to Executive’s Disability and will terminate immediately upon Executive’s death. For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform, with or without reasonable accommodation, Executive’s duties under this Agreement due to a physical or mental illness or injury for a period of six consecutive months or for an aggregate of 12 months in any consecutive 24-month period. Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third physician who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of this Agreement.

(ii)Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate, survivors or beneficiaries (as the case may be) shall be entitled to receive:

(A)the Accrued Rights;

(B)any Annual Bonus earned, but unpaid, as of the date of termination for the immediately preceding fiscal year, paid in accordance with Section 3(b) (except to the extent payment is otherwise deferred pursuant to any applicable deferred compensation arrangement with the Company, in which case such payment shall be made in accordance with the terms and conditions of such deferred compensation arrangement);

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(C)no later than 10 days following the date of termination, a pro rata portion of the Annual Target Bonus payable for the fiscal year in which such termination occurs, based on a fraction, the numerator of which is the number of days during the fiscal year up to and including the date of termination of Executive’s employment and the denominator of which is the number of days in such fiscal year (the “Pro-Rated Bonus”); and

(D)death or disability benefits under any applicable plans and programs of the Company in accordance with the terms and provisions of such plans and programs.

(d)By the Company Without Cause (other than by reason of death or Disability).

(i)If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability), Executive shall be entitled to receive:

(A)the Accrued Rights;

(B)the Pro-Rated Bonus;

(C)subject to Executive’s continued compliance with Section 6 and material compliance with Section 7 hereof, and the execution and non-revocation of the Release (as defined below), a lump-sum cash payment within 55 days after such termination and effectiveness of the Release equal to the sum of (x) 150% of Executive’s Base Salary as of the date immediately prior to Executive’s termination of employment and (y) 150% of the actual Annual Bonus paid in respect of the immediately preceding fiscal year (or, if such termination occurs prior to the first date on which an Annual Bonus would have been paid had any payment been due, the Annual Target Bonus for the immediately preceding fiscal year), and (z) the monthly COBRA costs of providing health and welfare benefits for Executive and Executive’s dependents under the plans in which Executive was participating on the date of the applicable “COBRA qualifying event,” at the time of such event, times eighteen (18).

(ii)Release. Amounts payable to Executive under Section 5(c)(ii)(C) or Sections 5(d)(i)(B) and 5(d)(i)(C) (collectively, the “Conditioned Benefits”) are subject to (i) Executive’s execution and non-revocation of a release of claims, substantially in the form attached hereto as Exhibit I (the “Release”), within 60 days of the date of termination and (ii) the expiration of any revocation period contained in such Release. Further, to the extent that any of the Conditioned Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the sixtieth (60th) day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day, after which any remaining Conditioned Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein.

(e)Expiration of Employment Term. Unless the parties otherwise agree in writing, continuation of Executive’s employment with the Company following the expiration of the Employment Term shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement and Executive’s employment may thereafter be

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terminated at will by either Executive or the Company; provided that the provisions of Sections 6, 7 and 8 of this Agreement shall survive any termination of this Agreement or Executive’s termination of employment hereunder.

(f)Notice of Termination; Board/Committee Resignation. Any purported termination of employment by the Company or by Executive (other than due to Executive’s death) pursuant to Section 5 of this Agreement shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the Company’s affiliates (except to the extent Executive is otherwise entitled pursuant to a separate contractual arrangement to continue to serve as a member of the Board).

6.Non-Competition; Non-Solicitation. Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its affiliates and accordingly agrees as follows:

(a)Non-Competition.

(i)During Executive’s employment hereunder and, for a period of 18 months following the date Executive ceases to be employed by the Company (the “Restricted Period”), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly, solicit or assist in soliciting in competition with the Restricted Group in the Business, the business of any then current or prospective client or customer with whom Executive (or Executive’s direct reports) had personal contact or dealings on behalf of the Company during the one-year period preceding Executive’s termination of employment.

(ii)During the Restricted Period, Executive will not directly or indirectly:

(A)engage in the Business anywhere in the United States, or in any geographical area that is within 100 miles of any geographical area where the Restricted Group engages in the Business, including, for the avoidance of doubt, by entering into the employment of or rendering any services to a Core Competitor, except where such employment or services do not relate in any manner to the Business;

(B)acquire a financial interest in, or otherwise become actively involved with, any Person engaged in the Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or

(C)intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.

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(iii)Notwithstanding anything to the contrary in this Agreement, Executive may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Core Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Executive (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 2% or more of any class of securities of such Person.

(b)Non-Solicitation. During Executive’s employment hereunder and the Restricted Period, Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:

(i)solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;

(ii)hire any executive-level employee who was employed by the Restricted Group as of the date of Executive’s termination of employment with the Company or who left the employment of the Restricted Group coincident with, or within one year prior to or one year after, the date of Executive’s termination of employment with the Company; or

(iii)encourage any material consultant of the Restricted Group to cease working with the Restricted Group.

(iv)For purposes of this Agreement:

(A) “Business” shall mean (1) origination, installation, or monitoring services related to residential or commercial security, life-safety, energy management, cloud storage or smart home automation services, including cloud-enabled software solutions related thereto, (2) installation or servicing of residential or commercial solar panels or sale of electricity generated by solar panels, (3) design, engineering or manufacturing of technology or products related to residential or commercial security, life-safety, energy management or cloud storage, smart home automation services, including cloud-enabled software solutions related thereto, and/or (4) provision of wireless voice or data services and cloud storage, including internet, into the home.

(B)“Core Competitor” shall mean ADT Inc. , Protection 1, Inc., Protect America, Inc., Stanley Security Solutions, Inc., Vector Security, Inc., Slomins, Inc., Monitronics International, Inc. (Brinks Home Security) , Life Alert, Comcast Corporation, AT&T Inc., Verizon Communications, Inc., DISH Network Corp., Pinnacle, Microsoft Corporation, Amazon.com, Inc., Alphabet, Inc., Arlo Technologies, Inc., SimpliSafe, Inc. Control4 Corp., Alarm.com, Inc., Tyco Integrated Security, Resideo Technologies, Inc., Honeywell International Inc., Sungevity, Inc., RPS, Sunrun Inc., Solar City, Clean Power Finance, SunPower Corporation, Corbin Solar Solutions LLC, Galkos Construction, Inc., and each of their respective affiliates.

(C)“Restricted Group” shall mean, collectively, the Company and its subsidiaries and, to the extent engaged in the Business, their respective affiliates.

(c)During the Restricted Period, Executive agrees not to make, or cause any other person to make, any communication that is intended to criticize or disparage, or has the

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effect of criticizing or disparaging, the Company or any of its affiliates, agents or advisors, or any of its or their respective employees, officers or directors (it being understood that comments made in Executive’s good faith performance of his duties hereunder shall not be deemed disparaging or defamatory for purposes of this Agreement).

(d)It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 6 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Section 6 is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Section 6 is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

(e)The period of time during which the provisions of this Section 6 shall be in effect shall be extended by the length of time during which Executive is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.

(f)The provisions of this Section 6 shall survive the termination of Executive’s employment for any reason, including but not limited to, any termination other than for Cause.

7.Confidentiality; Intellectual Property.

(a)Confidentiality.

(i)Executive will not at any time (whether during or after Executive’s employment with the Company), (x) retain or use for the benefit, purposes or account of Executive or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than Executive’s professional advisers who are bound by confidentiality obligations or otherwise in performance of Executive’s duties under Executive’s employment and pursuant to customary industry practice), any non-public, proprietary or confidential information – including, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals – concerning the past, current or future business, activities and operations of the Company, its subsidiaries or affiliates and/or any third party that has disclosed or provided any of same to the Company, its subsidiaries or affiliates on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

(ii)“Confidential Information” shall not include any information that is (a) generally known to the industry or the public other than as a result of Executive’s breach of this covenant; (b) made legitimately available to Executive by a third party without breach of any confidentiality obligation of which Executive has knowledge; or (c) required by law to be disclosed; provided that with respect to subsection (c) Executive shall give prompt written notice to the Company of such requirement, disclose no more

8

information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.

(iii)Except as required by law, Executive will not disclose to anyone, other than Executive’s family (it being understood that, in this Agreement, the term “family” refers to Executive, Executive’s spouse, children, parents and spouse’s parents) and advisors, the existence or contents of this Agreement; provided that Executive may disclose to any prospective future employer the provisions of Sections 6 and 7 of this Agreement. This Section 7(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).

(iv)Upon termination of Executive’s employment with the Company for any reason, Executive shall (A) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its subsidiaries or affiliates; and (B) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

(v)Nothing in this Agreement shall prohibit or impede Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Executive understands and acknowledges that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is Executive authorized to disclose any information covered by the Company’s attorney-client privilege or attorney work product or the Company’s trade secrets, without the prior written consent of the Company. Executive does not need the prior authorization of (or to give notice to) the Company regarding any communication, disclosure or activity described in this paragraph.

(b)Intellectual Property.

(i)If Executive creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents

9

or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, at any time during Executive’s employment by the Company (or any of its subsidiaries) and within the scope of such employment and/or with the use of any of the Company resources (such Works, “Company Works”), Executive shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all of Executive’s right, title, and interest therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition, other intellectual property laws, and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company. If Executive creates any written records (in the form of notes, sketches, drawings, or any other tangible form or media) of any Company Works, Executive will keep and maintain same. The records will be available to and remain the sole property and intellectual property of the Company at all times.

(ii)Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Company Works.

(iii)Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Executive shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Executive, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest.

(iv)The provisions of Section 7 hereof shall survive the termination of Executive’s employment for any reason.

8.Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 6 and Section 7 of this Agreement would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled, in addition to any other remedy available at law or equity, to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. In addition, upon any breach of Section 6 or any material breach of Section 7 of this Agreement, Executive shall promptly return to the Company upon request all cash payments made to Executive pursuant to Section 5 (if any), less any amounts paid by Executive as taxes in respect of such payments (unless such taxes are actually recovered by Executive from the relevant governmental authority, in which case such tax amounts also shall be returned to the Company). Any determination under this Section 8 of whether Executive is in compliance with Section 6 hereof and material compliance with Section 7 hereof shall be determined based solely on the contractual provisions provided therein and the facts and circumstances of Executive’s actions without regard to whether the Company could obtain an injunction or other relief under the law of any particular jurisdiction.

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9.Miscellaneous.

(a) Indemnification; Directors’ and Officers’ Insurance. The Company shall indemnify and hold Executive harmless for all acts and omissions occurring during his employment with the Company or service as a member of the Board to the extent provided under the Company’s charter, by-laws and applicable law, and shall promptly advance to Executive or Executive’s heirs or representatives all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Expenses”) as a result of any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information (collectively, a “Claim”) or any proceeding (whether civil, criminal, administrative or investigative), or any threatened Claim or proceeding (whether civil, criminal, administrative or investigative), against Executive that arises out of or relates to Executive’s service as an officer, director or employee, as the case may be, of the Company, or Executive’s service in any such capacity or similar capacity with an affiliate of the Company or other entity at the request of the Company, upon receipt by the Company of a written request with appropriate documentation of such Expenses, and an undertaking by Executive to repay the amount advanced if it shall ultimately be determined that Executive is not entitled to be indemnified by the Company against such Expenses. During the Employment Term and for a term of six years thereafter, the Company, or any successor to the Company, shall purchase and maintain, at its own expense, directors and officers liability insurance providing coverage for Executive in the same amount as for members of the Board.

(b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, without regard to conflicts of laws principles thereof.

(c) Jurisdiction; Venue. Except as otherwise provided in Section 8 in connection with equitable remedies, each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any federal or state court sitting in the State of Utah over any suit, action or proceeding arising out of or relating to this Agreement and each of the parties agrees that any action relating in any way to this Agreement must be commenced only in the courts of the State of Utah, federal or state. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each of the parties hereto hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by certified mail, return receipt requested, or by recognized overnight courier service, to the address of such party set forth in Section 9(j).

(d) Entire Agreement; Amendments. This Agreement (including, without limitation, the schedules and exhibits attached hereto) contains the entire understanding of the parties with respect to the employment of Executive by the Company, and supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its current or former affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its current or former affiliates. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement (including, without limitation, the schedules and exhibits attached hereto) may not be altered, modified, or amended except by written instrument signed by the parties hereto.

(e) No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or

11

deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

(f) Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(g) Assignment. This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive. Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement shall be assigned by the Company to a person or entity which is a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

(h) Set Off; No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment, and such payments shall not be reduced by any compensation or benefits received from any subsequent employer or other endeavor. Any amounts due under Section 5 of this Agreement are considered reasonable by the Company and are not in the nature of a penalty.

(i) Compliance with Code Section 409A.

(i)The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any additional tax or interest under Code Section 409A, the Company shall, after consulting with and receiving the approval of Executive, reform such provision in a manner intended to avoid the incurrence by Executive of any such additional tax or interest.

(ii)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A, and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” The determination of whether and when a separation from service has occurred for proposes of this Agreement shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.

(iii)Any provision of this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service, the Company determines that Executive is a “specified employee,” within the meaning of Code Section 409A, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement on account of such separation from service would be considered nonqualified deferred compensation under Code Section 409A, such payment or benefit shall be paid or provided at the date which is the earlier of (i) six (6) months and one day after such separation from service and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 9(i) (whether they would have otherwise been payable in a single sum or in

12

installments in the absence of such delay) shall be paid or provided to Executive in a lump-sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(iv)Any reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation within the meaning of Code Section 409A shall be made or provided in accordance with the requirements of Code Section 409A, including that (A) in no event shall any fees, expenses or other amounts eligible to be reimbursed by the Company under this Agreement be paid later than the last day of the calendar year next following the calendar year in which the applicable fees, expenses or other amounts were incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits that the Company is obligated to pay or provide, in any given calendar year shall not affect the expenses that the Company is obligated to reimburse, or the in-kind benefits that the Company is obligated to pay or provide, in any other calendar year, provided that the foregoing clause (B) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect; and (C) Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit.

(v)For purposes of Code Section 409A, Executive’s right to receive any installment payments shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (for example, “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement, to the extent such payment is subject to Code Section 409A.

(j) Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Vivint Smart Home, Inc.

4931 North 300 West

Provo, Utah 84604

Attention: Chief Legal Officer

with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Gregory T. Grogan

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If to Executive:

To the most recent address of Executive set forth in the personnel records of the Company.

(k) Executive Representation. Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of the terms of any employment agreement or other agreement or written policy to which Executive is a party or otherwise bound. Executive hereby further represents that he is not subject to any restrictions on his ability to solicit, hire or engage any employee or other service-provider. Executive agrees that the Company is relying on the foregoing representations in entering into this Agreement and related equity-based award agreements. Executive hereby acknowledges and agrees that Executive’s commencement of employment with the Company and the terms and conditions of this Agreement are subject to the Board’s satisfaction, in its sole discretion, of the completion of a background check.

(l) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(m) Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signatures Follow]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

VIVINT SMART HOME, INC.

/s/ David Bywater

_____________________________________
By: David Bywater
Title: Chief Executive Officer

[Signature Page to Employment Agreement]

EXECUTIVE

/s/ Daniel Garen

______________________________________
Daniel Garen

[Signature Page to Employment Agreement]

Exhibit I

RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims (“Release”) is entered into and delivered to Vivint Smart Home, Inc. (the “Company”) as of this [●] day of _________, 202[_], by Daniel Garen (the “Executive”). The Executive agrees as follows:

1.The employment relationship between the Executive and the Company and its subsidiaries and affiliates, as applicable, terminated on the [●] day of _______, 202[_] (the “Termination Date”) pursuant to Section [__] of the Employment Agreement between the Company and Executive dated July [--], 2021 (“Employment Agreement”).

2.In consideration of the payments, rights and benefits provided for in Section 5(c)(ii)(C) or Sections 5(d)(i)(B) and 5(d)(i)(C) of the Employment Agreement (collectively, as applicable, the “Separation Terms”) and this Release, the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of himself and his agents, representatives, attorneys, administrators, heirs, executors and assigns (collectively, the “Employee Releasing Parties”), hereby releases and forever discharges the Company Released Parties (as defined below), from all claims, charges, causes of action, obligations, expenses, damages of any kind (including attorneys’ fees and costs actually incurred) or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, arising from or relating to Executive’s employment or termination from employment with the Company or otherwise, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Older Workers Benefit Protection Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Family and Medical Leave Act of 1993; Section 1981 of the Civil Rights Act of 1866; Section 1985(3) of the Civil Rights Act of 1871; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; any other federal, state or local laws against discrimination; or any other federal, state, or local statute, regulation or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release by the Executive of any and all claims or rights arising under contract (whether written or oral, express or implied), covenant, public policy, tort or otherwise. For purposes hereof, “Company Released Parties” shall mean the Company and any of its past or present employees, agents, insurers, attorneys, administrators, officials, directors, shareholders, divisions, parents, members, subsidiaries, affiliates, predecessors, successors, employee benefit plans, and the sponsors, fiduciaries, or administrators of the Company’s employee benefit plans.

3.The Executive acknowledges that the Executive is waiving and releasing rights that the Executive may have under the ADEA and other federal, state and local statutes contract and the common law and that this Release is knowing and voluntary. The Executive and the Company agree that this Release does not apply to any rights or claims that may arise after the date of execution by Executive of this Release. The Executive acknowledges that the consideration given for this Release is in addition to anything of value to which the Executive is already entitled. The Executive further acknowledges that the Executive has been advised by this writing that: (i) the Executive should consult with an attorney prior to executing this Release; (ii) the Executive has up to twenty-one (21) days within which to consider this Release, although the Executive may, at the Executive’s discretion, sign and return this Release at an earlier time, in which case the Executive waives all rights to the balance of this twenty-one (21) day review period; and (iii) for a period of seven (7) days following the execution of this Release in duplicate originals, the Executive may revoke this Release in a writing delivered to the Chairman

of the Board of Directors of the Company, and this Release shall not become effective or enforceable until the revocation period has expired.

4.This Release does not release the Company Released Parties from (i) any obligations due to the Executive under the Separation Terms, (ii) any rights Executive has to indemnification by the Company and to directors and officers liability insurance coverage, (iii) any vested rights the Executive has under the Company’s employee pension benefit and group healthcare benefit plans as a result of Executive’s actual service with the Company, (iv) any fully vested and nonforfeitable rights of the Executive as a shareholder or member of the Company or its affiliates, (v) any rights of the Executive pursuant to any equity or incentive award agreement with the Company, or (vi) any rights which cannot be waived by an employee under applicable law.

5.Nothing in this Release shall prohibit or impede Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation; provided, that in each case such communications and disclosures are consistent with applicable law. Executive understands and acknowledges that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive understands and acknowledges further that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Except as otherwise provided in this paragraph or under applicable law, under no circumstance is Executive authorized to disclose any information covered by the Company’s attorney-client privilege or attorney work product or the Company’s trade secrets, without the prior written consent of the Company. Executive does not need the prior authorization of (or to give notice to) the Company regarding any communication, disclosure or activity described in this paragraph.

6.The Executive represents and warrants that he has not filed any action, complaint, charge, grievance, arbitration or similar proceeding against the Company Released Parties.

7.This Release is not an admission by the Company Released Parties or the Employee Releasing Parties of any wrongdoing, liability or violation of law.

8.The Executive shall continue to be bound by the restrictive covenants contained in the Employment Agreement which are incorporated herein by reference.

9.This Release shall be governed by and construed in accordance with the laws of the State ofNew York, without reference to the principles of conflict of laws.

10.Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.

11.The Executive acknowledges that the Executive has carefully read and understands this Release, that the Executive has the right to consult an attorney with

2

respect to its provisions and that this Release has been entered into knowingly and voluntarily. The Executive acknowledges that no representation, statement, promise, inducement, threat or suggestion has been made by any of the Company Released Parties to influence the Executive to sign this Release except such statements as are expressly set forth herein or in the Employment Agreement.

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Executive has executed this Release as of the day and year first written above.

EXECUTIVE

____________________________________

Daniel Garen

4

EX-21.1

Exhibit 21.1

Subsidiaries of Vivint Smart Home, Inc.

Name	Jurisdiction of Incorporation / Organization
313 Aviation, LLC	Utah
Smart Home Pros, Inc.	Utah
Vivint, Inc.	Utah
Vivint Purchasing, LLC	Utah
AP AL LLC	Delaware
APX Group Holdings, Inc.	Delaware
APX Group, Inc.	Delaware
IPR LLC	Delaware
Farmington IP LLC	Delaware
Legacy Vivint Smart Home, Inc.	Delaware
Space Monkey, LLC	Delaware
Vivint Amigo, Inc.	Delaware
Vivint Funding US LLC	Delaware
Vivint Funding Holdings LLC	Delaware
Vivint Group, Inc.	Delaware
Vivint Servicing, LLC	Delaware
Vivint Solar Licensing, LLC	Delaware
Vivint Warranty and Home Insurance, LLC	Delaware
Vivint Louisiana LLC	Louisiana
Vivint Canada, Inc.	Canada
Vivint New Zealand Limited	New Zealand
Vivint Funding Canada LP	Ontario

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 No. 333-253740) of Vivint Smart Home, Inc.,

(2) Registration Statement (Form S-8 No. 333-237365) of Vivint Smart Home, Inc.,

(3) Registration Statement (Form S-8 No. 333-233911) of Vivint Smart Home, Inc., and

(4) Registration Statement (Form S-3 No. 333-252648) of Vivint Smart Home, Inc.

of our reports dated March 1, 2022, with respect to the consolidated financial statements of Vivint Smart Home, Inc. and the effectiveness of internal control over financial reporting of Vivint Smart Home, Inc. included in this Annual Report (Form 10-K) of Vivint Smart Home, Inc. for the year ended December 31, 2021.

/s/ Ernst & Young LLP

Salt Lake City, UT

March 1, 2022

EX-31.1

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, David Bywater, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2021 of Vivint Smart Home, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2022

/s/ David Bywater

David Bywater

Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Dale R. Gerard, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2021 of Vivint Smart Home, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2022

/s/ Dale R. Gerard

Dale R. Gerard

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Annual Report of Vivint Smart Home, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Bywater, Chief Executive Officer and Director of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: March 1, 2022

/s/ David Bywater

David Bywater

Chief Executive Officer and Director

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Annual Report of Vivint Smart Home, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dale R. Gerard, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: March 1, 2022

/s/ Dale R. Gerard

Dale R. Gerard

Chief Financial Officer

(Principal Financial Officer)

XML

Cover - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Feb. 28, 2022	Jun. 30, 2021
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-38246
Entity Registrant Name	Vivint Smart Home, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-1380306
Entity Address, Address Line One	4931 North 300 West
Entity Address, City or Town	Provo
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84604
City Area Code	801
Local Phone Number	377-9111
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	VVNT
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 861.1
Entity Common Stock, Shares Outstanding		208,734,698
Documents Incorporated by Reference	Portions of the Registrant's Proxy Statement relating to its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Entity Central Index Key	0001713952

XML

Audit Information	12 Months Ended
	Dec. 31, 2021
Audit Information [Abstract]
Auditor Name	Ernst & Young LLP
Auditor Location	Salt Lake City, Utah
Auditor Firm ID	42

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 208,509	$ 313,799
Accounts and notes receivable, net of allowance of $13,271 and $9,911	63,671	64,697
Inventories	51,251	47,299
Prepaid expenses and other current assets	19,385	14,338
Total current assets	342,816	440,133
Property, plant and equipment, net	55,448	52,379
Capitalized contract costs, net	1,405,442	1,318,498
Deferred financing costs, net	2,088	1,667
Intangible assets, net	51,928	111,474
Goodwill	837,153	837,077
Operating lease right-of-use assets	46,000	52,880
Long-term notes receivables and other non-current assets, net	44,753	58,317
Total assets	2,785,628	2,872,425
Current Liabilities:
Accounts payable	96,317	85,656
Accrued payroll and commissions	83,347	87,943
Accrued expenses and other current liabilities	236,250	247,324
Deferred revenue	429,900	327,632
Current portion of notes payable, net	13,500	9,500
Current portion of operating lease liabilities	12,033	12,135
Current portion of finance lease liabilities	2,854	3,356
Total current liabilities	874,201	773,546
Notes payable, net	2,347,765	2,372,235
Notes payable, net - related party	351,080	443,865
Finance lease liabilities, net of current portion	1,416	2,460
Deferred revenue, net of current portion	778,214	621,182
Operating lease liabilities, net of current portion	41,713	49,692
Other long-term obligations	106,135	121,235
Warrant derivative liabilities	24,564	75,531
Deferred income tax liabilities	640	2,168
Total liabilities	4,525,728	4,461,914
Commitments and contingencies (See Note 15)
Stockholders’ deficit:
Preferred stock, $0.0001 par value, 300,000,000 shares authorized; none issued and outstanding as of December 31, 2021 and 2020, respectively	0	0
Class A Common stock, $0.0001 par value, 3,000,000,000 shares authorized; 208,734,193 and 202,216,341 shares issued and outstanding as of December 31, 2021 and 2020, respectively	21	20
Additional paid-in capital	1,703,815	1,548,786
Accumulated deficit	(3,417,038)	(3,111,486)
Accumulated other comprehensive loss	(26,898)	(26,809)
Total stockholders’ deficit	(1,740,100)	(1,589,489)
Total liabilities and stockholders’ deficit	$ 2,785,628	$ 2,872,425

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for credit loss	$ 13,271	$ 9,911
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	300,000,000	300,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	3,000,000,000	3,000,000,000
Common stock, issued (in shares)	208,734,193	202,216,341
Common stock, outstanding (in shares)	208,734,193	202,216,341

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenues:
Revenues	$ 1,479,388	$ 1,252,267	$ 1,151,100
Costs and expenses:
Operating expenses (exclusive of depreciation and amortization shown separately below)	384,365	352,343	369,285
Selling expenses (exclusive of amortization of deferred commissions of $212,967, $197,697 and $181,265, respectively, which are included in depreciation and amortization shown separately below)	379,497	302,287	191,800
General and administrative expenses	268,312	267,923	193,480
Depreciation and amortization	601,452	570,831	543,592
Restructuring and asset impairment charges	0	20,941	0
Total costs and expenses	1,633,626	1,514,325	1,298,157
Loss from operations	(154,238)	(262,058)	(147,057)
Other expenses (income):
Interest expense	184,993	221,175	260,014
Interest income	(532)	(708)	(23)
Fair Value Adjustment of Warrants	(50,107)	109,250	0
Other loss (income), net	14,489	10,473	(7,665)
Loss before income taxes	(303,081)	(602,248)	(399,383)
Income tax expense	2,471	1,083	1,313
Net loss	$ (305,552)	$ (603,331)	$ (400,696)
Net loss per share attributable to common stockholders:
Basic (in dollars per share)	$ (1.47)	$ (3.37)	$ (4.23)
Diluted (in dollars per share)	$ (1.71)	$ (3.37)	$ (4.23)
Weighted-average shares used in computing net loss per share attributable to common stockholders:
Basic (in shares)	208,265,631	179,071,278	94,805,201
Diluted (in shares)	209,078,167	179,071,278	94,805,201

XML

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Amortization of deferred commissions	$ 212,967	$ 197,697	$ 181,265

XML

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (305,552)	$ (603,331)	$ (400,696)
Other comprehensive (loss) income, net of tax effects:
Foreign currency translation adjustment	(89)	657	1,371
Total other comprehensive (loss) income	(89)	657	1,371
Comprehensive loss	$ (305,641)	$ (602,674)	$ (399,325)

XML

Consolidated Statements of Changes in Equity (Deficit) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional paid-in capital	Accumulated deficit	Accumulated deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated other comprehensive loss
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018			94,696,362
Beginning Balance at Dec. 31, 2018	$ (1,400,402)	$ 83	$ 9	$ 735,968	$ (2,107,542)	$ 83	$ (28,837)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise or vesting of equity awards (in shares)			41,818
Net Loss	(400,696)				(400,696)
Foreign currency translation adjustment	1,371						1,371
Stock-based compensation	4,241			4,241
Return of capital	(4,788)			(4,788)
Capital contribution (in shares)			199,417
Capital contribution	4,700			4,700
Stockholders' equity, ending balance (in shares) at Dec. 31, 2019			94,937,597
Ending Balance at Dec. 31, 2019	(1,795,491)		$ 9	740,121	(2,508,155)		(27,466)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Recapitalization transaction (in shares)			59,793,021
Recapitalization transaction	422,119		$ 6	422,113
Issuance of earnout shares (in shares)			36,084,141
Issuance of earnout shares			$ 5	(5)
Tax withholdings related to net share settlement of equity awards (in shares)			(468,773)
Tax withholdings related to net share settlement of equity awards	(9,313)			(9,313)
Forfeited shares (in shares)			(188,972)
Warrants exercised (in shares)			10,621,654
Warrants exercised	186,551			186,551
Issuance of common stock upon exercise or vesting of equity awards (in shares)			1,437,673
Net Loss	(603,331)				(603,331)
Foreign currency translation adjustment	657						657
Stock-based compensation	198,213			198,213
Restructuring expenses	11,106			11,106
Stockholders' equity, ending balance (in shares) at Dec. 31, 2020			202,216,341
Ending Balance at Dec. 31, 2020	(1,589,489)		$ 20	1,548,786	(3,111,486)		(26,809)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of earnout shares (in shares)			1,239,818
Issuance of earnout shares	0
Tax withholdings related to net share settlement of equity awards (in shares)			(1,691,254)
Tax withholdings related to net share settlement of equity awards	(29,398)			(29,398)
Forfeited shares (in shares)			(17,198)
Warrants exercised (in shares)			825,016
Warrants exercised	19,743			19,743
Issuance of common stock upon exercise or vesting of equity awards (in shares)			6,161,470
Issuance of common stock upon exercise or vesting of equity awards	1		$ 1
Net Loss	(305,552)				(305,552)
Foreign currency translation adjustment	(89)						(89)
Stock-based compensation	164,684			164,684
Stockholders' equity, ending balance (in shares) at Dec. 31, 2021			208,734,193
Ending Balance at Dec. 31, 2021	$ (1,740,100)		$ 21	$ 1,703,815	$ (3,417,038)		$ (26,898)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible List]	Accounting Standards Update 2016-02 [Member]

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss from operations	$ (305,552)	$ (603,331)	$ (400,696)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities of operations:
Amortization of capitalized contract costs	524,981	481,213	437,437
Amortization of customer relationships	58,134	65,908	74,538
Gain on fair value changes of equity securities	(659)	0	(2,254)
Expensed offering costs	0	0	168
Depreciation and amortization of property, plant and equipment and other intangible assets	18,337	23,710	31,617
Amortization of deferred financing costs and bond premiums and discounts	4,629	3,956	4,703
Loss (gain) on warrant derivative liability	(50,107)	109,250	0
Warrant issuance costs	0	723	0
Loss on sale or disposal of assets	339	2,579	1,121
Loss on early extinguishment of debt	30,210	12,710	806
Stock-based compensation	164,684	198,213	4,241
Provision for doubtful accounts	31,341	23,778	25,043
Deferred income taxes	(3,598)	(1,813)	606
Restructuring and asset impairment charges	0	11,106	0
Changes in operating assets and liabilities:
Accounts and notes receivable, net	(30,724)	(24,684)	(34,486)
Inventories	(3,950)	17,299	(13,951)
Prepaid expenses and other current assets	(5,102)	(2,336)	(816)
Capitalized contract costs, net	(611,547)	(584,151)	(535,063)
Long-term notes receivables and other non-current assets, net	16,335	28,964	22,273
Right-of-use assets	6,881	12,440	7,255
Accounts payable	9,627	3,256	5,611
Accrued payroll and commissions, accrued expenses, and other current and long-term liabilities	(22,837)	156,784	24,899
Current and long-term operating lease liabilities	(8,081)	(13,291)	(8,149)
Deferred revenue	259,113	304,381	133,505
Net cash provided by (used in) operating activities	82,454	226,664	(221,592)
Cash flows from investing activities:
Capital expenditures	(17,275)	(25,245)	(10,119)
Proceeds from the sale of capital assets	141	18,063	878
Acquisition of intangible assets	(347)	(4,481)	(1,801)
Proceeds from sales of equity securities	0	0	5,430
Net cash used in investing activities	(17,481)	(11,663)	(5,612)
Cash flows from financing activities:
Proceeds from notes payable	1,758,000	1,241,000	225,000
Proceeds from notes payable - related party	392,000	309,000	0
Repayments of notes payable	(1,896,950)	(1,579,499)	(233,100)
Repayments of notes payable - related party	(351,300)	(174,800)	0
Borrowings from revolving line of credit	0	359,200	342,500
Repayment of revolving line of credit	0	(604,200)	(97,500)
Taxes paid related to net share settlements of stock-based compensation awards	(29,398)	(9,171)	0
Repayments of finance lease obligations	(3,158)	(7,657)	(9,781)
Proceeds from Mosaic recapitalization	0	463,522	0
Proceeds from warrant exercises	10,819	120,802	0
Financing costs	(26,351)	(11,191)	0
Deferred financing costs	(23,878)	(12,894)	(4,896)
Payment of offering costs	0	0	(2,574)
Return of capital	0	0	(5,435)
Proceeds from capital contributions	0	0	4,700
Net cash (used in) provided by financing activities	(170,216)	94,112	218,914
Effect of exchange rate changes on cash and cash equivalents	(47)	137	66
Net (decrease) increase in cash and cash equivalents	(105,290)	309,250	(8,224)
Cash and cash equivalents:
Beginning of period	313,799	4,549	12,773
End of period	208,509	313,799	4,549
Supplemental cash flow disclosures:
Income tax paid	7,050	537	661
Interest paid	173,160	215,223	252,911
Supplemental non-cash investing and financing activities:
Finance lease additions	1,823	855	10,197
Intangible asset acquisitions included within accounts payable, accrued expenses and other current liabilities and other long-term obligations	157	167	1,536
Capital expenditures included within accounts payable, accrued expenses and other current liabilities	3,426	2,458	2,074
Deferred offering costs included within accounts payable	$ 0	$ 0	$ 4,206

XML

Description of Business	12 Months Ended
	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of BusinessVivint Smart Home, Inc., and its wholly owned subsidiaries, (collectively the “Company”), is one of the largest smart home companies in North America. The Company is engaged in the sale, installation, servicing and monitoring of smart home and security systems, primarily in the United States and Canada.

XML

Revisions of Previously-Issued Financial Statements

12 Months Ended

Dec. 31, 2021

Accounting Changes and Error Corrections [Abstract]

Revisions of Previously-Issued Financial Statements

Revisions of Previously-Issued Financial Statements

During the financial close for the quarter ended September 30, 2021, the Company determined that certain revenue transactions associated with monthly service charge adjustments and contract modifications were not being recognized over the proper period. Consequently, during 2021 and in previous annual and quarterly periods, certain immaterial errors existed in previously reported amounts of revenue.

The Company assessed the materiality of the misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to all prior consolidated financial statements taken as a whole and, therefore, amending previously filed reports to correct the errors was not required. However, the Company concluded that the cumulative effect of correcting the errors in the quarter ended September 30, 2021 would materially misstate the Company’s consolidated financial statements for the three and nine months ended September 30, 2021. Accordingly, the Company has reflected the corrections in the results for prior periods included in this Annual Report on Form 10-K. In addition, the amounts labeled “Adjustment” include certain other previously identified adjustments that were not previously deemed material to the periods presented. The Company will also revise such information in future filings to reflect the correction of the errors.

The following tables present the revised results for each previously reported period, the adjustments made to each period and the previously reported amounts to summarize the effect of the corrections on the previously reported Balance Sheets and Statements of Operations for the periods presented (in thousands, except per-share amounts). These errors did not impact total cash flows from operating, investing or financing activities as presented in the Statement of Cash Flows for any period.

Consolidated Balance Sheets	As of December 31, 2020
	As Previously Reported	Adjustment	As Revised
Long-term notes receivables and other assets, net	62,510	(4,193)	58,317
Total assets	2,876,618	(4,193)	2,872,425
Deferred revenue	321,143	6,489	327,632
Total current liabilities	767,057	6,489	773,546
Deferred revenue, net of current portion	615,598	5,584	621,182
Total liabilities	4,449,841	12,073	4,461,914
Accumulated deficit	(3,095,220)	(16,266)	(3,111,486)
Total stockholders’ deficit	(1,573,223)	(16,266)	(1,589,489)
Total liabilities and stockholders’ deficit	2,876,618	(4,193)	2,872,425

Consolidated Statements of Operations	Year Ended December 31, 2020
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,260,566	$	(8,299)	$	1,252,267
General and administrative expenses	266,335		1,588		267,923
Total costs and expenses	1,512,737		1,588		1,514,325
Loss from operations	(252,171)		(9,887)		(262,058)
Loss before income taxes	(592,361)		(9,887)		(602,248)
Income tax expense	2,837		(1,754)		1,083
Net loss	(595,198)		(8,133)		(603,331)
Comprehensive loss	(594,541)		(8,133)		(602,674)
Net loss attributable per share to common stockholders:
Basic and diluted	(3.32)		(0.05)		(3.37)

Consolidated Statements of Operations	Year Ended December 31, 2019
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,155,981	$	(4,881)	$	1,151,100
Selling expenses	193,359		(1,559)		191,800
General and administrative expenses	192,182		1,298		193,480
Depreciation and amortization	543,440		152		543,592
Total costs and expenses	1,298,266		(109)		1,298,157
Loss from operations	(142,285)		(4,772)		(147,057)
Loss before income taxes	(394,611)		(4,772)		(399,383)
Net loss	(395,924)		(4,772)		(400,696)
Comprehensive loss	(394,553)		(4,772)		(399,325)
Net loss attributable per share to common stockholders:
Basic and diluted	(4.18)		(0.05)		(4.23)

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying consolidated financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”). Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.

On January 17, 2020 (the “Closing Date”), the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Merger Sub, and Legacy Vivint Smart Home, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home. (See Note 5 “Business Combination” for further discussion).

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home surviving as the surviving company (the “Business Combination”). Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Vivint Smart Home, Inc. is treated as the acquired company and Legacy Vivint Smart Home is treated as the acquirer for financial statement reporting and accounting purposes. Legacy Vivint Smart Home has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Legacy Vivint Smart Home’s shareholders prior to the Business Combination had the greatest voting interest in the combined entity;

•Prior to the Business Combination, Legacy Vivint Smart Home’s directors represented the majority of the Vivint Smart Home board of directors;         

•Prior to the Business Combination, Legacy Vivint Smart Home’s senior management was the senior management of Vivint Smart Home; and         

•Prior to the Business Combination, Legacy Vivint Smart Home was the larger entity based on historical total assets and revenues.

As a result of Legacy Vivint Smart Home being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Legacy Vivint Smart Home is the predecessor and legal successor to the Company. The historical operations of Legacy Vivint Smart Home are deemed to be those of the Company. Thus, the financial statements included in this Annual Report reflect (i) the historical operating results of Legacy Vivint Smart Home prior to the Business Combination; (ii) the combined results of the Company and Legacy Vivint Smart Home following the Business Combination on January 17, 2020; (iii) the assets and liabilities of Legacy Vivint Smart Home at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of Legacy Vivint Smart Home in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Legacy Vivint Smart Home.

In connection with the Business Combination, Mosaic Acquisition Corp. changed its name to Vivint Smart Home, Inc. The Company’s Common Stock is now listed on the NYSE under the symbol “VVNT”. Prior to the Business Combination, the Company neither engaged in any operations nor generated any revenue. Until the Business Combination, based on the Company’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Vivint Flex Pay

The Vivint Flex Pay plan (“Vivint Flex Pay”) became the Company’s primary equipment financing model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint’s smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through third-party financing providers (“Consumer Financing Program” or “CFP”) (2) the Company generally offers a limited number of customers not eligible for the Consumer Financing Program, but who qualify under the Company’s underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card or by obtaining short-term financing (generally no more than six month installment terms) through the Company.

Although customers pay separately for Products and Services under the Vivint Flex Pay plan, the Company has determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. For RICs, gross deferred revenues are reduced by imputed interest and estimated write-offs. For Products financed through the CFP, gross deferred revenues are reduced by (i) any fees the third-party financing provider (“Financing Provider”) is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to the Financing Providers.

Under the CFP, qualified customers are eligible for financing offerings (“Loans”) originated by Financing Providers of between $150 and $6,000. The terms of most Loans are determined based on the customer’s credit quality. The annual percentage rates on these loans is either 0% or 9.99%, depending on the customer's credit quality, and the Loans are issued on either an installment or revolving basis with repayment terms ranging from with a 6- to 60-months.

For certain Financing Provider Loans:

•The Company pays a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding Loans.

•The Company incurs fees at the time of the Loan origination and receives proceeds that are net of these fees.

•The Company also shares liability for credit losses, with the Company being responsible for between 2.6% and

100% of lost principal balances.

•The Company is responsible for reimbursing certain Financing Providers for merchant transaction fees and other fees associated with the Loans.

Because of the nature of these provisions, the Company records a derivative liability at its fair value when the Financing Provider originates Loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by the Company to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Consolidated Statement of Operations. (See Note 11).

For certain other Loans, the Company receives net proceeds (net of fees and expected losses) for which the Company has no further obligation to the Financing Provider. The Company records these net proceeds to deferred revenue.

Retail Installment Contract Receivables

For subscribers that enter into a RIC to finance the purchase of Products, the Company records a receivable for the amount financed. Gross RIC receivables are reduced for (i) expected write-offs of uncollectible balances over the term of the RIC and (ii) a present value discount of the expected cash flows using a risk adjusted market interest rate. Therefore, the RIC receivables equal the present value of the expected cash flows to be received by the Company over the term of the RIC, evaluated on a pool basis. RICs are pooled based on customer credit quality, contract length and geography. At the time of installation, the Company records a long-term note receivable within long-term notes receivables and other assets, net on the consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the consolidated balance sheets.

The Company imputes the interest on the RIC receivable using a risk adjusted market interest rate and records it as a reduction to deferred revenue and as an adjustment to the face amount of the related receivable. The risk adjusted interest rate considers a number of factors, including credit quality of the subscriber base and other qualitative considerations such as macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the consolidated statements of operations.

When the Company determines that there are RIC receivables that have become uncollectible, it records an adjustment to the allowance and reduces the related note receivable balance. On a regular basis, the Company also assesses the expected remaining cash flows based on historical RIC write-off trends, current market conditions and both Company and third-party forecast data. If the Company determines there is a change in expected remaining cash flows, the total amount of this change for all RICs is recorded in the current period to the provision for credit losses, which is included in general and administrative expenses in the accompanying consolidated statements of operations. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due. (See Note 5).

Revenue Recognition

The Company offers its customers smart home services combining Products, including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary back-end cloud platform software and Services. These together create an integrated system that allows the Company’s customers to monitor, control and protect their home (“Smart Home Services”). The Company’s customers are buying this integrated system that provides them with these Smart Home Services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Smart Home Services, the Company has concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights and obligations. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.

The majority of the Company’s subscription contracts are between three and five years in length and are generally non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for Smart Home Services is generally due in advance on a monthly basis.

Sales of Products and other one-time fees such as service or installation fees are invoiced to the customer at the time of sale. Revenues for any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.

Beginning in late 2020, the Company began operating as a third-party dealer for residential solar installers in several states throughout the U.S, whereby the Company earns a commission from the installer for selling their solar services. Because there are no further performance obligations once the installation is complete, revenue is recognized at that time.

To date, revenues from the Smart Insurance business have been immaterial to our overall financial results.

Deferred Revenue

The Company's deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home Services. Deferred revenues are recognized over the term of the related performance obligation, which is generally three to five years.

Accounts Receivable

Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring Services, amounts due from Financing Providers and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and are non-interest bearing and are included within accounts and notes receivable, net on the consolidated balance sheets. Accounts receivable totaled $26.4 million and $19.8 million and December 31, 2021 and 2020, respectively net of the allowance for doubtful accounts of $13.3 million and $9.9 million at December 31, 2021 and 2020, respectively. The Company estimates this allowance based on historical collection experience, subscriber attrition rates, current market conditions and both Company and third-party forecast data. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in the accompanying consolidated statements of operations.

The changes in the Company’s allowance for doubtful accounts were as follows for the periods ended (in thousands):

	Year ended December 31,
	2021		2020		2019
Beginning balance	$	9,911	$	8,118	$	5,594
Provision for doubtful accounts	31,341		23,778		25,043
Write-offs and adjustments	(27,981)		(21,985)		(22,519)
Balance at end of period	$	13,271	$	9,911	$	8,118

Restructuring and Asset Impairment Charges

Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or dispose of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 12).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Vivint Smart Home, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company calculates amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortizes those deferred contract costs on a straight-line basis over the expected period of benefit that the Company has determined to be five years, consistent with the pattern in which the Company provides services to its customers. The Company believes this pattern of amortization appropriately reduces the carrying value of the capitalized contract costs over time to reflect the decline in the value of the assets as the remaining period of benefit for each monthly portfolio of contracts decreases. The period of benefit of five years is longer than a typical contract term because of anticipated contract renewals. The Company applies this period of benefit to its entire portfolio of contracts. The Company updates its estimate of the period of benefit periodically and whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations.

The carrying amount of the capitalized contract costs is periodically reviewed for impairment. In performing this review, the Company considers whether the carrying amount of the capitalized contract costs will be recovered. In estimating the amount of consideration the Company expects to receive in the future related to capitalized contract costs, the Company considers factors such as attrition rates, economic factors, and industry developments, among other factors. If it is determined that capitalized contract costs are impaired, an impairment loss is recognized for the amount by which the carrying amount of the capitalized contract costs and the anticipated costs that relate directly to providing the future services exceed the consideration that has been received and that is expected to be received in the future. During the years ended December 31, 2021 and 2020, no impairment losses were recorded.

Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.

On the consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs - deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.

The Company’s depreciation and amortization included in the consolidated statements of operations consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Amortization of capitalized contract costs	$	524,981	$	481,213	$	437,437
Amortization of definite-lived intangibles	60,004		69,465		80,468
Depreciation and amortization of property, plant and equipment	16,467		20,153		25,687
Total depreciation and amortization	$	601,452	$	570,831	$	543,592

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with remaining maturities when purchased of three months or less.

Inventories

Inventories, which are comprised of smart home and security system equipment and parts are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (FIFO) method. Inventories sold to customers as part of a smart home and security system are generally capitalized as contract costs. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.

Deferred Financing Costs

Certain costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs associated with obtaining the APX Group, Inc.’s (“APX”) revolving credit facility are amortized over the amended maturity dates discussed in Note 6. Deferred financing costs associated with the revolving credit facility reported in the accompanying consolidated balance sheets as deferred financing costs, net at December 31, 2021 and 2020 were $2.1 million and $1.7 million, net of accumulated amortization of $11.5 million and $11.0 million, respectively. Deferred financing costs included in the accompanying consolidated balance sheets within notes payable, net at December 31, 2021 and 2020 were $34.3 million and $27.2 million, net of accumulated amortization of $77.4 million and $70.9 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying consolidated statements of operations totaled $6.9 million, $7.9 million and $9.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Residual Income Plans

The Company has a program that allows certain third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create (the “Channel Partner Plan”). The Company also has a residual sales compensation plan (the “Residual Plan”) under which the Company's sales personnel (each, a “Plan Participant”) receive compensation based on the performance of certain underlying contracts they created in prior years.

For both the Channel Partner Plan and Residual Plan, the Company calculates the present value of the expected future residual payments and records a liability for this amount in the period the subscriber account is originated. These costs are recorded to capitalized contract costs. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability. The current portion of the liability included in accrued payroll and commissions was $4.3 million and $4.1 million as of December 31, 2021 and 2020, respectively, and the noncurrent portion included in other long-term obligations was $23.2 million and $23.8 million at December 31, 2021 and 2020, respectively.

Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards. The Company accounts for forfeitures as they occur (See Note 14).

Advertising Expense

Advertising costs are expensed as incurred. Advertising costs were approximately $89.9 million, $70.9 million and $60.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Income Taxes

The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment.

Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows (See Note 13).

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.

Concentrations of Supply Risk

As of December 31, 2021, approximately 95% of the Company’s installed panels were the Company's proprietary SkyControl or Smart Hub panels and 5% were 2GIG Go!Control panels. The loss of the Company’s SkyControl panel supplier could potentially impact its operating results or financial position.

Fair Value Measurement

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:

Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.

Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the years ended December 31, 2021, 2020, and 2019.

The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.

Goodwill

The Company tests goodwill at the reporting unit level for impairment annually as of October 1 and on an interim basis when events occur or circumstances exist that indicate the carrying value may no longer be recoverable. The company compares the fair value of our reporting units with the carrying amount, including goodwill. The Company recognizes an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value. The Company’s reporting units are determined based on its current reporting structure, which as of December 31, 2021 consisted of one reporting unit. As of December 31, 2021, there were no changes in facts and circumstances since the most recent annual impairment analysis to indicate impairment existed. During the years ended December 31, 2021, 2020 and 2019, no impairments to goodwill were recorded.

Foreign Currency Translation and Other Comprehensive Income

The functional currency of Vivint Canada, Inc. is the Canadian dollar. Accordingly, Vivint Canada, Inc. assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and Vivint Canada, Inc. revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown as a separate component of equity.

When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ (deficit) equity as accumulated other comprehensive loss or income. When intercompany transactions are deemed to be of a short-term nature, translation

adjustments are required to be included in the consolidated statement of operations. The Company has determined that settlement of Vivint Canada, Inc. intercompany balances are anticipated and therefore such balances are deemed to be of a short-term nature. Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)

	For the Years Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Translation gain	$	(423)	$	(602)	$	(3,400)

Letters of Credit

As of December 31, 2021 and 2020, the Company had $14.0 million and $15.3 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.

Derivative Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation.

The Company accounts for its public warrants and private placement warrants as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are re-measured at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.

Accounting Pronouncements Issued But Not Yet Adopted

In March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, respectively. Together, the ASUs provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The Company can elect to apply the amendments through December 31, 2022. As of December 31, 2021, the Company had not utilized any of the expedients discussed within this ASU; however, it continues to assess its agreements to determine whether the expedients would be utilized through the allowed period of December 31, 2022.

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Revenue and Capitalized Contract Costs

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue and Capitalized Contract Costs

Revenue and Capitalized Contract Costs

Customers are typically invoiced for Smart Home Services in advance or at the time the Company delivers the related Smart Home Services. The majority of customers pay at the time of invoice via credit card, debit card or ACH. Deferred revenue relates to the advance consideration received from customers, which precedes the Company’s satisfaction of the associated performance obligation. The Company’s deferred revenues primarily result from customer payments received in advance for recurring monthly monitoring and other Smart Home Services, or other one-time fees, because these performance obligations are satisfied over time.

The Company also provides its customers with service warranties associated with product replacement and related services. As of December 31, 2021 and 2020, the Company had warranty service reserves of $6.0 million and $5.7 million, respectively, which are included in accrued expenses and other current liabilities on the consolidated balance sheets.

During the years ended December 31, 2021 and 2020, the Company recognized revenues of $320.0 million and $235.9 million, respectively, that were included in the deferred revenue balance as of December 31, 2020 and 2019, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2021, approximately $3.4 billion of revenue is expected to be recognized from remaining performance obligations for subscription contracts. The Company expects to recognize approximately 63% of the revenue related to these remaining performance obligations over the next 24 months, with the remaining balance recognized over an additional 36 months.

Timing of Revenue Recognition

The Company considers Products, related installation, and its proprietary back-end cloud platform software and services an integrated system that allows the Company’s customers to monitor, control and protect their homes. These Smart Home Services are accounted for as a single performance obligation that is recognized over the customer’s contract term, which is generally three to five years.

Capitalized Contract Costs

Capitalized contract costs generally include commissions, other compensation and related costs paid directly for the generation and installation of new or modified customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company defers and amortizes these costs for new or modified subscriber contracts on a straight-line basis over the expected period of benefit of five years.

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Retail Installment Contract Receivables

12 Months Ended

Dec. 31, 2021

Receivables [Abstract]

Retail Installment Contract Receivables

Retail Installment Contract Receivables

Certain subscribers have the option to purchase Products under a RIC, payable over either 42 or 60 months. Short-term RIC receivables are recorded in accounts and notes receivable, net and long-term RIC receivables are recorded in long-term notes receivables and other assets, net in the consolidated balance sheets.

The following table summarizes the RIC receivables (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC receivables, gross	$	90,204	$	138,926
RIC allowance	(12,384)		(27,061)
Imputed interest	(7,469)		(13,275)
RIC receivables, net	$	70,351	$	98,590
Classified on the consolidated balance sheets as:
Accounts and notes receivable, net	$	37,270	$	44,931
Long-term notes receivables and other assets, net	33,081		53,659
RIC receivables, net	$	70,351	$	98,590

The changes in the Company’s RIC allowance were as follows (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC allowance, beginning of period	$	27,061	$	38,110
Write-offs	(13,714)		(21,841)
Recoveries	3,446		6,340
Additions from RICs originated during the period	6,795		7,567
Change in expected credit losses	(10,995)		(2,914)
Other adjustments (1)	(209)		(201)
RIC allowance, end of period	$	12,384	$	27,061

(1) Other adjustments primarily reflect changes in foreign currency exchange rates related to Canadian RICs.

During years ended December 31, 2021, 2020 and 2019, the amount of RIC imputed interest income recognized in recurring and other revenue was $7.6 million, $10.6 million and $13.6 million, respectively.

Change in Accounting Estimate in 2019

RIC receivables are recorded at their present value, net of the RIC allowance and imputed interest. The Company records the RIC allowance as an adjustment to deferred revenue and as an adjustment to the face amount of the related receivable. The RIC allowance considers a number of factors, including collection experience, credit quality of the subscriber base and other qualitative considerations such as macro-economic factors.

In the third quarter of 2019, with over two years of RIC customer history, the Company determined that actual RIC write-offs were trending higher than the expected write-offs used in the original estimates. Therefore, the Company determined that it was necessary to adjust the remaining RIC allowance balance primarily associated with subscribers originated in 2017 and 2018, to reflect the new estimate of the present value of cash expected to be collected over the remaining contractual periods.

In accordance with this change in accounting estimate, in 2019 the Company increased the RIC allowance and recognized an adjustment to revenue to record the proportional amount related to performance obligations that have already been delivered and the remaining amount (related to undelivered performance obligations) to deferred revenue. The Company

recorded a total increase to the RIC allowance and imputed interest of $26.6 million, with a decrease to deferred revenue of $17.5 million and a decrease to recurring and other revenue of $9.1 million. The decrease to revenue resulted in a corresponding increase to net loss for the year ended December 31, 2019. This change in estimate increased basic and diluted net loss per share by $0.10 for the year ended December 31, 2019.

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Long-Term Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The Company’s debt at December 31, 2021 and 2020 consisted of the following (in thousands):

	December 31, 2021
	Outstanding Principal	Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
6.750% Senior Secured Notes Due 2027	600,000	—		(4,835)		595,165
5.750% Senior Notes Due 2029	800,000	—		(11,154)		788,846
Senior Secured Term Loan - noncurrent	1,333,125	—		(18,291)		1,314,834
Total Long-Term Debt	2,733,125	—		(34,280)		2,698,845
Senior Secured Term Loan - current	13,500	—		—		13,500
Total Debt	2,746,625	$	—	$	(34,280)	$	2,712,345

        

	December 31, 2020
	Outstanding Principal		Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
7.875% Senior Secured Notes Due 2022	$	677,000	$	7,885	$	(4,697)	$	680,188
7.625% Senior Notes Due 2023	400,000		—		(2,241)		397,759
8.500% Senior Secured Notes Due 2024	225,000		—		(3,530)		221,470
6.750% Senior Secured Notes Due 2027	600,000		—		(5,771)		594,229
Senior Secured Term Loan - noncurrent	933,375		—		(10,921)		922,454
Total Long-Term Debt	2,835,375		7,885		(27,160)		2,816,100
Senior Secured Term Loan - current	9,500						9,500
Total Debt	$	2,844,875	$	7,885	$	(27,160)	$	2,825,600

(1) Unamortized deferred financing costs related to the revolving credit facilities included in deferred financing costs, net on the consolidated balance sheets at December 31, 2021 and 2020 was $2.1 million and $1.7 million, respectively.

Notes Payable

2027 Notes

As of December 31, 2021, APX had $600.0 million outstanding aggregate principal amount of 6.750% senior secured notes due 2027 (the “2027 notes”). The 2027 notes are secured, on a pari passu basis, by the collateral securing obligations under the existing senior secured notes, the Revolving Credit Facility and the Term Loan Facility (as defined below), in each case, subject to certain exceptions and permitted liens. Interest accrues at the rate of 6.75% per annum for the 2027 notes. Interest on the 2027 notes is payable semiannually in arrears on February 15 and August 15 each year. APX may redeem the Notes at the prices and on the terms specified in the applicable indenture.

2029 Notes    

As of December 31, 2021, APX had $800.0 million outstanding aggregate principal amount of 5.75% senior notes due 2029 (the “2029 notes” and, together with the 2027 notes the “Notes”). The 2029 notes will mature on July 15, 2029. Interest accrues at the rate of 5.75% per annum for the 2029 notes. Interest on the 2029 notes is payable semiannually in arrears on January 15 and July 15 each year. APX may redeem the Notes at the prices and on the terms specified in the applicable indenture.    

Senior Secured Credit Facilities

In July 2021, APX amended and restated its existing senior secured term loan credit agreement and existing senior secured revolving credit facility with a new senior secured credit agreement (the “Credit Agreement”) that provides for (i) a term loan facility in an aggregate principal amount of $1,350 million (the “Term Loan Facility”, and the loans thereunder, the “Term Loans”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $370 million (the “Revolving Credit Facility”, and the loans thereunder, the “Revolving Loans”).

As of December 31, 2021, APX had outstanding term loans under the Term Loan Facility in an aggregate principal amount of $1,346.6 million. APX is required to make quarterly amortization payments under the Term Loan in an amount equal to 0.25% of the aggregate principal amount of the Term Loan outstanding on the closing date thereof. The remaining outstanding principal amount of the Term Loans will be due and payable in full on July 9, 2028. APX may prepay the Term Loans on the terms specified in the Credit Agreement. No amortization payments are required under the Revolving Credit Facility.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, APX is required to pay a quarterly commitment fee of 50 basis points (which will be subject to two interest rate step-downs of 12.5 basis points, based on APX meeting consolidated first lien net leverage ratio tests) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. APX also pays customary letter of credit and agency fees. The revolving credit commitments outstanding under the Revolving Credit Facility will be due and payable in full on July 9, 2026.

Borrowings under the amended and restated Term Loan Facility and Revolving Credit Facility bear interest, at APX’s option, at a rate per annum equal to either (a)(i) a base rate determined by reference to the highest of (1) the “Prime Rate” in the United States as published in The Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) the LIBOR rate for a one month interest period plus 1.00%, plus (ii) 2.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 2.50% and 2.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter) or (b)(i) a LIBOR rate determined by reference to the applicable page for the LIBOR rate for the interest period relevant to such borrowing plus (ii) 3.50% (or after the delivery of financial statements for the fiscal quarter ending December 31, 2021, between 3.50% and 3.00%, depending on the first lien net leverage ratio of the applicable fiscal quarter), subject in each case to an agreed interest rate floor.

There were no outstanding borrowings under the Revolving Credit Facility as of December 31, 2021 and December 31, 2020. As of December 31, 2021, the Company had $356.0 million of availability under the Revolving Credit Facility (after giving effect to $14.0 million of letters of credit outstanding and no borrowings).

Debt Modifications and Extinguishments

The Company performs analyses on a creditor-by-creditor basis for debt modifications and extinguishments to determine if repurchased debt was substantially different than debt issued to determine the appropriate accounting treatment of associated issuance costs. As a result of these analyses, the following amounts of other expense and loss on extinguishment and deferred financing costs were recorded (in thousands):

	Other expense and loss on extinguishment								Deferred financing costs
Issuance	Original premium extinguished		Previously deferred financing costs extinguished		New financing costs		Total other expense and loss on extinguishment		Previously deferred financing rolled over		New deferred financing costs		Total deferred financing costs
For the year ended December 31, 2021
2029 Notes issuance - July 2021	$	(5,656)	$	8,016	$	17,187	$	19,547	$	—	$	11,767	$	11,767
Term Loan issuance - July 2021	—		1,499		9,165		10,664		8,148		11,302		19,450
Total	$	(5,656)	$	9,515	$	26,352	$	30,211	$	8,148	$	23,069	$	31,217
For the year ended December 31, 2020
2027 Notes issuance - February 2020	$	(2,749)	$	4,033	$	6,146	$	7,430	$	205	$	6,346	$	6,551
Term Loan issuance - February 2020	—		235		5,045		5,280		6,973		5,461		12,434
Total	$	(2,749)	$	4,268	$	11,191	$	12,710	$	7,178	$	11,807	$	18,985
For the year ended December 31, 2019
2024 Notes issuance - May 2019	$	(588)	$	1,395	$	—	$	807	$	—	$	4,956	$	4,956

Deferred financing costs are amortized to interest expense over the life of the issued debt.    The following tables present deferred financing activity for the years ended December 31, 2021 and 2020 (in thousands):

	Unamortized Deferred Financing Costs
	Balance December 31, 2020		Additions		Early Extinguishment		Amortized		Balance December 31, 2021
Revolving Credit Facility	$	1,667	$	843	$	—	$	(422)	$	2,088
2022 Notes	4,697		—		(3,314)		(1,383)		—
2023 Notes	2,241		—		(1,681)		(560)		—
2024 Notes	3,530		—		(3,021)		(509)		—
2027 Notes	5,771		—		—		(936)		4,835
2029 Notes	—		11,767		—		(614)		11,153
Term Loan	10,921		11,302		(1,499)		(2,434)		18,290
Total Deferred Financing Costs	$	28,827	$	23,912	$	(9,515)	$	(6,858)	$	36,366

	Unamortized Deferred Financing Costs
	Balance December 31, 2019		Additions		Early Extinguishment		Amortized		Balance December 31, 2020
Revolving Credit Facility	$	1,123	$	1,027	$	—	$	(483)	$	1,667
2020 Notes	1,721		—		(1,565)		(156)		—
2022 Private Placement Notes	451		(205)		(221)		(25)		—
2022 Notes	9,532		—		(2,247)		(2,588)		4,697
2023 Notes	3,081		—		—		(840)		2,241
2024 Notes	4,431		—		—		(901)		3,530
2027 Notes	—		6,551		—		(780)		5,771
Term Loan	$	7,822	$	5,461	$	(235)	$	(2,127)	10,921
Total Deferred Financing Costs	$	28,161	$	12,834	$	(4,268)	$	(7,900)	$	28,827

Guarantees

All of the obligations under the Credit Agreement and the debt agreements governing the Notes are guaranteed by APX Group Holdings, Inc., each of APX Group's existing and future material wholly owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications) and solely in the case of the Notes, Vivint Smart Home, Inc. However, such subsidiaries shall only be required to guarantee the obligations under the debt agreements governing the Notes for so long as such entities guarantee the obligations under the Revolving Credit Facility, the Term Loan Facility or the Company's other indebtedness.

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Business Combination

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Business Combination

Business Combination

On January 17, 2020, the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Merger Sub, and Legacy Vivint Smart Home, as amended by the Merger Agreement, dated as of December 18, 2019, by and among the Company, Maiden Sub and Legacy Vivint Smart Home.

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home as the surviving company. At the effective time of the Business Combination (the “Effective Time”), each stockholder of Legacy Vivint Smart Home received 84.5320916792 shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for each share of Legacy Vivint Smart Home common stock, par value $0.01 per share, that such stockholder owned.

Pursuant in each case to a Subscription Agreement entered into in connection with the Merger Agreement, certain investment funds managed by affiliates of Fortress Investment Group LLC (“Fortress”) and certain investment funds affiliated with Blackstone Inc. (“Blackstone”) purchased, respectively, 12,500,000 and 10,000,000 newly-issued shares of Common Stock (such purchases, the “Fortress PIPE” and the “Blackstone PIPE,” respectively, and together, the “PIPE”) concurrently with the completion of the Business Combination (the “Closing”) on the Closing Date for an aggregate purchase price of $125.0 million and $100.0 million, respectively. In connection with the Merger, each of the issued and outstanding Founder Shares was converted into approximately 1.20 shares of Common Stock of the Company. The private placement warrants will expire five years after the Closing or earlier upon redemption or liquidation.

In connection with the execution of the Amendment, the Company entered into a Subscription and Backstop Agreement (the “Fortress Subscription and Backstop Agreement”). On the Closing Date, pursuant to the Fortress Subscription and Backstop Agreement, Fortress purchased 2,698,753 shares of Common Stock for an aggregate of $27.8 million. In addition, the Company entered into an additional subscription agreement (the “Additional Forward Purchaser Subscription Agreement”) with one of the forward purchasers (the “Forward Purchaser”). Pursuant to the Additional Forward Purchaser Subscription Agreement, immediately prior to the Effective Time, the Forward Purchaser purchased from us 5,000,000 shares of Common Stock at a purchase price of $10.00 per share. As consideration for the additional investment, concurrently with the Closing, 25% of Mosaic Sponsor LLC’s founder shares (“Forward Shares”) and private placement warrants were forfeited to the Company and the Company issued to the Forward Purchaser a number of shares of Common Stock equal to approximately 1.20 times the number of Founder Shares forfeited and a number of warrants equal to the number of private placement warrants forfeited.

At the Closing, certain investors (including an affiliate of Fortress) received an aggregate of 15,789,474 shares of Common Stock at a purchase price of $9.50 per share (the “IPO Forward Purchaser Investment”) pursuant to the terms of the forward purchase agreements the Company entered into in connection with the Company’s initial public offering.

In connection with the Closing, 31,074,592 shares of Common Stock were redeemed at a price per share of approximately $10.29. In addition, in connection with the Closing, each Founder Share issued and outstanding immediately prior to the Closing (other than the Founder Shares forfeited in connection with the Additional Forward Purchaser Subscription Agreement) converted into approximately 1.2 shares of Common Stock of the Company. Immediately prior to the Effective Time, each issued and outstanding share of Legacy Vivint Smart Home preferred stock (other than shares owned by Legacy Vivint Smart Home as treasury stock) converted into approximately 1.43 shares of Legacy Vivint Smart Home common stock in accordance with the certificate of designations of the Legacy Vivint Smart Home preferred stock.

As part of the Business Combination, the Company assumed the liabilities associated with the outstanding public warrants and private placement warrants. The Company recorded the warrants as a derivative liability at fair value on the date of the Business Combination.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended December 31, 2021:

	Recapitalization
	(in thousands)
Cash - Mosaic (net of redemptions)	$	35,344
Cash - Subscribers and Forward Purchasers	453,221
Less fees to underwriters and other transaction costs	(25,043)
Net cash received from recapitalization	463,522
Less: Warrant derivative liabilities assumed	(40,094)
Less: non-cash net liabilities assumed from Mosaic	(5)
Less: deferred and accrued transaction costs	(1,304)
Net contributions from recapitalization	$	422,119

The number of shares of Common Stock of Vivint Smart Home Inc. issued immediately following the consummation of the Business Combination is summarized as follows:

	Number of Shares
Common Stock outstanding prior to Business Combination	34,500,000
Less redemption of Mosaic Shares	(31,074,592)
Common Stock of Mosaic	3,425,408
Shares issued from Fortress PIPE	12,500,000
Shares from Blackstone PIPE	10,000,000
Shares from Additional Forward Purchaser Subscription Agreement	5,000,000
Shares from IPO Forward Purchaser Investment	15,789,474
Shares from Fortress Subscription and Backstop Agreement	2,698,753
Shares from Mosaic Founder Shares	10,379,386
Recapitalization shares	59,793,021
Legacy Vivint Smart Home equity holders	94,937,597
Total shares	154,730,618

Earnout consideration

Following the closing of the Merger, holders of Vivint common stock and holders of rollover restricted stock units (“Rollover RSUs”), the rollover stock appreciation rights (“Rollover SARs”), the shares of rollover restricted stock (“Rollover Restricted Stock”) and any awards granted under the Company rollover long-term incentive program (“Rollover LTIP Plans”) (together, “Rollover Equity Awards”) had the contingent right to receive, in the aggregate, up to 37,500,000 shares of Common Stock if, from the closing of the Merger until the fifth anniversary thereof, the dollar volume-weighted average price of Common Stock exceeded certain thresholds. The first issuance of 12,500,000 earnout shares occurred when the volume-weighted average price of Common Stock exceeded $12.50 for any 20 trading days within any 30-trading day period (the “First Earnout”). The second issuance of 12,500,000 earnout shares occurred when the volume weighted average price of Common Stock exceeded $15.00 for any 20 trading days within any 30-trading day period (the “Second Earnout”). The third issuance of 12,500,000 earnout shares occurred when the volume weighted average price of Common Stock exceeded $17.50 for any 20-trading days within any 30-trading day period (the “Third Earnout”) (as further described in the Merger Agreement).

Subsequent to the closing of the Merger, the cumulative issuance of 37,323,959 shares of Common Stock occurred after attainment of the First Earnout, Second Earnout and Third Earnout in February, March and September 2020, respectively. The difference in the shares issued in the earnouts and the aggregate amounts defined in the Merger Agreement above are primarily attributable to unissued shares reserved for future issuance to holders of Rollover Equity Awards, which are subject to the same vesting terms and conditions as the underlying Rollover Equity Awards. Additionally, shares were withheld from employees to satisfy the mandatory tax withholding requirements. The Company has determined that the earnout shares issued to non-employee shareholders and to holders of Vivint common stock and vested Rollover Equity Awards qualify for the scope exception in ASC 815-10-15-74(a) and meet the criteria for equity classification under ASC 815-40. These earnout shares were initially measured at fair value at Closing. Upon the attainment of the share price targets, the earnout shares delivered to the

equity holders are recorded in equity as shares issued, with the appropriate allocation to common stock at par and additional paid-in capital. Since all earnout shares have determined to be equity-classified, there is no remeasurement unless reclassification is required. For the earnout shares associated with unvested Rollover Equity Awards, the Company has determined that they qualify for equity classification and are subject to stock-based compensation expense under ASC 718.

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Balance Sheet Components

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Balance Sheet Components

The following table presents material balance sheet component balances as of December 31, 2021 and December 31, 2020 (in thousands):

	December 31,
	2021		2020
Prepaid expenses and other current assets
Prepaid expenses	$	12,791	$	11,286
Deposits	627		1,308
Other	5,967		1,744
Total prepaid expenses and other current assets	$	19,385	$	14,338
Capitalized contract costs
Capitalized contract costs	$	4,103,683	$	3,491,629
Accumulated amortization	(2,698,241)		(2,173,131)
Capitalized contract costs, net	$	1,405,442	$	1,318,498
Long-term notes receivables and other assets
RIC receivables, gross	$	52,934	$	93,995
RIC allowance	(12,384)		(27,061)
RIC imputed interest	(7,469)		(13,275)
Deferred income tax assets	2,022		—
Other	9,650		4,658
Total long-term notes receivables and other assets, net	$	44,753	$	58,317
Accrued payroll and commissions
Accrued commissions	47,879		46,353
Accrued payroll	$	35,468	$	41,590
Total accrued payroll and commissions	$	83,347	$	87,943
Accrued expenses and other current liabilities
Accrued interest payable	$	40,333	$	33,340
Current portion of derivative liability	140,394		142,755
Service warranty accrual	5,992		5,711
Current portion of warrant derivative liabilities	—		8,063
Accrued taxes	10,758		8,700
Accrued payroll taxes and withholdings	14,392		14,391
Loss contingencies	8,150		26,200
Other	16,231		8,164
Total accrued expenses and other current liabilities	$	236,250	$	247,324

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Property Plant and Equipment

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property Plant and Equipment

Property Plant and Equipment

Property, plant and equipment is recorded at historical cost less accumulated depreciation, which is calculated using the straight-line method over the estimated useful lives of the related assets, as follows (in thousands):

	December 31,				Estimated Useful Lives
	2021		2020
Vehicles	$	40,103	$	39,735	3-5 years
Computer equipment and software	83,479		72,616		3-5 years
Leasehold improvements	30,087		29,126		2-15 years
Office furniture, fixtures and equipment	22,327		21,394		2-7 years
Construction in process	11,089		6,180
Property, plant and equipment, gross	187,085		169,051
Accumulated depreciation and amortization	(131,637)		(116,672)
Property, plant and equipment, net	$	55,448	$	52,379

Property plant and equipment includes approximately $16.5 million and $17.6 million of assets under finance lease obligations, net of accumulated amortization of $24.5 million and $23.0 million at December 31, 2021 and 2020, respectively. Depreciation and amortization expense on all property plant and equipment was $16.5 million, $20.2 million and $25.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense relates to assets under finance leases as included in depreciation and amortization expense.

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill during the year ended December 31, 2021 was the result of foreign currency translation adjustments. The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, were as follows (in thousands):

Balance as of January 1, 2020	$	836,540
Effect of Foreign Currency Translation	537
Balance as of December 31, 2020	837,077
Effect of Foreign Currency Translation	76
Balance as of December 31, 2021	$	837,153

Intangible assets, net

The following table presents intangible asset balances as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Estimated Useful Lives
Definite-lived intangible assets:
Customer contracts	$	969,376	$	(920,617)	$	48,759	$	969,158	$	(862,352)	$	106,806	10 years
2GIG 2.0 technology	17,000		(17,000)		—		17,000		(17,000)		—		8 years
Other technology	4,725		(4,725)		—		4,725		(4,309)		416		2 - 7 years
Space Monkey technology	7,100		(7,100)		—		7,100		(7,100)		—		6 years
Patents	11,180		(8,076)		3,104		10,843		(6,656)		4,187		5 years
Total definite-lived intangible assets:	1,009,381		(957,518)		51,863		1,008,826		(897,417)		111,409
Indefinite-lived intangible assets:
Domain names	65		—		65		65		—		65
Total Indefinite-lived intangible assets	65		—		65		65		—		65
Total intangible assets, net	$	1,009,446	$	(957,518)	$	51,928	$	1,008,891	$	(897,417)	$	111,474

During the years ended December 31, 2021 and 2020, the Company added $0.4 million and $3.1 million of intangible assets related to patents, respectively. Amortization expense related to intangible assets was approximately $60.0 million, $69.5 million and $80.5 million for the years ended December 31, 2021, 2020, and 2019, respectively.

As of December 31, 2021, the remaining weighted-average amortization period for definite-lived intangible assets was 1.0 year. Estimated future amortization expense of intangible assets, excluding approximately $0.1 million in patents currently in process, is as follows as of December 31, 2021 (in thousands):

2022	$	49,889
2023	795
2024	610
2025	514
2026	4
Thereafter	—
Total estimated amortization expense	$	51,812

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Financial Instruments

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Financial Instruments

Financial Instruments

Cash and Cash Equivalents

Cash equivalents are classified as level 1 assets, as they have readily available market prices in an active market. The Company's cash and cash equivalents totaled $208.5 million and $313.8 million as of December 31, 2021 and 2020, respectively.

Corporate Securities

During the three months ended September 30, 2021, the Company obtained corporate securities, which are classified as Level 2 assets. The fair value of these securities was $2.4 million as of December 31, 2021. The fair value of the Company’s Level 2 corporate securities are based on observable prices that are based on inputs not quoted in active markets, but corroborated by market data.

Debt

Components of the Company's debt including the associated interest rates and related fair values (in thousands, except interest rates) are as follows:

Issuance	December 31, 2021				December 31, 2020				Stated Interest Rate
	Face Value		Estimated Fair Value		Face Value		Estimated Fair Value
2022 Notes	—		—		677,000		677,203		7.875	%
2023 Notes	—		—		400,000		415,200		7.625	%
2024 Notes	—		—		225,000		238,545		8.500	%
2027 Notes	600,000		633,660		600,000		645,300		6.750	%
2029 Notes	800,000		795,680		—		—		5.750	%
Term Loan	1,346,625		1,346,625		942,875		942,875		N/A
Total	$	2,746,625	$	2,775,965	$	2,844,875	$	2,919,123

The Notes are fixed-rate debt considered Level 2 fair value measurements as the values were determined using observable market inputs, such as current interest rates, prices observable from less active markets, as well as prices observable from comparable securities. The Term Loan is floating-rate debt and approximates the carrying value as interest accrues at floating rates based on market rates.

Derivative Financial Instruments

Consumer Financing Program

Under the Consumer Financing Program, the Company pays a monthly fee to Financing Providers based on either the average daily outstanding balance of the Loans or the number of outstanding Loans. For certain Loans, the Company incurs fees at the time of the loan origination and receives proceeds that are net of these fees. The Company also shares the liability for credit losses, depending on the credit quality of the customer. Because of the nature of certain provisions under the Consumer Financing Program, the Company records a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments. Changes to the fair value are recorded through other income, net in the Consolidated Statement of Operations. The following represent the contractual future payment obligations with the Financing Providers under the Consumer Financing Program that are components of the derivative:

•The Company pays either a monthly fee based on the average daily outstanding balance of the Loans, or the number of outstanding Loans, depending on the Financing Provider

•The Company shares the liability for credit losses depending on the credit quality of the customer

•The Company pays transactional fees associated with customer payment processing

The derivative is classified as a Level 3 instrument. The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and loss severity rates. These derivatives are priced quarterly using a credit valuation adjustment methodology. In summary, the fair value represents an estimate of the

present value of the cash flows the Company will be obligated to pay to the Financing Provider for each component of the derivative.

The following table summarizes the fair value and the notional amount of the Company’s outstanding consumer financing program derivative instrument as of December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Consumer Financing Program Contractual Obligations:
Fair value	$	216,795	$	227,896
Notional amount	1,160,278		912,626
Classified on the consolidated balance sheets as:
Accrued expenses and other current liabilities	140,394		142,755
Other long-term obligations	76,401		85,141
Total Consumer Financing Program Contractual Obligation	$	216,795	$	227,896

Changes in Level 3 Fair Value Measurements - Consumer Financing Program

The following table summarizes the change in the fair value of the Level 3 outstanding derivative instrument for the years ended December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Balance, beginning of period	$	227,896	$	136,863
Additions	94,995		167,055
Settlements	(91,826)		(71,962)
Gains included in earnings	(14,270)		(4,060)
Balance, end of period	$	216,795	$	227,896

Warrant Liabilities

As a result of the Business Combination, the Company assumed a derivative warrant liability related to previously issued private placement warrants and public warrants in connection with Mosaic’s initial public offering. The fair value of the Company’s public warrants were measured based on the market price of such warrants and are considered a Level 1 fair value measurement. As of January 7, 2021, all public warrants were exercised or redeemed and none were outstanding as of December 31, 2021. The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the private placement warrants and are considered a Level 3 fair value measurement. The warrants are measured at each reporting period, with changes in fair value recognized in the statement of operations.

The change in the fair value of the derivative warrant liabilities for the years ended December 31, 2021 and 2020 is summarized as follows (in thousands):

	Public Warrants		Private Placement Warrants		Total Derivative Warrant liability
Warrant liability assumed from the Business Combination	$	9,775	$	30,319	$	40,094
Change in fair value of warrant liability	64,038		45,212		109,250
Reclassification of derivative liabilities for exercised warrants	(65,750)		—		(65,750)
Balance, December 31, 2020	8,063		75,531		83,594
Change in fair value of warrant liability	1,350		$	(50,967)	(49,617)
Write-off fair value of unexercised expired warrants	(490)		$	—	(490)
Reclassification of derivative liabilities for exercised warrants	(8,923)		$	—	(8,923)
Balance, December 31, 2021	—		24,564		24,564

The estimated fair value of the private placement warrant derivative liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes valuation model are assumptions related to expected stock-price volatility, expiration, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expiration of the warrants. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

	As of December 31, 2021			As of December 31, 2020
Number of private placement warrants	5,933,334			5,933,334
Exercise price	$	11.50		$	11.50
Stock price	$	9.78		$	20.75
Expiration term (in years)	3.05			4.05
Volatility	70		%	60		%
Risk-free Rate	0.98		%	0.27		%
Dividend yield	—		%	—		%

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Restructuring and Asset Impairment Charges

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring and Asset Impairment Charges

Restructuring and Asset Impairment Charges

Restructuring

2020 Cost Reductions

In March 2020, the Company announced a number of cost reduction initiatives that are expected to reduce certain of the Company’s General and Administrative, Customer Service, and Sales Support fixed costs. The Company completed the majority of these cost reduction initiatives in the first quarter of 2020. In addition to resulting in meaningful cost reductions, the Company’s initiatives are expected to streamline operations, focus on engineering and innovation and provide a better focus on driving customer satisfaction. These actions resulted in one-time cash employee severance and termination benefits expenses of $20.9 million during the year ended December 31, 2020. These costs included $11.1 million in stock-based compensation expense associated with the accelerated vesting of stock-based awards to certain executives related to separation agreements.

2019 Wireless Spin-Off

On July 31, 2019, the Company completed a spin-off of its Wireless subsidiary. In connection with the spin-off, the equity interests of Wireless were distributed to the shareholders of Vivint Smart Home pro rata based on their respective holdings. As a result of the spin-off, the Company's additional paid-in capital was decreased by the net assets of Wireless of $4.8 million, as of the effective date of the spin-off. The spin-off does not represent a strategic shift that has (or will have) a major effect on the Company's operations and financial results.

The results of Wireless are reflected in the Company's consolidated financial statement up through July 31, 2019. The following financial information presents the results of operations of Wireless for the year ended December 31, 2019:

	Years Ended December 31,
	2019
Recurring and other revenue	$	2,808
Costs and expenses:
Operating expenses	$	5,455
Selling expenses	$	137
General and administrative expenses	$	5,291
Depreciation and amortization	$	68
Total costs and expenses	$	10,951
Loss from operations	$	(8,143)
Other expenses (income):
Interest expense	—
Other income, net	(2,100)
Net loss	$	(6,043)

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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company files a consolidated federal income tax return with its wholly owned U.S. subsidiaries.

The income tax expense consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Current income tax:
Federal	$	—	$	—	$	—
State	2,359		2,174		703
Foreign	3,641		764		(2)
Total	6,000		2,938		701
Deferred income tax:
Federal	—		—		(380)
State	(263)		(851)		(73)
Foreign	(3,266)		(1,004)		1,065
Total	(3,529)		(1,855)		612
Income tax expense	$	2,471	$	1,083	$	1,313

The following reconciles the tax benefit computed at the statutory federal rate and the Company’s tax expense (in thousands):

	Year ended December 31,
	2021		2020		2019
Computed expected tax benefit	$	(63,647)	$	(126,472)	$	(82,833)
State income taxes, net of federal tax effect	1,556		882		483
Foreign income taxes	221		(383)		232
Other reconciling items	(1,235)		(714)		2,988
Permanent differences	(8,753)		36,423		5,694
Excess deductible compensation limitation	10,463		9,667		1,313
Change in valuation allowance	63,866		81,680		73,436
Income tax expense	$	2,471	$	1,083	$	1,313

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2021			2020
Gross deferred tax assets:
Net operating loss carryforwards	$	546,693		$	558,972
Deferred subscriber income	326,759			254,722
Interest expense limitation	142,919			119,402
Accrued expenses and allowances	56,495			52,031
Lease liabilities	13,356			15,342
Purchased intangibles and deferred financing costs	9,687			13,765
Inventory reserves	1,859			2,801
Research and development credits	41			41
Deferred capitalized contract costs	1,800			—
Property and equipment	1,888			2
Valuation allowance	(740,397)			(664,191)
Total	361,100			352,887
Gross deferred tax liabilities:
Deferred capitalized contract costs	(346,887)			(338,141)
Right of use assets	(11,430)			(13,119)
Purchased intangibles and deferred financing costs	(959)			(2,092)
Property and equipment	(443)			(1,703)
Total	(359,719)		-359719000	(355,055)
Net deferred tax assets (liabilities)	$	1,381		$	(2,168)

The Company had gross operating loss carryforwards as follows (in thousands):

	December 31,
	2021		2020
Net operating loss carryforwards:
Federal	$	2,229,000	$	2,294,340
States	2,036,000		1,996,245
Total	$	4,265,000	$	4,290,585

U.S. federal net operating loss carryforwards will begin to expire in 2029, if not used. State net operating loss carryforwards expire over different periods and some have already begun to expire. The Company had U.S. research and development credits of approximately $41,000 at December 31, 2021, and December 31, 2020, which begin to expire in 2030.

There are no remaining Canadian net operating loss (“NOL”) carryforwards as of December 31, 2021.

Realization of the Company’s federal and state net operating loss carryforwards and tax credits is dependent on generating sufficient taxable income prior to their expiration. The Company performed a study to determine the amount of any limitation on its net operating losses and concluded that as of December 31, 2021 an ownership change had not occurred under the provisions of Internal Revenue Code Section 382, and as of that date the losses were not limited. The future use of the net operating loss carryforwards may have limitations resulting from future ownership changes or other factors under Section 382 of the Internal Revenue Code.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company does not expect that the NOL carryback provision of the CARES Act will result in a material cash benefit. In addition to the NOL changes, the CARES Act contains modifications on the limitation of business interest for tax years beginning in

2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. This modification increased the allowable interest expense deduction of the Company and resulted in less taxable income for the years ended 2019 and 2020, resulting in less utilization of net operating losses in those years.

At December 31, 2021 and 2020, the Company recorded a valuation allowance against its U.S. federal and state net deferred tax assets as it believes it is more likely than not that these benefits will not be realized. Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against net deferred tax assets and evaluating the Company’s uncertain tax positions. The Company has considered and weighed the available evidence, both positive and negative, to determine whether it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Based on available information, management does not believe it is more likely than not that all of its deferred tax assets will be utilized. The Company recorded a valuation allowance against U.S. net deferred tax assets of approximately $740.4 million and $664.2 million at December 31, 2021 and 2020, respectively.

The Company is no longer subject to income tax examination by the U.S. federal, state or local tax authorities for years ended December 31, 2016 or prior; however, its tax attributes, such as NOL carryforwards and tax credits, are still subject to examination in the year they are used.

As of December 31, 2021, the Company has not recognized any uncertain tax positions.

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Stock-Based Compensation and Equity

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation and Equity

Stock-Based Compensation and Equity

The Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (the “Plan”) provides for the issuance of stock-based incentive awards to attract, motivate and retain qualified employees and non-employee directors, and to align their financial interests with those of company stockholders. In addition to the rollover awards converted as part of the Business Combination, the Company utilizes a combination of time-based and performance-based restricted stock units.

Tracking Units

The Company issued tracking units to certain executives to align their financial interests with those of company stockholders. The tracking units are recognized as expense over the employee's requisite service period. In 2021, 560,841 tracking units vested that were subject to time-based vesting. In June 2021, the fair value of the unvested tracking units was modified such that at December 31, 2021, 1,121,681 tracking units were unvested, and there was $1.2 million of unrecognized compensation expense of which is expected to be recognized over a weighted-average period of 1.4 years, and are subject to ratable time-based vesting over a five-year period from June 2018.

Rollover SARs

Stock Appreciation Rights (“SARs”) were previously issued to various levels of key employees and board members. As of December 31, 2021, there was no unrecognized compensation expense related to Rollover SARs.

A summary of the Rollover SARs activity for the years ended December 31, 2021 and 2020 is presented below:

	Rollover SARs	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2019	3,603,537	$	18.17	7.86	$	0.9
Forfeited	(1,055,978)	18.03
Exercised	(73,548)	12.35
Outstanding, December 31, 2020	2,474,011	17.59		6.60	7.8
Forfeited	(409,566)	18.50
Exercised	(59,733)	9.32
Outstanding, December 31, 2021	2,004,712	17.65		5.62	—
Unvested Rollover SARs expected to vest after December 31, 2021	—	—		—	—
Exercisable at December 31, 2021	2,004,712	$	17.65	5.62	—

Rollover LTIPs

The Company established four incentive compensation pools with a number of hypothetical SARs with awards to certain employees entitling them to a portion of the proceeds of such hypothetical SARs on certain distribution dates (the “Rollover LTIP Plans”). In February 2020, the board of directors approved the 2020 modification with respect to such shares, such that they would be distributed in January 2021, to the extent not then distributed. Each hypothetical Rollover SAR has a strike price of $7.22 per share. In the first quarter of 2021, the Company made the final distribution of shares of Class A common stock pursuant to the Rollover LTIP Plans resulting in the issuance of 1,609,627 shares of Class A common stock to holders of Rollover LTIP Awards. As a result of this distribution, the Company recorded compensation costs totaling $37.2 million, of which $32.7 million and $4.5 million was included in selling expenses and operating expenses, respectively.

The fair value of the shares distributed pursuant to the Rollover LTIP Plans values were determined based on the stock price of the Company on the date shares were issued to holders of Rollover LTIP Awards, which was $23.08 per share for the January 2021 distribution.

Earnouts

During the year ended December 31, 2021, holders of Rollover Equity Awards became entitled to receive share of our Class A Common Stock as a result of the attainment of the First Earnout, Second Earnout and Third Earnout (see Note 7 Business Combination for further discussion). Such shares were issuable in respect to holders of Rollover Equity Awards, subject to the same vesting terms and conditions as the underlying Rollover Equity Awards. Associated with the Rollover LTIP distribution in 2021, 847,141 shares of related earnouts were issued, resulting in $19.6 million expense. At December 31, 2021,

there was a de minimis amount of unrecognized compensation expense related to earnouts granted, which is expected to be recognized over a weighted-average period of 1.5 years.

A summary of the earnout share activity for those that were subject to stock-based compensation expense under ASC 718, for the year ended December 31, 2021 is presented below:

	Shares	Weighted Average Grant-Date Fair Value per Share
Unvested at December 31, 2020	412,816	$	21.98
Granted	847,141	23.08
Vested	(1,235,897)	22.73
Unvested at December 31, 2020	24,060	21.98

Restricted Stock Units

During the year ended December 31, 2021, the Company approved grants under the Plan of time-vesting restricted stock units (the “RSUs”) awards (each representing the right to receive one share of Class A common stock of the Company upon the settlement of each restricted stock unit) to various levels of key employees. The RSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date. Additionally, RSUs were granted to non-employee board members which are subject to a one year vesting schedule. All vesting shall be subject to the recipient’s continued employment with Vivint Smart Home, Inc. or its subsidiaries through the applicable vesting dates. Compensation expense associated with the unvested restricted stock units is recognized on a straight-line basis over the vesting period. At December 31, 2021, there was approximately $114.8 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.8 years.

The following summarizes information about RSU transactions for the year ended December 31, 2021:

	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	8,640,418	$	22.76
Modified	(1,842,146)	22.86
Granted	5,865,475	13.33
Vested	(2,162,984)	22.62
Forfeited	(930,096)	20.43
Unvested at December 31, 2021	9,570,667	16.12

Performance Stock Units

During the year ended December 31, 2021, the Company approved grants under the Plan of performance-vesting restricted stock units (the “PSUs”) (each representing the right to receive one share of Class A common stock of the Company upon the settlement of each restricted stock unit).

The PSUs predominately vest based upon the Company’s achievement of specified performance goals through the performance period and the passage of time. The PSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date, subject to continued employment on the applicable vesting date.

During the year ended December 31, 2021, the Company deemed the achievement of certain PSU vesting conditions as being probable, and thus began recognizing stock-based compensation over the service period. At December 31, 2021, there was approximately $61.7 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 1.8 years.

The following summarizes information about PSU transactions for the year ended December 31, 2021:

	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	4,877,277	$	22.67
Modified	1,842,146	22.86
Granted	5,993,063	15.72
Vested	(2,348,957)	22.83
Forfeited	(719,863)	19.12
Unvested at December 31, 2021	9,643,666	17.23

Stock-based compensation expense in connection with all stock-based awards for the years ended December 31, 2021, 2020 and 2019 is allocated as follows (in thousands):

	Year ended December 31,
	2021		2020		2019
Operating expenses	$	16,567	$	20,157	$	320
Selling expenses	103,239		101,623		508
General and administrative expenses	46,622		76,433		3,413
Total stock-based compensation	$	166,428	$	198,213	$	4,241

Equity

Class A Common Stock—The Company is authorized to issue 3,000,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At December 31, 2021, there were 208,734,193 shares of Class A common stock issued and outstanding.

Preferred stock—The Company is authorized to issue 300,000,000 preferred stock with a par value of $0.0001 per share. At December 31, 2021, there are no preferred stock issued or outstanding.

Warrants—As of December 31, 2021, no public warrants were outstanding. Each whole warrant entitled the holder to purchase one Class A common stock at an exercise price of $11.50 per share, subject to adjustment. Warrants could only be exercised for a whole number of shares. No fractional warrants were issued upon separation of the units and only whole warrants were traded. The warrants became exercisable 30 days after the completion of the Business Combination.

As of December 31, 2021, 5,933,334 private placement warrants were outstanding. The private placement warrants are identical to the public warrants, except that the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private placement warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the private placement warrants are held by someone other than the initial stockholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. The warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

The Company may call the warrants for redemption:

1.For cash:

•in whole and not in part;

•at a price of $0.01 per warrant;

•upon a minimum of 30 days’ prior written notice of redemption; and

•if, and only if, the last reported closing price of the common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

2.For Class A common stock:

•in whole and not in part;

•at a price equal to a number of Class A common stock to be determined by reference to a table included in the warrant agreement, based on the redemption date and the fair market value of the Class A common stock;

• upon a minimum of 30 days’ prior written notice of redemption; and

•if, and only if, the last reported closing price of the common stock equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends notice of redemption to the warrant holders.

In December 2020, after meeting the above requirements for redemption, the Company delivered a notice of redemption to redeem all of its outstanding public warrants for cash, with a redemption date January 7, 2021 (the “Redemption Date”) for a redemption price of $0.01 per public warrant (the “Redemption Price”). Warrants to purchase Common Stock that were issued under the Warrant Agreement in a private placement and still held by the initial holders thereof or their permitted transferees are not subject to this redemption. The public warrants could have been exercised by the holders thereof prior to the Redemption Date to purchase fully paid and non-assessable shares of Common Stock underlying such warrants, at the exercise price of $11.50 per share. All Public Warrants that remained unexercised at 5:00 p.m., New York City time, on the Redemption Date were void and were no longer exercisable, and the holders of those Public Warrants were entitled to receive only the redemption price of $0.01 per warrant.

The exercise price and number of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants shares.

During the year ended December 31, 2021, 825,016 warrants were exercised for Class A common stock, for which the Company received $10.8 million of cash. During the year ended December 31, 2020, 10,504,533 warrants were exercised for Class A common stock, for which the Company received $120.8 million of cash.

Capital Contribution

During the year end December 31, 2019, 313 Acquisition contributed $4.7 million to the Company as capital contributions. During the year ended December 31, 2019 the Company returned capital to 313 Acquisition of $4.8 million.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Indemnification

Subject to certain limitations, the Company is obligated to indemnify its current and former directors, officers and employees with respect to certain litigation matters and investigations that arise in connection with their service to the Company. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that the Company is required to pay or reimburse these individuals’ reasonable legal expenses and possibly damages and other liabilities incurred in connection with these matters.

Legal

The Company is named from time to time as a party to lawsuits arising in the ordinary course of business related to its sales, marketing, and the provision of its services and equipment. Actions filed against the Company include commercial, intellectual property, customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In addition, from time to time the Company is subject to examinations, investigations and/or enforcement actions by federal and state licensing and regulatory agencies and may face the risk of penalties for violation of financial services, consumer protections and other applicable laws and regulations. For example, in 2019, the Company received a subpoena in connection with an investigation by the U.S. Department of Justice (“DOJ”) concerning potential violations of the Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”). In January 2021, the Company entered into a settlement agreement with the DOJ that resolved this investigation. As part of this settlement, the Company paid $3.2 million to the U.S. The Company also has received a civil investigative demand from the staff of the Federal Trade Commission (“FTC”) concerning potential violations of the Fair Credit Reporting Act (“FCRA”) and the “Red Flags Rule” thereunder, and the Federal Trade Commission Act (“FTC Act”). In April 2021, the Company entered into a settlement with the FTC that resolved this investigation. As part of this settlement, which was approved by a federal court on May 3, 2021, the Company paid a total of $20 million to the U.S. and agreed to implement various additional compliance related measures. The Company is currently in the process of administering the terms of this settlement, which include multiple undertakings by the Company. The Company has been endeavoring to comply with these undertakings and the demands on management and costs incurred in connection with these undertakings may be substantial. The Company has been engaged in ongoing discussions with the staff of the FTC regarding the Company’s compliance with the terms of the settlement. In addition, in accordance with the settlement, the Company is required to undergo biennial assessments by an independent third-party assessor who will review the Company’s compliance programs and provide a report to the FTC staff on the Company’s ongoing compliance with the settlement. The Company expects to receive the results of the first biennial assessment during the first quarter of 2022. U.S. Customs and Border Protection is investigating the Company’s historical compliance with regulations relating to duties and tariffs in connection with its import of certain products from outside the U.S. The Department of Justice is also investigating potential violations of the False Claims Act relating to similar issues. The Company is cooperating with these investigations. The Company also receives inquiries, including civil investigative demands (“CIDs”), from various State Attorneys General, typically from their respective consumer protection or consumer affairs divisions. In general, litigation and enforcements by regulatory agencies can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings and enforcement actions are difficult to predict and the costs incurred can be substantial. The Company believes the amounts accrued in its financial statements to cover these matters, as disclosed in the following paragraph, are adequate in light of the probable and estimated liabilities. Factors that the Company considers in the determination of the likelihood of a loss and the estimate of the range of that loss in respect of legal and enforcement matters include the merits of a particular matter, the nature of the matter, the length of time the matter has been pending, the procedural posture of the matter, how the Company intends to defend the matter, the likelihood of settling the matter and the anticipated range of a possible settlement. Because such matters are subject to many uncertainties, the ultimate outcomes are not predictable and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in the Company’s financial statements or that the matters will not have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

The Company regularly reviews outstanding legal claims, actions, and enforcement matters to determine if accruals for expected negative outcomes of such matters are probable and can be reasonably estimated. The Company had accruals for all such matters of approximately $8.2 million and $26.2 million as of December 31, 2021 and 2020, respectively. The Company evaluates its outstanding legal and regulatory proceedings and other matters each quarter to assess its loss contingency accruals, and makes adjustments in such accruals, upward or downward, as appropriate, based on management’s best judgment after consultation with counsel. There is no assurance that the Company’s accruals for loss contingencies will not need to be adjusted in the future. The amount of such adjustment could significantly exceed the accruals the Company has recorded.

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Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

The Company has operating leases for corporate offices, warehouse facilities, research and development and other operating facilities and other operating assets. The Company has finance leases for vehicles, office equipment and other warehouse equipment. The leases have remaining terms of 1 year to 7 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.

The components of lease expense were as follows (in thousands):

	Year ended December 31,
	2021		2020
Operating lease cost	$	15,689	$	16,784
Finance lease cost:
Amortization of right-of-use assets	$	2,375	$	5,090
Interest on lease liabilities	264		453
Total finance lease cost	$	2,639	$	5,543

Supplemental cash flow information related to leases was as follows (in thousands):

	Year ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(16,877)	$	(17,635)
Operating cash flows from finance leases	(264)		(453)
Financing cash flows from finance leases	(3,158)		(7,657)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	4,490	$	3,420
Finance leases	1,808		1,228

Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):

	Year ended December 31,
	2021			2020
Operating Leases
Operating lease right-of-use assets	$	46,000		$	52,880
Current operating lease liabilities	$	12,033		$	12,135
Operating lease liabilities	41,713			49,692
Total operating lease liabilities	$	53,746		$	61,827
Finance Leases
Property, plant and equipment, gross	$	40,939		$	40,571
Accumulated depreciation	(24,465)			(22,976)
Property, plant and equipment, net	$	16,474		$	17,595
Current finance lease liabilities	$	2,854		$	3,356
Finance lease liabilities	1,416			2,460
Total finance lease liabilities	$	4,270		$	5,816
Weighted Average Remaining Lease Term
Operating leases	5 years			5 years
Finance leases	2.7 years			1.6 years
Weighted Average Discount Rate
Operating leases	7		%	7		%
Finance leases	4		%	4		%

Maturities of lease liabilities were as follows (in thousands):

	Operating Leases		Finance Leases
Year Ending December 31,
2022	$	15,858	$	3,025
2023	15,199		847
2024	14,392		514
2025	8,764		—
2026	5,008		—
Thereafter	4,494		—
Total lease payments	63,715		4,386
Less imputed interest	(9,969)		(116)
Total	$	53,746	$	4,270

Leases

Leases

The Company has operating leases for corporate offices, warehouse facilities, research and development and other operating facilities and other operating assets. The Company has finance leases for vehicles, office equipment and other warehouse equipment. The leases have remaining terms of 1 year to 7 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.

The components of lease expense were as follows (in thousands):

	Year ended December 31,
	2021		2020
Operating lease cost	$	15,689	$	16,784
Finance lease cost:
Amortization of right-of-use assets	$	2,375	$	5,090
Interest on lease liabilities	264		453
Total finance lease cost	$	2,639	$	5,543

Supplemental cash flow information related to leases was as follows (in thousands):

	Year ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(16,877)	$	(17,635)
Operating cash flows from finance leases	(264)		(453)
Financing cash flows from finance leases	(3,158)		(7,657)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	4,490	$	3,420
Finance leases	1,808		1,228

Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):

	Year ended December 31,
	2021			2020
Operating Leases
Operating lease right-of-use assets	$	46,000		$	52,880
Current operating lease liabilities	$	12,033		$	12,135
Operating lease liabilities	41,713			49,692
Total operating lease liabilities	$	53,746		$	61,827
Finance Leases
Property, plant and equipment, gross	$	40,939		$	40,571
Accumulated depreciation	(24,465)			(22,976)
Property, plant and equipment, net	$	16,474		$	17,595
Current finance lease liabilities	$	2,854		$	3,356
Finance lease liabilities	1,416			2,460
Total finance lease liabilities	$	4,270		$	5,816
Weighted Average Remaining Lease Term
Operating leases	5 years			5 years
Finance leases	2.7 years			1.6 years
Weighted Average Discount Rate
Operating leases	7		%	7		%
Finance leases	4		%	4		%

Maturities of lease liabilities were as follows (in thousands):

	Operating Leases		Finance Leases
Year Ending December 31,
2022	$	15,858	$	3,025
2023	15,199		847
2024	14,392		514
2025	8,764		—
2026	5,008		—
Thereafter	4,494		—
Total lease payments	63,715		4,386
Less imputed interest	(9,969)		(116)
Total	$	53,746	$	4,270

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Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Transactions with Vivint Solar

Vivint Solar, Inc. (“Solar”) has historically been considered a related party of the Company due to the Company and Solar being under the common control of 313 Acquisition. In October 2020 Solar was acquired by SunRun, Inc. in an all-stock transaction (“SunRun Acquisition”). Upon completion of the SunRun Acquisition, the Company and Solar were no longer under the common control of 313 Acquisition and therefore the Company and Solar are no longer related parties.

The Company was a party to a number of agreements with Solar. In August 2017, the Company entered into a sales dealer agreement with Solar, pursuant to which each company agreed to act as a non-exclusive dealer for the other party to

market, promote and sell each other’s products. Prior to the SunRun Acquisition, net expenses charged to Solar in connection with these agreements was $3.3 million and $9.2 million during the years ended December 31, 2020 and 2019, respectively.

On March 3, 2020, the Company and Solar amended and restated the sales dealer agreement to, among other things, add exclusivity obligations for both companies in certain territories and jurisdictions, expand the types of services each company is permitted to render thereunder, and to permit use of the services offered by Amigo, a wholly-owned subsidiary of the Company, in connection with the submission and processing of leads generated pursuant to the agreement. The amended and restated agreement has a one-year term, which automatically renews for successive one-year terms unless terminated earlier by either party upon 90 days’ prior written notice.

On March 3, 2020, the Company and Solar entered into a recruiting services agreement pursuant to which each company has agreed to assist the other in recruiting sales representatives to its direct-to-home sales force. The parties will pay each other certain fees for these services which will be calculated in accordance with the terms of the agreement. The Company and Vivint Solar have also agreed under the terms of the agreement not to solicit for employment any member of the other’s executive or senior management team, any dealer, or any of the other’s employees who primarily manage sales, installation or services of the other’s products and services. Such obligations will continue throughout the term of the agreement.

On March 3, 2020, Amigo entered into a Subscriber Generation Agreements with Solar and the Company to facilitate the use of the Amigo application for the submission and processing of leads generated pursuant to the amended and restated sales dealer agreement.

In connection with the amendment and restatement of the sales dealer agreement and the execution of the recruiting services agreement, the Company and Solar terminated the Marketing and Customer Relations Agreement, dated September 30, 2014 (as amended from time to time) and the Non-Competition Agreement, dated September 30, 2014 (as amended from time to time), in each case effective as of March 3, 2020.

Other Related-party Transactions

The Company incurred additional expenses during the years ended December 31, 2021, 2020 and 2019, of approximately $0.9 million, $0.6 million, $2.5 million, respectively, for other related-party transactions including contributions to the charitable organization Vivint Gives Back, facility costs, and other services. These expenses were included in selling and general and administrative expenses in the accompanying consolidated statement of operations. Accrued expenses and other current liabilities included on the Company's balance sheets associated with these related-party transactions at December 31, 2021 and 2020 were $0.1 million and $0.1 million, respectively.

On July 31, 2019, in an effort to deliver additional cost savings and cash-flow improvements, the Company completed a spin-off of Wireless, its wireless internet business. Associated with the spin-off, the Company and Wireless entered into a Transition Service Agreement (“TSA”) According to the TSA, Vivint performs specified services for Wireless, including human resources, information technology, and facilities. The Company invoices Wireless on a monthly basis for these agreed upon services. Additionally, Vivint cross charges Wireless for items not included in the TSA but that are paid for by Vivint on behalf of Wireless. There were no transactions associated with these services for the year ended December 31, 2021 and $1.3 million for each of the years ended December 31, 2020 and 2019. There were no balances due to or from Wireless as of December 31, 2021 and 2020.

Transactions with Blackstone

On November 16, 2012, the Company was acquired by an investor group comprised of certain investment funds affiliated with Blackstone Capital Partners VI L.P., and certain co-investors and management investors through certain mergers and related reorganization transactions (collectively, the “Reorganization”). In connection with the Reorganization, the Company engaged Blackstone Management Partners L.L.C. (“BMP”) to provide monitoring, advisory and consulting services on an ongoing basis. In consideration for these services, the Company agreed to pay an annual monitoring fee equal to the greater of (i) a minimum base fee of $2.7 million subject to adjustments if the Company engages in a business combination or disposition that is deemed significant and (ii) the amount of the monitoring fee paid in respect of the immediately preceding fiscal year, without regard to any post-fiscal year “true-up” adjustments as determined by the agreement. The Company incurred expenses for such services of approximately $5.7 million, $8.1 million and $5.6 million during the years ended December 31, 2021, 2020 and 2019, respectively and was included in general and administrative expense in the accompanying consolidated statement of operations. Accounts payable and accrued expenses and other current liabilities at December 31, 2021 and 2020 included liabilities of $0.7 million and $8.1 million, respectively to BMP related to the monitoring fee.

Under the support and services agreement, the Company also engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period but in no event shall the Company be obligated to pay more than $1.5 million during any calendar year. During the years ended December 31, 2021, 2020 and 2019 the Company incurred no costs associated with such services. Additionally, during the year ended December 31, 2019 the Company agreed to reimburse Blackstone for $1.8 million of certain other fees incurred by Blackstone for activities related to the Company and was included in general and administrative expenses in the accompanying consolidated statement of operations. In October 2020, Blackstone provided an updated amount of fees in the amount of $1.3 million. This amount was paid in the fourth quarter of 2021.

In connection with the execution of the Merger Agreement, the Company and the parties to the support and services agreement entered into an amended and restated support and services agreement with BMP. The amended and restated support and services agreement became effective upon the consummation of the Merger and amended and restated the existing support and services agreement to, upon the consummation of the merger, (a) eliminate the requirement to pay a milestone payment to BMP upon the occurrence of an IPO, (b) for any fiscal year beginning after the consummation of the merger, (i) eliminate the Minimum Annual Fee and (ii) decrease the “true-up” of the annual Monitoring Fee payment to BMP to 1% of consolidated EBITDA and (c) upon the earlier of (1) the completion of Legacy Vivint Smart Home’s fiscal year ending December 31, 2021 or (2) the date upon which Blackstone owns less than 5% of the voting power of all of the shares of capital stock entitled to vote generally in the election of directors of Vivint Smart Home’s or its direct or indirect controlling parent, and such stake has a fair market value (as determined by Blackstone) of less than $25 million (the “Exit Date”), the annual Monitoring Fee payment to BMP otherwise payable in connection with the agreement will cease and no other milestone payment or other similar payment will be owed by the Company to BMP.

Under the amended and restated support and services agreement, the Company and Legacy Vivint Smart Home have, through the Exit Date (or an earlier date determined by BMP), engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP may, at any time, choose not to provide any such services. Such services are provided without charge, other than for the reimbursement of out-of-pocket expenses as set forth in the amended and restated support and services agreement.

From time to time, the Company does business with a number of other companies affiliated with Blackstone.

Related Party Debt     

Affiliates of Blackstone participated as initial purchasers, arrangers, or creditors of the 2027 notes and term loan facility amendment and restatement in February 2020 and again in the 2029 notes and term loan facility amendment and restatement in July 2021 and received approximately $1.3 million and $3.0 million, respectively, of fees associated with these transactions. As of December 31, 2021, affiliates of Blackstone held $201.2 million and $18.5 million in the Term Loan Facility and 2029 Notes, respectively. As of December 31, 2020, affiliates of Blackstone held $166.1 million of outstanding aggregate principal of the Term Loan Facility.

In February 2020 and July 2021, an affiliate of Fortress participated as a lender in the amended and restated term loan facility and received approximately $0.9 million and $0.8 million in lender fees, respectively. As of December 31, 2021, Fortress held $11.7 million and $119.7 million in the 2027 Notes and Term Loan Facility, respectively. As of December 31, 2020, Fortress held $72.5 million, $19.9 million, $11.7 million and $173.7 million in the 2023 Notes, 2024 Notes, 2027 Notes and Term Loan Facility, respectively.

In July 2019, 313 Acquisition LLC contributed $4.7 million to the Company as a capital contribution.

Transactions involving related parties cannot be presumed to be carried out at an arm’s-length basis.

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Segment Reporting and Business Concentrations

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Reporting and Business Concentrations

Segment Reporting and Business Concentrations

For the years ended December 31, 2021, 2020 and 2019, the Company conducted business through one operating segment, Vivint. The Company primarily operated in two geographic regions: United States and Canada. Revenues by geographic region were as follows (in thousands):

	United States		Canada		Total
Revenue from external customers
Year ended December 31, 2021	$	1,418,700	$	60,688	$	1,479,388
Year ended December 31, 2020	$	1,186,218	$	66,049	$	1,252,267
Year ended December 31, 2019	$	1,079,246	$	71,854	$	1,151,100

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Employee Benefit Plan

12 Months Ended

Dec. 31, 2021

Postemployment Benefits [Abstract]

Employee Benefit Plan

Employee Benefit Plan

The Company offers eligible employees the opportunity to contribute a percentage of their earned income into company-sponsored 401(k) plans.

From January 1, 2018 through May 2, 2020, participants in the 401(k) plans were eligible for the Company's matching program. This matching program was suspended, effective May 2, 2020 and reinstated, effective January 1, 2021. Additionally, at the end of 2020, the Company made a one-time contribution to the matching program.

Under this reinstated program, the Company matches an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 3% of such employee’s eligible earnings and $0.50 for every $1.00 for the next 2% of such employee’s eligible earnings. The maximum match available under the 401(k) plan is 4% of the employee’s eligible earnings. All contributions under the reinstated program vest immediately.

Matching contributions that were made to the plans during the years ended December 31, 2021, 2020 and 2019 totaled $10.3 million and $4.3 million, and $6.5 million, respectively.

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Basic and Diluted Net Loss Per Share

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

Basic and Diluted Net Loss Per Share

The Company computes basic loss per share by dividing loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock. The calculation of diluted loss per share requires that, to the extent the average market price of the underlying shares for the reporting period exceeds the exercise price of the warrants, and the presumed exercise of such securities are dilutive to net loss per share for the period, an adjustment to net loss available to common stockholders used in the calculation is required to remove the change in fair value of the warrants from the numerator for the period. Likewise, an adjustment to the denominator is required to reflect the related dilutive shares, if any, under the treasury stock method. As a result of the Business Combination, the Company has retrospectively adjusted the weighted average number of common shares outstanding prior to January 17, 2020 by multiplying them by the exchange ratio used to determine the number of common shares into which they converted.

The following table sets forth the computation of the Company’s basic and diluted net loss attributable per share to common stockholders for the years ended December 31, 2021, 2020 and 2019:

	Year ended December 31,
	2021		2020		2019
Numerator:
Net loss attributable to common stockholders	$	(305,552)	$	(603,331)	$	(400,696)
Gain on change in fair value of warrants, diluted	(50,967)		—		—
Net loss attributable to common stockholders, diluted (in thousands)	(356,519)		(603,331)		(400,696)
Denominator:
Shares used in computing net loss attributable per share to common stockholders, basic and diluted	208,265,631		179,071,278		94,805,201
Weighted-average effect of potentially dilutive shares to purchase common stock	812,536		—		—
Shares used in computing net loss attributable per share to common stockholders, diluted	209,078,167		179,071,278		94,805,201
Net loss attributable per share to common stockholders:
Basic	$	(1.47)	$	(3.37)	$	(4.23)
Diluted	$	(1.71)	$	(3.37)	$	(4.23)

The following table discloses securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for all periods presented:

	As of December 31,
	2021	2020	2019
Rollover SARs	2,004,712	2,474,011	3,603,537
Rollover LTIPs	—	2,316,869	4,633,738
RSUs	9,570,667	8,692,347	51,929
PSUs	9,643,666	4,877,277	—
Public warrants	—	878,346	—
Private placement warrants	—	5,933,334	—
Earnout shares reserved for future issuance	24,060	1,260,281	—

See Note 7 for additional information regarding the earnout shares and see Note 14 for additional information regarding the terms of the Rollover SARs, Rollover LTIPs, RSUs, PSUs, earnout shares and public and private placement warrants.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company has prepared the accompanying consolidated financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”). Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.

On January 17, 2020 (the “Closing Date”), the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated September 15, 2019, by and among the Company, Merger Sub, and Legacy Vivint Smart Home, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 18, 2019, by and among the Company, Merger Sub and Legacy Vivint Smart Home. (See Note 5 “Business Combination” for further discussion).

Pursuant to the terms of the Merger Agreement, a business combination between the Company and Legacy Vivint Smart Home was effected through the merger of Merger Sub with and into Legacy Vivint Smart Home, with Legacy Vivint Smart Home surviving as the surviving company (the “Business Combination”). Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Vivint Smart Home, Inc. is treated as the acquired company and Legacy Vivint Smart Home is treated as the acquirer for financial statement reporting and accounting purposes. Legacy Vivint Smart Home has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Legacy Vivint Smart Home’s shareholders prior to the Business Combination had the greatest voting interest in the combined entity;

•Prior to the Business Combination, Legacy Vivint Smart Home’s directors represented the majority of the Vivint Smart Home board of directors;         

•Prior to the Business Combination, Legacy Vivint Smart Home’s senior management was the senior management of Vivint Smart Home; and         

•Prior to the Business Combination, Legacy Vivint Smart Home was the larger entity based on historical total assets and revenues.

As a result of Legacy Vivint Smart Home being the accounting acquirer, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Legacy Vivint Smart Home is the predecessor and legal successor to the Company. The historical operations of Legacy Vivint Smart Home are deemed to be those of the Company. Thus, the financial statements included in this Annual Report reflect (i) the historical operating results of Legacy Vivint Smart Home prior to the Business Combination; (ii) the combined results of the Company and Legacy Vivint Smart Home following the Business Combination on January 17, 2020; (iii) the assets and liabilities of Legacy Vivint Smart Home at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of Legacy Vivint Smart Home in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Legacy Vivint Smart Home.

In connection with the Business Combination, Mosaic Acquisition Corp. changed its name to Vivint Smart Home, Inc. The Company’s Common Stock is now listed on the NYSE under the symbol “VVNT”. Prior to the Business Combination, the Company neither engaged in any operations nor generated any revenue. Until the Business Combination, based on the Company’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Vivint Flex Pay

Vivint Flex Pay

The Vivint Flex Pay plan (“Vivint Flex Pay”) became the Company’s primary equipment financing model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint’s smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through third-party financing providers (“Consumer Financing Program” or “CFP”) (2) the Company generally offers a limited number of customers not eligible for the Consumer Financing Program, but who qualify under the Company’s underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card or by obtaining short-term financing (generally no more than six month installment terms) through the Company.

Although customers pay separately for Products and Services under the Vivint Flex Pay plan, the Company has determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. For RICs, gross deferred revenues are reduced by imputed interest and estimated write-offs. For Products financed through the CFP, gross deferred revenues are reduced by (i) any fees the third-party financing provider (“Financing Provider”) is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to the Financing Providers.

Under the CFP, qualified customers are eligible for financing offerings (“Loans”) originated by Financing Providers of between $150 and $6,000. The terms of most Loans are determined based on the customer’s credit quality. The annual percentage rates on these loans is either 0% or 9.99%, depending on the customer's credit quality, and the Loans are issued on either an installment or revolving basis with repayment terms ranging from with a 6- to 60-months.

For certain Financing Provider Loans:

•The Company pays a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding Loans.

•The Company incurs fees at the time of the Loan origination and receives proceeds that are net of these fees.

•The Company also shares liability for credit losses, with the Company being responsible for between 2.6% and

100% of lost principal balances.

•The Company is responsible for reimbursing certain Financing Providers for merchant transaction fees and other fees associated with the Loans.

Because of the nature of these provisions, the Company records a derivative liability at its fair value when the Financing Provider originates Loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by the Company to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Consolidated Statement of Operations. (See Note 11).

For certain other Loans, the Company receives net proceeds (net of fees and expected losses) for which the Company has no further obligation to the Financing Provider. The Company records these net proceeds to deferred revenue.

Retail Installment Contract Receivables

Retail Installment Contract Receivables

For subscribers that enter into a RIC to finance the purchase of Products, the Company records a receivable for the amount financed. Gross RIC receivables are reduced for (i) expected write-offs of uncollectible balances over the term of the RIC and (ii) a present value discount of the expected cash flows using a risk adjusted market interest rate. Therefore, the RIC receivables equal the present value of the expected cash flows to be received by the Company over the term of the RIC, evaluated on a pool basis. RICs are pooled based on customer credit quality, contract length and geography. At the time of installation, the Company records a long-term note receivable within long-term notes receivables and other assets, net on the consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the consolidated balance sheets.

The Company imputes the interest on the RIC receivable using a risk adjusted market interest rate and records it as a reduction to deferred revenue and as an adjustment to the face amount of the related receivable. The risk adjusted interest rate considers a number of factors, including credit quality of the subscriber base and other qualitative considerations such as macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the consolidated statements of operations.

When the Company determines that there are RIC receivables that have become uncollectible, it records an adjustment to the allowance and reduces the related note receivable balance. On a regular basis, the Company also assesses the expected remaining cash flows based on historical RIC write-off trends, current market conditions and both Company and third-party forecast data. If the Company determines there is a change in expected remaining cash flows, the total amount of this change for all RICs is recorded in the current period to the provision for credit losses, which is included in general and administrative expenses in the accompanying consolidated statements of operations. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due.

Revenue Recognition

Revenue Recognition

The Company offers its customers smart home services combining Products, including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary back-end cloud platform software and Services. These together create an integrated system that allows the Company’s customers to monitor, control and protect their home (“Smart Home Services”). The Company’s customers are buying this integrated system that provides them with these Smart Home Services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Smart Home Services, the Company has concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights and obligations. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.

The majority of the Company’s subscription contracts are between three and five years in length and are generally non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for Smart Home Services is generally due in advance on a monthly basis.

Sales of Products and other one-time fees such as service or installation fees are invoiced to the customer at the time of sale. Revenues for any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.

Beginning in late 2020, the Company began operating as a third-party dealer for residential solar installers in several states throughout the U.S, whereby the Company earns a commission from the installer for selling their solar services. Because there are no further performance obligations once the installation is complete, revenue is recognized at that time.

To date, revenues from the Smart Insurance business have been immaterial to our overall financial results.

Deferred Revenue

The Company's deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home Services. Deferred revenues are recognized over the term of the related performance obligation, which is generally three to five years.

Accounts Receivable

Accounts Receivable

Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring Services, amounts due from Financing Providers and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and are non-interest bearing and are included within accounts and notes receivable, net on the consolidated balance sheets. Accounts receivable totaled $26.4 million and $19.8 million and December 31, 2021 and 2020, respectively net of the allowance for doubtful accounts of $13.3 million and $9.9 million at December 31, 2021 and 2020, respectively. The Company estimates this allowance based on historical collection experience, subscriber attrition rates, current market conditions and both Company and third-party forecast data. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in the accompanying consolidated statements of operations.

Restructuring and Asset Impairment Charges

Restructuring and Asset Impairment ChargesRestructuring and asset impairment charges represent expenses incurred in relation to activities to exit or dispose of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 12).

Principles of Consolidation

Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of Vivint Smart Home, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Capitalized Contract Costs

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company calculates amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortizes those deferred contract costs on a straight-line basis over the expected period of benefit that the Company has determined to be five years, consistent with the pattern in which the Company provides services to its customers. The Company believes this pattern of amortization appropriately reduces the carrying value of the capitalized contract costs over time to reflect the decline in the value of the assets as the remaining period of benefit for each monthly portfolio of contracts decreases. The period of benefit of five years is longer than a typical contract term because of anticipated contract renewals. The Company applies this period of benefit to its entire portfolio of contracts. The Company updates its estimate of the period of benefit periodically and whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations.

The carrying amount of the capitalized contract costs is periodically reviewed for impairment. In performing this review, the Company considers whether the carrying amount of the capitalized contract costs will be recovered. In estimating the amount of consideration the Company expects to receive in the future related to capitalized contract costs, the Company considers factors such as attrition rates, economic factors, and industry developments, among other factors. If it is determined that capitalized contract costs are impaired, an impairment loss is recognized for the amount by which the carrying amount of the capitalized contract costs and the anticipated costs that relate directly to providing the future services exceed the consideration that has been received and that is expected to be received in the future. During the years ended December 31, 2021 and 2020, no impairment losses were recorded.

Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.

On the consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs - deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with remaining maturities when purchased of three months or less.

Inventories

InventoriesInventories, which are comprised of smart home and security system equipment and parts are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (FIFO) method. Inventories sold to customers as part of a smart home and security system are generally capitalized as contract costs. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.

Deferred Financing Costs

Deferred Financing Costs

Certain costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs associated with obtaining the APX Group, Inc.’s (“APX”) revolving credit facility are amortized over the amended maturity dates discussed in Note 6. Deferred financing costs associated with the revolving credit facility reported in the accompanying consolidated balance sheets as deferred financing costs, net at December 31, 2021 and 2020 were $2.1 million and $1.7 million, net of accumulated amortization of $11.5 million and $11.0 million, respectively. Deferred financing costs included in the accompanying consolidated balance sheets within notes payable, net at December 31, 2021 and 2020 were $34.3 million and $27.2 million, net of accumulated amortization of $77.4 million and $70.9 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying consolidated statements of operations totaled $6.9 million, $7.9 million and $9.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Residual Income Plans

Residual Income Plans

The Company has a program that allows certain third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create (the “Channel Partner Plan”). The Company also has a residual sales compensation plan (the “Residual Plan”) under which the Company's sales personnel (each, a “Plan Participant”) receive compensation based on the performance of certain underlying contracts they created in prior years.

For both the Channel Partner Plan and Residual Plan, the Company calculates the present value of the expected future residual payments and records a liability for this amount in the period the subscriber account is originated. These costs are recorded to capitalized contract costs. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability. The current portion of the liability included in accrued payroll and commissions was $4.3 million and $4.1 million as of December 31, 2021 and 2020, respectively, and the noncurrent portion included in other long-term obligations was $23.2 million and $23.8 million at December 31, 2021 and 2020, respectively.

Stock-Based Compensation

Stock-Based Compensation

The Company measures compensation expense for all stock-based awards based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards. The Company accounts for forfeitures as they occur (See Note 14).

Advertising Expense

Advertising Expense Advertising costs are expensed as incurred.

Income Taxes

Income Taxes

The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment.

Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows (See Note 13)

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.

Concentrations of Supply Risk

Concentrations of Supply Risk

As of December 31, 2021, approximately 95% of the Company’s installed panels were the Company's proprietary SkyControl or Smart Hub panels and 5% were 2GIG Go!Control panels. The loss of the Company’s SkyControl panel supplier could potentially impact its operating results or financial position.

Fair Value Measurement

Fair Value Measurement

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:

Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.

Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the years ended December 31, 2021, 2020, and 2019.

The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.

Goodwill

GoodwillThe Company tests goodwill at the reporting unit level for impairment annually as of October 1 and on an interim basis when events occur or circumstances exist that indicate the carrying value may no longer be recoverable. The company compares the fair value of our reporting units with the carrying amount, including goodwill. The Company recognizes an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value. The Company’s reporting units are determined based on its current reporting structure, which as of December 31, 2021 consisted of one reporting unit. As of December 31, 2021, there were no changes in facts and circumstances since the most recent annual impairment analysis to indicate impairment existed.

Foreign Currency Translation and Other Comprehensive Income

Foreign Currency Translation and Other Comprehensive Income

The functional currency of Vivint Canada, Inc. is the Canadian dollar. Accordingly, Vivint Canada, Inc. assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and Vivint Canada, Inc. revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown as a separate component of equity.

When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ (deficit) equity as accumulated other comprehensive loss or income. When intercompany transactions are deemed to be of a short-term nature, translation

adjustments are required to be included in the consolidated statement of operations. The Company has determined that settlement of Vivint Canada, Inc. intercompany balances are anticipated and therefore such balances are deemed to be of a short-term nature. Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)

	For the Years Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Translation gain	$	(423)	$	(602)	$	(3,400)

Letters of Credit

Letters of Credit

As of December 31, 2021 and 2020, the Company had $14.0 million and $15.3 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.

Derivative warrant liabilities

Derivative Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is assessed as part of this evaluation.

The Company accounts for its public warrants and private placement warrants as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are re-measured at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.

Accounting Pronouncements Issued But Not Yet Adopted

Accounting Pronouncements Issued But Not Yet AdoptedIn March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, respectively. Together, the ASUs provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The Company can elect to apply the amendments through December 31, 2022. As of December 31, 2021, the Company had not utilized any of the expedients discussed within this ASU; however, it continues to assess its agreements to determine whether the expedients would be utilized through the allowed period of December 31, 2022.

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Revisions of Previously-Issued Financial Statements (Tables)

12 Months Ended

Dec. 31, 2021

Accounting Changes and Error Corrections [Abstract]

Schedule of Impact of the Restatement

The following tables present the revised results for each previously reported period, the adjustments made to each period and the previously reported amounts to summarize the effect of the corrections on the previously reported Balance Sheets and Statements of Operations for the periods presented (in thousands, except per-share amounts). These errors did not impact total cash flows from operating, investing or financing activities as presented in the Statement of Cash Flows for any period.

Consolidated Balance Sheets	As of December 31, 2020
	As Previously Reported	Adjustment	As Revised
Long-term notes receivables and other assets, net	62,510	(4,193)	58,317
Total assets	2,876,618	(4,193)	2,872,425
Deferred revenue	321,143	6,489	327,632
Total current liabilities	767,057	6,489	773,546
Deferred revenue, net of current portion	615,598	5,584	621,182
Total liabilities	4,449,841	12,073	4,461,914
Accumulated deficit	(3,095,220)	(16,266)	(3,111,486)
Total stockholders’ deficit	(1,573,223)	(16,266)	(1,589,489)
Total liabilities and stockholders’ deficit	2,876,618	(4,193)	2,872,425

Consolidated Statements of Operations	Year Ended December 31, 2020
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,260,566	$	(8,299)	$	1,252,267
General and administrative expenses	266,335		1,588		267,923
Total costs and expenses	1,512,737		1,588		1,514,325
Loss from operations	(252,171)		(9,887)		(262,058)
Loss before income taxes	(592,361)		(9,887)		(602,248)
Income tax expense	2,837		(1,754)		1,083
Net loss	(595,198)		(8,133)		(603,331)
Comprehensive loss	(594,541)		(8,133)		(602,674)
Net loss attributable per share to common stockholders:
Basic and diluted	(3.32)		(0.05)		(3.37)

Consolidated Statements of Operations	Year Ended December 31, 2019
	As Previously Reported		Adjustment		As Revised
Recurring and other revenue	$	1,155,981	$	(4,881)	$	1,151,100
Selling expenses	193,359		(1,559)		191,800
General and administrative expenses	192,182		1,298		193,480
Depreciation and amortization	543,440		152		543,592
Total costs and expenses	1,298,266		(109)		1,298,157
Loss from operations	(142,285)		(4,772)		(147,057)
Loss before income taxes	(394,611)		(4,772)		(399,383)
Net loss	(395,924)		(4,772)		(400,696)
Comprehensive loss	(394,553)		(4,772)		(399,325)
Net loss attributable per share to common stockholders:
Basic and diluted	(4.18)		(0.05)		(4.23)

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Schedule of Changes in Company's Allowance for Accounts Receivable

The changes in the Company’s allowance for doubtful accounts were as follows for the periods ended (in thousands):

	Year ended December 31,
	2021		2020		2019
Beginning balance	$	9,911	$	8,118	$	5,594
Provision for doubtful accounts	31,341		23,778		25,043
Write-offs and adjustments	(27,981)		(21,985)		(22,519)
Balance at end of period	$	13,271	$	9,911	$	8,118

Schedule Of Depreciation And Amortization Expense

The Company’s depreciation and amortization included in the consolidated statements of operations consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Amortization of capitalized contract costs	$	524,981	$	481,213	$	437,437
Amortization of definite-lived intangibles	60,004		69,465		80,468
Depreciation and amortization of property, plant and equipment	16,467		20,153		25,687
Total depreciation and amortization	$	601,452	$	570,831	$	543,592

Schedule of Intercompany Foreign Currency Balances

Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)

	For the Years Ended
	December 31, 2021		December 31, 2020		December 31, 2019
Translation gain	$	(423)	$	(602)	$	(3,400)

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Retail Installment Contract Receivables (Tables)

12 Months Ended

Dec. 31, 2021

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Changes in Company's Allowance for Accounts Receivable

The changes in the Company’s allowance for doubtful accounts were as follows for the periods ended (in thousands):

	Year ended December 31,
	2021		2020		2019
Beginning balance	$	9,911	$	8,118	$	5,594
Provision for doubtful accounts	31,341		23,778		25,043
Write-offs and adjustments	(27,981)		(21,985)		(22,519)
Balance at end of period	$	13,271	$	9,911	$	8,118

Retail Installment Contracts

Accounts, Notes, Loans and Financing Receivable [Line Items]

Schedule of Changes in Company's Allowance for Accounts Receivable

The following table summarizes the RIC receivables (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC receivables, gross	$	90,204	$	138,926
RIC allowance	(12,384)		(27,061)
Imputed interest	(7,469)		(13,275)
RIC receivables, net	$	70,351	$	98,590
Classified on the consolidated balance sheets as:
Accounts and notes receivable, net	$	37,270	$	44,931
Long-term notes receivables and other assets, net	33,081		53,659
RIC receivables, net	$	70,351	$	98,590

Schedule of Allowance for Credit Losses on Financing Receivables

The changes in the Company’s RIC allowance were as follows (in thousands):

	For the Years Ended
	December 31, 2021		December 31, 2020
RIC allowance, beginning of period	$	27,061	$	38,110
Write-offs	(13,714)		(21,841)
Recoveries	3,446		6,340
Additions from RICs originated during the period	6,795		7,567
Change in expected credit losses	(10,995)		(2,914)
Other adjustments (1)	(209)		(201)
RIC allowance, end of period	$	12,384	$	27,061

(1) Other adjustments primarily reflect changes in foreign currency exchange rates related to Canadian RICs.

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Summary of Debt

The Company’s debt at December 31, 2021 and 2020 consisted of the following (in thousands):

	December 31, 2021
	Outstanding Principal	Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
6.750% Senior Secured Notes Due 2027	600,000	—		(4,835)		595,165
5.750% Senior Notes Due 2029	800,000	—		(11,154)		788,846
Senior Secured Term Loan - noncurrent	1,333,125	—		(18,291)		1,314,834
Total Long-Term Debt	2,733,125	—		(34,280)		2,698,845
Senior Secured Term Loan - current	13,500	—		—		13,500
Total Debt	2,746,625	$	—	$	(34,280)	$	2,712,345

        

	December 31, 2020
	Outstanding Principal		Unamortized Premium (Discount)		Unamortized Deferred Financing Costs (1)		Net Carrying Amount
Long-Term Debt:
7.875% Senior Secured Notes Due 2022	$	677,000	$	7,885	$	(4,697)	$	680,188
7.625% Senior Notes Due 2023	400,000		—		(2,241)		397,759
8.500% Senior Secured Notes Due 2024	225,000		—		(3,530)		221,470
6.750% Senior Secured Notes Due 2027	600,000		—		(5,771)		594,229
Senior Secured Term Loan - noncurrent	933,375		—		(10,921)		922,454
Total Long-Term Debt	2,835,375		7,885		(27,160)		2,816,100
Senior Secured Term Loan - current	9,500						9,500
Total Debt	$	2,844,875	$	7,885	$	(27,160)	$	2,825,600

(1) Unamortized deferred financing costs related to the revolving credit facilities included in deferred financing costs, net on the consolidated balance sheets at December 31, 2021 and 2020 was $2.1 million and $1.7 million, respectively.

Schedule Of Other Expense And Loss On Extinguishment And Deferred Financing Costs

As a result of these analyses, the following amounts of other expense and loss on extinguishment and deferred financing costs were recorded (in thousands):

	Other expense and loss on extinguishment								Deferred financing costs
Issuance	Original premium extinguished		Previously deferred financing costs extinguished		New financing costs		Total other expense and loss on extinguishment		Previously deferred financing rolled over		New deferred financing costs		Total deferred financing costs
For the year ended December 31, 2021
2029 Notes issuance - July 2021	$	(5,656)	$	8,016	$	17,187	$	19,547	$	—	$	11,767	$	11,767
Term Loan issuance - July 2021	—		1,499		9,165		10,664		8,148		11,302		19,450
Total	$	(5,656)	$	9,515	$	26,352	$	30,211	$	8,148	$	23,069	$	31,217
For the year ended December 31, 2020
2027 Notes issuance - February 2020	$	(2,749)	$	4,033	$	6,146	$	7,430	$	205	$	6,346	$	6,551
Term Loan issuance - February 2020	—		235		5,045		5,280		6,973		5,461		12,434
Total	$	(2,749)	$	4,268	$	11,191	$	12,710	$	7,178	$	11,807	$	18,985
For the year ended December 31, 2019
2024 Notes issuance - May 2019	$	(588)	$	1,395	$	—	$	807	$	—	$	4,956	$	4,956

Schedule of Deferred Finance Activity

The following tables present deferred financing activity for the years ended December 31, 2021 and 2020 (in thousands):

	Unamortized Deferred Financing Costs
	Balance December 31, 2020		Additions		Early Extinguishment		Amortized		Balance December 31, 2021
Revolving Credit Facility	$	1,667	$	843	$	—	$	(422)	$	2,088
2022 Notes	4,697		—		(3,314)		(1,383)		—
2023 Notes	2,241		—		(1,681)		(560)		—
2024 Notes	3,530		—		(3,021)		(509)		—
2027 Notes	5,771		—		—		(936)		4,835
2029 Notes	—		11,767		—		(614)		11,153
Term Loan	10,921		11,302		(1,499)		(2,434)		18,290
Total Deferred Financing Costs	$	28,827	$	23,912	$	(9,515)	$	(6,858)	$	36,366

	Unamortized Deferred Financing Costs
	Balance December 31, 2019		Additions		Early Extinguishment		Amortized		Balance December 31, 2020
Revolving Credit Facility	$	1,123	$	1,027	$	—	$	(483)	$	1,667
2020 Notes	1,721		—		(1,565)		(156)		—
2022 Private Placement Notes	451		(205)		(221)		(25)		—
2022 Notes	9,532		—		(2,247)		(2,588)		4,697
2023 Notes	3,081		—		—		(840)		2,241
2024 Notes	4,431		—		—		(901)		3,530
2027 Notes	—		6,551		—		(780)		5,771
Term Loan	$	7,822	$	5,461	$	(235)	$	(2,127)	10,921
Total Deferred Financing Costs	$	28,161	$	12,834	$	(4,268)	$	(7,900)	$	28,827

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Business Combination (Tables)

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Information Related to Business Combination

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended December 31, 2021:

	Recapitalization
	(in thousands)
Cash - Mosaic (net of redemptions)	$	35,344
Cash - Subscribers and Forward Purchasers	453,221
Less fees to underwriters and other transaction costs	(25,043)
Net cash received from recapitalization	463,522
Less: Warrant derivative liabilities assumed	(40,094)
Less: non-cash net liabilities assumed from Mosaic	(5)
Less: deferred and accrued transaction costs	(1,304)
Net contributions from recapitalization	$	422,119

The number of shares of Common Stock of Vivint Smart Home Inc. issued immediately following the consummation of the Business Combination is summarized as follows:

	Number of Shares
Common Stock outstanding prior to Business Combination	34,500,000
Less redemption of Mosaic Shares	(31,074,592)
Common Stock of Mosaic	3,425,408
Shares issued from Fortress PIPE	12,500,000
Shares from Blackstone PIPE	10,000,000
Shares from Additional Forward Purchaser Subscription Agreement	5,000,000
Shares from IPO Forward Purchaser Investment	15,789,474
Shares from Fortress Subscription and Backstop Agreement	2,698,753
Shares from Mosaic Founder Shares	10,379,386
Recapitalization shares	59,793,021
Legacy Vivint Smart Home equity holders	94,937,597
Total shares	154,730,618

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Balance Sheet Components (Tables)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Balance Sheet Component Balances

The following table presents material balance sheet component balances as of December 31, 2021 and December 31, 2020 (in thousands):

	December 31,
	2021		2020
Prepaid expenses and other current assets
Prepaid expenses	$	12,791	$	11,286
Deposits	627		1,308
Other	5,967		1,744
Total prepaid expenses and other current assets	$	19,385	$	14,338
Capitalized contract costs
Capitalized contract costs	$	4,103,683	$	3,491,629
Accumulated amortization	(2,698,241)		(2,173,131)
Capitalized contract costs, net	$	1,405,442	$	1,318,498
Long-term notes receivables and other assets
RIC receivables, gross	$	52,934	$	93,995
RIC allowance	(12,384)		(27,061)
RIC imputed interest	(7,469)		(13,275)
Deferred income tax assets	2,022		—
Other	9,650		4,658
Total long-term notes receivables and other assets, net	$	44,753	$	58,317
Accrued payroll and commissions
Accrued commissions	47,879		46,353
Accrued payroll	$	35,468	$	41,590
Total accrued payroll and commissions	$	83,347	$	87,943
Accrued expenses and other current liabilities
Accrued interest payable	$	40,333	$	33,340
Current portion of derivative liability	140,394		142,755
Service warranty accrual	5,992		5,711
Current portion of warrant derivative liabilities	—		8,063
Accrued taxes	10,758		8,700
Accrued payroll taxes and withholdings	14,392		14,391
Loss contingencies	8,150		26,200
Other	16,231		8,164
Total accrued expenses and other current liabilities	$	236,250	$	247,324

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Property Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Components of Property and Equipment

Property, plant and equipment is recorded at historical cost less accumulated depreciation, which is calculated using the straight-line method over the estimated useful lives of the related assets, as follows (in thousands):

	December 31,				Estimated Useful Lives
	2021		2020
Vehicles	$	40,103	$	39,735	3-5 years
Computer equipment and software	83,479		72,616		3-5 years
Leasehold improvements	30,087		29,126		2-15 years
Office furniture, fixtures and equipment	22,327		21,394		2-7 years
Construction in process	11,089		6,180
Property, plant and equipment, gross	187,085		169,051
Accumulated depreciation and amortization	(131,637)		(116,672)
Property, plant and equipment, net	$	55,448	$	52,379

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The change in the carrying amount of goodwill during the year ended December 31, 2021 was the result of foreign currency translation adjustments. The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, were as follows (in thousands):

Balance as of January 1, 2020	$	836,540
Effect of Foreign Currency Translation	537
Balance as of December 31, 2020	837,077
Effect of Foreign Currency Translation	76
Balance as of December 31, 2021	$	837,153

Schedule of Intangible Asset Balances

The following table presents intangible asset balances as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Estimated Useful Lives
Definite-lived intangible assets:
Customer contracts	$	969,376	$	(920,617)	$	48,759	$	969,158	$	(862,352)	$	106,806	10 years
2GIG 2.0 technology	17,000		(17,000)		—		17,000		(17,000)		—		8 years
Other technology	4,725		(4,725)		—		4,725		(4,309)		416		2 - 7 years
Space Monkey technology	7,100		(7,100)		—		7,100		(7,100)		—		6 years
Patents	11,180		(8,076)		3,104		10,843		(6,656)		4,187		5 years
Total definite-lived intangible assets:	1,009,381		(957,518)		51,863		1,008,826		(897,417)		111,409
Indefinite-lived intangible assets:
Domain names	65		—		65		65		—		65
Total Indefinite-lived intangible assets	65		—		65		65		—		65
Total intangible assets, net	$	1,009,446	$	(957,518)	$	51,928	$	1,008,891	$	(897,417)	$	111,474

Schedule of Indefinite-Lived Intangible Assets

The following table presents intangible asset balances as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Estimated Useful Lives
Definite-lived intangible assets:
Customer contracts	$	969,376	$	(920,617)	$	48,759	$	969,158	$	(862,352)	$	106,806	10 years
2GIG 2.0 technology	17,000		(17,000)		—		17,000		(17,000)		—		8 years
Other technology	4,725		(4,725)		—		4,725		(4,309)		416		2 - 7 years
Space Monkey technology	7,100		(7,100)		—		7,100		(7,100)		—		6 years
Patents	11,180		(8,076)		3,104		10,843		(6,656)		4,187		5 years
Total definite-lived intangible assets:	1,009,381		(957,518)		51,863		1,008,826		(897,417)		111,409
Indefinite-lived intangible assets:
Domain names	65		—		65		65		—		65
Total Indefinite-lived intangible assets	65		—		65		65		—		65
Total intangible assets, net	$	1,009,446	$	(957,518)	$	51,928	$	1,008,891	$	(897,417)	$	111,474

Schedule of Estimated Future Amortization Expense of Intangible Assets Excluding Patents Currently in Process

Estimated future amortization expense of intangible assets, excluding approximately $0.1 million in patents currently in process, is as follows as of December 31, 2021 (in thousands): 

2022	$	49,889
2023	795
2024	610
2025	514
2026	4
Thereafter	—
Total estimated amortization expense	$	51,812

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Components of Long-Term Debt Including Associated Interest Rates and Related Fair Values

Components of the Company's debt including the associated interest rates and related fair values (in thousands, except interest rates) are as follows:

Issuance	December 31, 2021				December 31, 2020				Stated Interest Rate
	Face Value		Estimated Fair Value		Face Value		Estimated Fair Value
2022 Notes	—		—		677,000		677,203		7.875	%
2023 Notes	—		—		400,000		415,200		7.625	%
2024 Notes	—		—		225,000		238,545		8.500	%
2027 Notes	600,000		633,660		600,000		645,300		6.750	%
2029 Notes	800,000		795,680		—		—		5.750	%
Term Loan	1,346,625		1,346,625		942,875		942,875		N/A
Total	$	2,746,625	$	2,775,965	$	2,844,875	$	2,919,123

Schedule of Derivative Liabilities at Fair Value

The following table summarizes the fair value and the notional amount of the Company’s outstanding consumer financing program derivative instrument as of December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Consumer Financing Program Contractual Obligations:
Fair value	$	216,795	$	227,896
Notional amount	1,160,278		912,626
Classified on the consolidated balance sheets as:
Accrued expenses and other current liabilities	140,394		142,755
Other long-term obligations	76,401		85,141
Total Consumer Financing Program Contractual Obligation	$	216,795	$	227,896

Schedule of Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation

The following table summarizes the change in the fair value of the Level 3 outstanding derivative instrument for the years ended December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020
Balance, beginning of period	$	227,896	$	136,863
Additions	94,995		167,055
Settlements	(91,826)		(71,962)
Gains included in earnings	(14,270)		(4,060)
Balance, end of period	$	216,795	$	227,896

Schedule of Fair Value of Derivative Warranty Liabilities

The change in the fair value of the derivative warrant liabilities for the years ended December 31, 2021 and 2020 is summarized as follows (in thousands):

	Public Warrants		Private Placement Warrants		Total Derivative Warrant liability
Warrant liability assumed from the Business Combination	$	9,775	$	30,319	$	40,094
Change in fair value of warrant liability	64,038		45,212		109,250
Reclassification of derivative liabilities for exercised warrants	(65,750)		—		(65,750)
Balance, December 31, 2020	8,063		75,531		83,594
Change in fair value of warrant liability	1,350		$	(50,967)	(49,617)
Write-off fair value of unexercised expired warrants	(490)		$	—	(490)
Reclassification of derivative liabilities for exercised warrants	(8,923)		$	—	(8,923)
Balance, December 31, 2021	—		24,564		24,564

Schedule of Quantitative Information Regarding Level 3 Fair Value Measurements Inputs

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

	As of December 31, 2021			As of December 31, 2020
Number of private placement warrants	5,933,334			5,933,334
Exercise price	$	11.50		$	11.50
Stock price	$	9.78		$	20.75
Expiration term (in years)	3.05			4.05
Volatility	70		%	60		%
Risk-free Rate	0.98		%	0.27		%
Dividend yield	—		%	—		%

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Restructuring and Asset Impairment Charges (Tables)

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Schedule of Results of Operations of Wireless

The following financial information presents the results of operations of Wireless for the year ended December 31, 2019:

	Years Ended December 31,
	2019
Recurring and other revenue	$	2,808
Costs and expenses:
Operating expenses	$	5,455
Selling expenses	$	137
General and administrative expenses	$	5,291
Depreciation and amortization	$	68
Total costs and expenses	$	10,951
Loss from operations	$	(8,143)
Other expenses (income):
Interest expense	—
Other income, net	(2,100)
Net loss	$	(6,043)

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Income Tax Provision

The income tax expense consisted of the following (in thousands):

	Year ended December 31,
	2021		2020		2019
Current income tax:
Federal	$	—	$	—	$	—
State	2,359		2,174		703
Foreign	3,641		764		(2)
Total	6,000		2,938		701
Deferred income tax:
Federal	—		—		(380)
State	(263)		(851)		(73)
Foreign	(3,266)		(1,004)		1,065
Total	(3,529)		(1,855)		612
Income tax expense	$	2,471	$	1,083	$	1,313

Schedule of Reconciliation of Tax Expense Computed at Statutory Federal Rate and Company's Tax Expense

The following reconciles the tax benefit computed at the statutory federal rate and the Company’s tax expense (in thousands):

	Year ended December 31,
	2021		2020		2019
Computed expected tax benefit	$	(63,647)	$	(126,472)	$	(82,833)
State income taxes, net of federal tax effect	1,556		882		483
Foreign income taxes	221		(383)		232
Other reconciling items	(1,235)		(714)		2,988
Permanent differences	(8,753)		36,423		5,694
Excess deductible compensation limitation	10,463		9,667		1,313
Change in valuation allowance	63,866		81,680		73,436
Income tax expense	$	2,471	$	1,083	$	1,313

Schedule of Significant Portions of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands): 

	December 31,
	2021			2020
Gross deferred tax assets:
Net operating loss carryforwards	$	546,693		$	558,972
Deferred subscriber income	326,759			254,722
Interest expense limitation	142,919			119,402
Accrued expenses and allowances	56,495			52,031
Lease liabilities	13,356			15,342
Purchased intangibles and deferred financing costs	9,687			13,765
Inventory reserves	1,859			2,801
Research and development credits	41			41
Deferred capitalized contract costs	1,800			—
Property and equipment	1,888			2
Valuation allowance	(740,397)			(664,191)
Total	361,100			352,887
Gross deferred tax liabilities:
Deferred capitalized contract costs	(346,887)			(338,141)
Right of use assets	(11,430)			(13,119)
Purchased intangibles and deferred financing costs	(959)			(2,092)
Property and equipment	(443)			(1,703)
Total	(359,719)		-359719000	(355,055)
Net deferred tax assets (liabilities)	$	1,381		$	(2,168)

Summary of Net Operating Loss Carryforwards

The Company had gross operating loss carryforwards as follows (in thousands):

	December 31,
	2021		2020
Net operating loss carryforwards:
Federal	$	2,229,000	$	2,294,340
States	2,036,000		1,996,245
Total	$	4,265,000	$	4,290,585

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Stock-Based Compensation and Equity (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Summary of the SAR Activity

A summary of the Rollover SARs activity for the years ended December 31, 2021 and 2020 is presented below:

	Rollover SARs	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding, December 31, 2019	3,603,537	$	18.17	7.86	$	0.9
Forfeited	(1,055,978)	18.03
Exercised	(73,548)	12.35
Outstanding, December 31, 2020	2,474,011	17.59		6.60	7.8
Forfeited	(409,566)	18.50
Exercised	(59,733)	9.32
Outstanding, December 31, 2021	2,004,712	17.65		5.62	—
Unvested Rollover SARs expected to vest after December 31, 2021	—	—		—	—
Exercisable at December 31, 2021	2,004,712	$	17.65	5.62	—

Summary of Earnout Grant Activitiy

A summary of the earnout share activity for those that were subject to stock-based compensation expense under ASC 718, for the year ended December 31, 2021 is presented below:

	Shares	Weighted Average Grant-Date Fair Value per Share
Unvested at December 31, 2020	412,816	$	21.98
Granted	847,141	23.08
Vested	(1,235,897)	22.73
Unvested at December 31, 2020	24,060	21.98

Summary of Restricted Stock Unit Activity

The following summarizes information about RSU transactions for the year ended December 31, 2021:

	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	8,640,418	$	22.76
Modified	(1,842,146)	22.86
Granted	5,865,475	13.33
Vested	(2,162,984)	22.62
Forfeited	(930,096)	20.43
Unvested at December 31, 2021	9,570,667	16.12

Summary of Performance Stock Unit Activity

The following summarizes information about PSU transactions for the year ended December 31, 2021:

	Units	Weighted Average Grant-Date Fair Value per Unit
Unvested at December 31, 2020	4,877,277	$	22.67
Modified	1,842,146	22.86
Granted	5,993,063	15.72
Vested	(2,348,957)	22.83
Forfeited	(719,863)	19.12
Unvested at December 31, 2021	9,643,666	17.23

Schedule of Stock-Based Compensation Expense

Stock-based compensation expense in connection with all stock-based awards for the years ended December 31, 2021, 2020 and 2019 is allocated as follows (in thousands):

	Year ended December 31,
	2021		2020		2019
Operating expenses	$	16,567	$	20,157	$	320
Selling expenses	103,239		101,623		508
General and administrative expenses	46,622		76,433		3,413
Total stock-based compensation	$	166,428	$	198,213	$	4,241

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Leases (Tables)

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Schedule of Lease Expense and Supplemental Cash Flow Information

The components of lease expense were as follows (in thousands):

	Year ended December 31,
	2021		2020
Operating lease cost	$	15,689	$	16,784
Finance lease cost:
Amortization of right-of-use assets	$	2,375	$	5,090
Interest on lease liabilities	264		453
Total finance lease cost	$	2,639	$	5,543

Supplemental cash flow information related to leases was as follows (in thousands):

	Year ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(16,877)	$	(17,635)
Operating cash flows from finance leases	(264)		(453)
Financing cash flows from finance leases	(3,158)		(7,657)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	4,490	$	3,420
Finance leases	1,808		1,228

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):

	Year ended December 31,
	2021			2020
Operating Leases
Operating lease right-of-use assets	$	46,000		$	52,880
Current operating lease liabilities	$	12,033		$	12,135
Operating lease liabilities	41,713			49,692
Total operating lease liabilities	$	53,746		$	61,827
Finance Leases
Property, plant and equipment, gross	$	40,939		$	40,571
Accumulated depreciation	(24,465)			(22,976)
Property, plant and equipment, net	$	16,474		$	17,595
Current finance lease liabilities	$	2,854		$	3,356
Finance lease liabilities	1,416			2,460
Total finance lease liabilities	$	4,270		$	5,816
Weighted Average Remaining Lease Term
Operating leases	5 years			5 years
Finance leases	2.7 years			1.6 years
Weighted Average Discount Rate
Operating leases	7		%	7		%
Finance leases	4		%	4		%

Schedule of Maturities of Financing Leases Liabilities

Maturities of lease liabilities were as follows (in thousands):

	Operating Leases		Finance Leases
Year Ending December 31,
2022	$	15,858	$	3,025
2023	15,199		847
2024	14,392		514
2025	8,764		—
2026	5,008		—
Thereafter	4,494		—
Total lease payments	63,715		4,386
Less imputed interest	(9,969)		(116)
Total	$	53,746	$	4,270

Schedule of Maturities of Operating Leases Liabilities

Maturities of lease liabilities were as follows (in thousands):

	Operating Leases		Finance Leases
Year Ending December 31,
2022	$	15,858	$	3,025
2023	15,199		847
2024	14,392		514
2025	8,764		—
2026	5,008		—
Thereafter	4,494		—
Total lease payments	63,715		4,386
Less imputed interest	(9,969)		(116)
Total	$	53,746	$	4,270

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Segment Reporting and Business Concentrations (Tables)

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Revenues and Long-Lived Assets by Geographic Region

Revenues by geographic region were as follows (in thousands):

	United States		Canada		Total
Revenue from external customers
Year ended December 31, 2021	$	1,418,700	$	60,688	$	1,479,388
Year ended December 31, 2020	$	1,186,218	$	66,049	$	1,252,267
Year ended December 31, 2019	$	1,079,246	$	71,854	$	1,151,100

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Basic and Diluted Net Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of the Company’s basic and diluted net loss attributable per share to common stockholders for the years ended December 31, 2021, 2020 and 2019:

	Year ended December 31,
	2021		2020		2019
Numerator:
Net loss attributable to common stockholders	$	(305,552)	$	(603,331)	$	(400,696)
Gain on change in fair value of warrants, diluted	(50,967)		—		—
Net loss attributable to common stockholders, diluted (in thousands)	(356,519)		(603,331)		(400,696)
Denominator:
Shares used in computing net loss attributable per share to common stockholders, basic and diluted	208,265,631		179,071,278		94,805,201
Weighted-average effect of potentially dilutive shares to purchase common stock	812,536		—		—
Shares used in computing net loss attributable per share to common stockholders, diluted	209,078,167		179,071,278		94,805,201
Net loss attributable per share to common stockholders:
Basic	$	(1.47)	$	(3.37)	$	(4.23)
Diluted	$	(1.71)	$	(3.37)	$	(4.23)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table discloses securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because to do so would have been antidilutive for all periods presented:

	As of December 31,
	2021	2020	2019
Rollover SARs	2,004,712	2,474,011	3,603,537
Rollover LTIPs	—	2,316,869	4,633,738
RSUs	9,570,667	8,692,347	51,929
PSUs	9,643,666	4,877,277	—
Public warrants	—	878,346	—
Private placement warrants	—	5,933,334	—
Earnout shares reserved for future issuance	24,060	1,260,281	—

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Schedule of Restatement of Financial Statements - Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Long-term notes receivables and other assets, net	$ 44,753	$ 58,317
Total assets	2,785,628	2,872,425
Deferred revenue	429,900	327,632
Total current liabilities	874,201	773,546
Deferred revenue, net of current portion	778,214	621,182
Deferred income tax liabilities	640	2,168
Total liabilities	4,525,728	4,461,914
Accumulated deficit	(3,417,038)	(3,111,486)
Total stockholders’ deficit	(1,740,100)	(1,589,489)	$ (1,795,491)	$ (1,400,402)
Total liabilities and stockholders’ deficit	$ 2,785,628	2,872,425
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Long-term notes receivables and other assets, net		62,510
Total assets		2,876,618
Deferred revenue		321,143
Total current liabilities		767,057
Deferred revenue, net of current portion		615,598
Total liabilities		4,449,841
Accumulated deficit		(3,095,220)
Total stockholders’ deficit		(1,573,223)
Total liabilities and stockholders’ deficit		2,876,618
Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Long-term notes receivables and other assets, net		(4,193)
Total assets		(4,193)
Deferred revenue		6,489
Total current liabilities		6,489
Deferred revenue, net of current portion		5,584
Total liabilities		12,073
Accumulated deficit		(16,266)
Total stockholders’ deficit		(16,266)
Total liabilities and stockholders’ deficit		$ (4,193)

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Schedule of Restatement of Financial Statements - Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Recurring and other revenue	$ 1,479,388	$ 1,252,267	$ 1,151,100
Selling expenses	379,497	302,287	191,800
General and administrative expenses	268,312	267,923	193,480
Depreciation and amortization	601,452	570,831	543,592
Total costs and expenses	1,633,626	1,514,325	1,298,157
Loss from operations	(154,238)	(262,058)	(147,057)
Loss before income taxes	(303,081)	(602,248)	(399,383)
Income tax expense	2,471	1,083	1,313
Net loss	(305,552)	(603,331)	(400,696)
Comprehensive loss	$ (305,641)	$ (602,674)	$ (399,325)
Basic (in dollars per share)	$ (1.47)	$ (3.37)	$ (4.23)
Diluted (in dollars per share)	$ (1.71)	$ (3.37)	$ (4.23)
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Recurring and other revenue		$ 1,260,566	$ 1,155,981
Selling expenses			193,359
General and administrative expenses		266,335	192,182
Depreciation and amortization			543,440
Total costs and expenses		1,512,737	1,298,266
Loss from operations		(252,171)	(142,285)
Loss before income taxes		(592,361)	(394,611)
Income tax expense		2,837
Net loss		(595,198)	(395,924)
Comprehensive loss		$ (594,541)	$ (394,553)
Basic (in dollars per share)		$ (3.32)	$ (4.18)
Diluted (in dollars per share)		$ (3.32)	$ (4.18)
Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Recurring and other revenue		$ (8,299)	$ (4,881)
Selling expenses			(1,559)
General and administrative expenses		1,588	1,298
Depreciation and amortization			152
Total costs and expenses		1,588	(109)
Loss from operations		(9,887)	(4,772)
Loss before income taxes		(9,887)	(4,772)
Income tax expense		(1,754)
Net loss		(8,133)	(4,772)
Comprehensive loss		$ (8,133)	$ (4,772)
Basic (in dollars per share)		$ (0.05)	$ (0.05)
Diluted (in dollars per share)		$ (0.05)	$ (0.05)

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Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2021 USD ($) payment unit	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Basis Of Presentation And Significant Accounting Policies [Line Items]
Material right to renew contract, term	3 years
Accounts receivable	$ 26,400,000	$ 19,800,000
Allowance for doubtful accounts	$ 13,271,000	9,911,000	$ 8,118,000	$ 5,594,000
Capitalized contract cost, amortization period	5 years
Capitalized contract costs, expected period of benefit	5 years
Capitalized contract cost, impairment loss	$ 0	0
Amortization of deferred financing costs and bond premiums and discounts	4,629,000	3,956,000	4,703,000
Sales commission included in accrued payroll and commissions	4,300,000	4,100,000
Other long-term obligations	23,200,000	23,800,000
Advertising expenses incurred	$ 89,900,000	70,900,000	60,400,000
Uncertain income tax position percentage	50.00%
Number of reporting units | unit	1
Goodwill, impairment loss	$ 0	0	0
Issued and unused letters of credit		15,300,000
Vivint Sky Control Panels
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of installed panels	95.00%
2GIG Sale
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of installed panels	5.00%
Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Liability percentage	260.00%
Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Liability percentage	100.00%
Interest Expense
Basis Of Presentation And Significant Accounting Policies [Line Items]
Amortization of deferred financing costs and bond premiums and discounts	$ 6,900,000	7,900,000	$ 9,800,000
Notes Payable
Basis Of Presentation And Significant Accounting Policies [Line Items]
Deferred financing cost, net	34,300,000	27,200,000
Deferred financing cost, accumulated amortization	77,400,000	70,900,000
Revolving Credit Facility
Basis Of Presentation And Significant Accounting Policies [Line Items]
Issued and unused letters of credit	356,000,000
Revolving Credit Facility | Line of Credit
Basis Of Presentation And Significant Accounting Policies [Line Items]
Deferred financing cost, net	2,100,000	1,700,000
Deferred financing cost, accumulated amortization	$ 11,500,000	$ 11,000,000
Vivint Flex Pay
Basis Of Presentation And Significant Accounting Policies [Line Items]
Number of payment options | payment	3
Vivint Flex Pay | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Installment loans available to qualified customers, amount provided by third party	$ 150
Installment loans available to qualified customers, annual percentage rate	0.00%
Loans available to qualified customers, term of loan	6 months
Vivint Flex Pay | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Installment loans available to qualified customers, amount provided by third party	$ 6,000
Installment loans available to qualified customers, annual percentage rate	9.99%
Loans available to qualified customers, term of loan	60 months
Subscriber Contracts | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Contract with customer, term	3 years
Subscriber Contracts | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Contract with customer, term	5 years

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Significant Accounting Policies - Statement of Operations in Other (Income) Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Translation gain	$ (423)	$ (602)	$ (3,400)

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Significant Accounting Policies - Accounts Receivable (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 9,911	$ 8,118	$ 5,594
Provision for doubtful accounts	31,341	23,778	25,043
Write-offs and adjustments	(27,981)	(21,985)	(22,519)
Balance at end of period	$ 13,271	$ 9,911	$ 8,118

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Significant Accounting Policies - Depreciation and Amortization (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	$ 601,452	$ 570,831	$ 543,592
Depreciation and amortization of property, plant and equipment
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	16,467	20,153	25,687
Amortization of capitalized contract costs
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	524,981	481,213	437,437
Amortization of definite-lived intangibles
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	$ 60,004	$ 69,465	$ 80,468

XML

Revenue and Capitalized Contract Costs - (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Capitalized Contract Cost [Line Items]
Service warranty accrual	$ 5,992	$ 5,711
Revenue recognized that were included in deferred revenue	320,000	$ 235,900
Revenue expected to be recognized from remaining performance obligations for subscription contracts	$ 3,400,000
Capitalized contract cost, amortization period	5 years
Subscriber Contracts | Minimum
Capitalized Contract Cost [Line Items]
Contract with customer, term	3 years
Subscriber Contracts | Maximum
Capitalized Contract Cost [Line Items]
Contract with customer, term	5 years

XML

Revenue and Capitalized Contract Costs - Performance Obligation, Expected Timing (Details)	Dec. 31, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage revenue of related to remaining performance obligation expected to recognized over the next 24 months	63.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	24 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	36 months

XML

Retail Installment Contract Receivables - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period of RIC customer history	2 years
Change in expected credit losses		$ 259,113	$ 304,381	$ 133,505
Increase (decrease) to earnings per share from change in accounting estimate				$ 0.10
Uncollectible Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Change in expected credit losses	$ 17,500
Retail Installment Contracts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest income		7,600	10,600	$ 13,600
Other revenue		$ 7,600	$ 10,600	$ 13,600
Retail Installment Contracts | Uncollectible Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest income	(9,100)
Change in expected credit losses	26,600
Other revenue	$ (9,100)
Vivint Flex Pay | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Installment loans available to qualified customers, term of loan		42 months
Vivint Flex Pay | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Installment loans available to qualified customers, term of loan		60 months

XML

Retail Installment Contract Receivables - Installment Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
RIC allowance	$ (12,384)	$ (27,061)
Imputed interest	(7,469)	(13,275)
Classified on the consolidated balance sheets as:
Accounts and Financing Receivable, after Allowance for Credit Loss, Current	63,671	64,697
Long-term notes receivables and other assets, net	44,753	58,317
Retail Installment Contracts
Accounts, Notes, Loans and Financing Receivable [Line Items]
RIC receivables, gross	90,204	138,926
RIC allowance	(12,384)	(27,061)	$ (38,110)
RIC receivables, net	70,351	98,590
Classified on the consolidated balance sheets as:
Accounts and Financing Receivable, after Allowance for Credit Loss, Current	37,270	44,931
Long-term notes receivables and other assets, net	$ 33,081	$ 53,659

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Retail Installment Contract Receivables - Allowance for Credit Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
RIC allowance, beginning of period	$ 27,061
Recoveries	3,446	$ 6,340
RIC allowance, end of period	12,384	27,061
Retail Installment Contracts
Financing Receivable, Allowance for Credit Loss [Roll Forward]
RIC allowance, beginning of period	27,061	38,110
Write-offs	(13,714)	(21,841)
Additions from RICs originated during the period	6,795	7,567
Change in expected credit losses	(10,995)	(2,914)
Other adjustments	(209)	(201)
RIC allowance, end of period	$ 12,384	$ 27,061

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Long-Term Debt - Summary of Debt (Detail) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt	$ 2,733,125,000
Outstanding Principal, total debt	2,746,625,000	$ 2,844,875,000
Unamortized Premium (Discount)	0	7,885,000
Unamortized Deferred Financing Costs	(34,280,000)	(27,160,000)
Net Carrying Amount, noncurrent	2,698,845,000
Net Carrying Amount	2,712,345,000	2,825,600,000
Long-term Debt
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt		2,835,375,000
Unamortized Premium (Discount)		7,885,000
Unamortized Deferred Financing Costs		(27,160,000)
Net Carrying Amount, noncurrent		2,816,100,000
Revolving Credit Facility
Debt Instrument [Line Items]
Net Carrying Amount	0	0
Deferred financing costs, net	$ 2,100,000	$ 1,700,000
Senior Notes | 6.750% Senior Secured Notes Due 2027
Debt Instrument [Line Items]
Debt instrument interest rate (percentage)	6.75%	6.75%
Outstanding principal, noncurrent debt	$ 600,000,000	$ 600,000,000
Unamortized Premium (Discount)	0	0
Unamortized Deferred Financing Costs	(4,835,000)	(5,771,000)
Net Carrying Amount, noncurrent	$ 595,165,000	$ 594,229,000
Senior Notes | 5.750% Senior Notes Due 2029
Debt Instrument [Line Items]
Debt instrument interest rate (percentage)	5.75%
Outstanding principal, noncurrent debt	$ 800,000,000
Unamortized Premium (Discount)	0
Unamortized Deferred Financing Costs	(11,154,000)
Net Carrying Amount, noncurrent	$ 788,846,000
Senior Notes | 7.875% Senior Secured Notes Due 2022
Debt Instrument [Line Items]
Debt instrument interest rate (percentage)	7.875%	7.875%
Outstanding principal, noncurrent debt		$ 677,000,000
Unamortized Premium (Discount)		7,885,000
Unamortized Deferred Financing Costs		(4,697,000)
Net Carrying Amount, noncurrent		$ 680,188,000
Senior Notes | 7.625% Senior Notes Due 2023
Debt Instrument [Line Items]
Debt instrument interest rate (percentage)	7.625%	7.625%
Outstanding principal, noncurrent debt		$ 400,000,000
Unamortized Premium (Discount)		0
Unamortized Deferred Financing Costs		(2,241,000)
Net Carrying Amount, noncurrent		$ 397,759,000
Senior Notes | 8.500% Senior Secured Notes Due 2024
Debt Instrument [Line Items]
Debt instrument interest rate (percentage)	8.50%	8.50%
Outstanding principal, noncurrent debt		$ 225,000,000
Unamortized Premium (Discount)		0
Unamortized Deferred Financing Costs		(3,530,000)
Net Carrying Amount, noncurrent		221,470,000
Term Loan | Term Loan
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt		933,375,000
Unamortized Premium (Discount)		0
Unamortized Deferred Financing Costs		(10,921,000)
Net Carrying Amount, noncurrent		922,454,000
Net carrying amount, current		9,500,000
Term Loan | Term Loan
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt	$ 1,333,125,000
Outstanding principal, current debt	13,500,000	$ 9,500,000
Unamortized Premium (Discount)	0
Unamortized Deferred Financing Costs	(18,291,000)
Net Carrying Amount, noncurrent	1,314,834,000
Net carrying amount, current	$ 13,500,000

XML

Long-Term Debt - Notes Payable (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021 USD ($) step-down	Jul. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt		$ 2,733,125,000
Face Value		$ 2,712,345,000		$ 2,825,600,000
Available borrowing capacity				15,300,000
Revolving Credit Facility
Debt Instrument [Line Items]
Basis percentage		0.50%
Number of interest rate step downs | step-down		2
Commitment fee, step down (percentage)		0.125%
Face Value		$ 0		0
Available borrowing capacity		356,000,000
Letters of credit outstanding		14,000,000
Senior Notes | 6.750% Senior Secured Notes Due 2027
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt		$ 600,000,000		$ 600,000,000
Debt instrument interest rate (percentage)		6.75%		6.75%
Senior Notes | 5.750% Senior Notes Due 2029
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt		$ 800,000,000
Debt instrument interest rate (percentage)		5.75%
Senior Notes | 7.875% Senior Secured Notes Due 2022
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt				$ 677,000,000
Debt instrument interest rate (percentage)		7.875%		7.875%
Senior Notes | 7.625% Senior Notes Due 2023
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt				$ 400,000,000
Debt instrument interest rate (percentage)		7.625%		7.625%
Senior Notes | 8.500% Senior Secured Notes Due 2024
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt				$ 225,000,000
Debt instrument interest rate (percentage)		8.50%		8.50%
Term Loan | Term Loan
Debt Instrument [Line Items]
Outstanding principal, noncurrent debt				$ 933,375,000
Principal amount		$ 1,346,600,000	$ 1,350,000,000
Debt instrument, redemption price, percentage of principal amount redeemed (as a percentage)		0.25%
Term Loan | Term Loan | Revolving Credit Facility
Debt Instrument [Line Items]
Principal amount			$ 370,000,000
Federal Funds Effective Swap Rate | Credit Agreement
Debt Instrument [Line Items]
Variable Interest rate (percentage)		0.50%
LIBOR | Credit Agreement
Debt Instrument [Line Items]
Variable Interest rate (percentage)		1.00%
LIBOR plus 1% | Credit Agreement
Debt Instrument [Line Items]
Variable Interest rate (percentage)		2.50%
LIBOR plus 1% | Credit Agreement | Forecast | Maximum
Debt Instrument [Line Items]
Variable Interest rate (percentage)	2.50%
LIBOR plus 1% | Credit Agreement | Forecast | Minimum
Debt Instrument [Line Items]
Variable Interest rate (percentage)	2.00%
LIBOR Referenced to Applicable Page for LIBOR Rate for the Interest Period Relevant to Such Borrowings | Credit Agreement | Maximum
Debt Instrument [Line Items]
Variable Interest rate (percentage)		3.50%
LIBOR Referenced to Applicable Page for LIBOR Rate for the Interest Period Relevant to Such Borrowings | Credit Agreement | Forecast | Maximum
Debt Instrument [Line Items]
Variable Interest rate (percentage)	3.50%
LIBOR Referenced to Applicable Page for LIBOR Rate for the Interest Period Relevant to Such Borrowings | Credit Agreement | Forecast | Minimum
Debt Instrument [Line Items]
Variable Interest rate (percentage)	3.00%

XML

Long-Term Debt - Other Expense and Loss on Extinguishment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Original premium extinguished	$ (5,656)	$ (2,749)
Previously deferred financing costs extinguished	9,515	4,268
New financing costs	26,352	11,191
Total other expense and loss on extinguishment	30,211	12,710
Previously deferred financing rolled over	8,148	7,178
New deferred financing costs	23,069	11,807
Total deferred financing costs	31,217	18,985
Term Loan | Term Loan
Debt Instrument [Line Items]
Previously deferred financing costs extinguished	1,499	235
Term Loan | Term Loan issuance - July 2021 | Term Loan
Debt Instrument [Line Items]
Original premium extinguished	0
Previously deferred financing costs extinguished	1,499
New financing costs	9,165
Total other expense and loss on extinguishment	10,664
Previously deferred financing rolled over	8,148
New deferred financing costs	11,302
Total deferred financing costs	19,450
Term Loan | Term Loan issuance - February 2020 | Term Loan
Debt Instrument [Line Items]
Original premium extinguished		0
Previously deferred financing costs extinguished		235
New financing costs		5,045
Total other expense and loss on extinguishment		5,280
Previously deferred financing rolled over		6,973
New deferred financing costs		5,461
Total deferred financing costs		12,434
Senior Notes | 2029 Notes
Debt Instrument [Line Items]
Previously deferred financing costs extinguished	0
Senior Notes | 8.500% Senior Secured Notes Due 2024
Debt Instrument [Line Items]
Previously deferred financing costs extinguished	3,021	0
Senior Notes | 2029 Notes issuance - July 2021 | 2029 Notes
Debt Instrument [Line Items]
Original premium extinguished	(5,656)
Previously deferred financing costs extinguished	8,016
New financing costs	17,187
Total other expense and loss on extinguishment	19,547
Previously deferred financing rolled over	0
New deferred financing costs	11,767
Total deferred financing costs	$ 11,767
Senior Notes | 2027 Notes issuance - February 2020 | 6.750% Senior Secured Noes Due 2027
Debt Instrument [Line Items]
Original premium extinguished		(2,749)
Previously deferred financing costs extinguished		4,033
New financing costs		6,146
Total other expense and loss on extinguishment		7,430
Previously deferred financing rolled over		205
New deferred financing costs		6,346
Total deferred financing costs		$ 6,551
Senior Notes | 2024 Notes issuance - May 2019 | 8.500% Senior Secured Notes Due 2024
Debt Instrument [Line Items]
Original premium extinguished			$ (588)
Previously deferred financing costs extinguished			1,395
New financing costs			0
Total other expense and loss on extinguishment			807
Previously deferred financing rolled over			0
New deferred financing costs			4,956
Total deferred financing costs			$ 4,956

XML

Long-Term Debt - Deferred Financing Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Deferred Financing Activity [Roll Forward]
Beginning balance	$ 28,827	$ 28,161
Additions	23,912	12,834
Early Extinguishment	(9,515)	(4,268)
Amortized	(6,858)	(7,900)
Ending balance	36,366	28,827
Senior Notes | 2020 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	0	1,721
Additions		0
Early Extinguishment		(1,565)
Amortized		(156)
Ending balance		0
Senior Notes | 2022 Private Placement Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	0	451
Additions		(205)
Early Extinguishment		(221)
Amortized		(25)
Ending balance		0
Senior Notes | 2022 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	4,697	9,532
Additions	0	0
Early Extinguishment	(3,314)	(2,247)
Amortized	(1,383)	(2,588)
Ending balance	0	4,697
Senior Notes | 2023 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	2,241	3,081
Additions	0	0
Early Extinguishment	(1,681)	0
Amortized	(560)	(840)
Ending balance	0	2,241
Senior Notes | 2024 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	3,530	4,431
Additions	0	0
Early Extinguishment	(3,021)	0
Amortized	(509)	(901)
Ending balance	0	3,530
Senior Notes | 2027 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	5,771	0
Additions	0	6,551
Early Extinguishment	0	0
Amortized	(936)	(780)
Ending balance	4,835	5,771
Senior Notes | 2029 Notes
Deferred Financing Activity [Roll Forward]
Beginning balance	0
Additions	11,767
Early Extinguishment	0
Amortized	(614)
Ending balance	11,153	0
Term Loan | Term Loan
Deferred Financing Activity [Roll Forward]
Beginning balance	10,921	7,822
Additions	11,302	5,461
Early Extinguishment	(1,499)	(235)
Amortized	(2,434)	(2,127)
Ending balance	18,290	10,921
Revolving Credit Facility | Line of Credit
Deferred Financing Activity [Roll Forward]
Beginning balance	1,667	1,123
Additions	843	1,027
Early Extinguishment	0	0
Amortized	(422)	(483)
Ending balance	$ 2,088	$ 1,667

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Business Combination (Details) $ / shares in Units, $ in Millions	Jan. 17, 2020 USD ($) $ / shares shares	Jan. 16, 2020 $ / shares	Dec. 31, 2021 $ / shares	Dec. 31, 2020 $ / shares
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, par value (in dollars per share) | $ / shares			$ 0.0001	$ 0.0001
Fortress Investment Group
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares from Fortress Subscription And Backstop Agreement (in shares)	2,698,753
Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.0001
Conversion ratio for founder shares	1.2
Warrants, expiration period	5 years
Shares from Fortress Subscription And Backstop Agreement (in shares)	2,698,753
Shares from Additional Forward Purchaser Subscription Agreement (in shares)	5,000,000
Forward Purchase Agreement, share purchase price (in dollars per share) | $ / shares		$ 10.00
Common stock issued per share of founder share forefeited	1.20
Shares from IPO Forward Purchaser Investment (in shares)	15,789,474
Conversion ratio of preferred stock to common stock		1.43
Merger | Fortress Investment Group
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Purchase price of shares | $	$ 27.8
Shares redeemed (in shares)	31,074,592
Price of shares redeemed (in dollars per share) | $ / shares	$ 10.29
Merger | Legacy Vivint Smart Home
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.01
Merger | Fortress Investment Group
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares issued from PIPE (in shares)	12,500,000
Purchase price of shares | $	$ 125.0
Merger | Blackstone Management Partners L.L.C.
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares issued from PIPE (in shares)	10,000,000
Purchase price of shares | $	$ 100.0
Merger | Mosaic Sponsor LLC
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Percentage of Mosaic Sponsor LLC's founder shares and private placement warrants forfeited (percent)		25.00%
Merger | Certain Investors
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares from IPO Forward Purchaser Investment (in shares)	15,789,474
IPO Forward Purchase Investment, share purchase price (in dollars per share) | $ / shares	$ 9.50
Common Class A
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, par value (in dollars per share) | $ / shares			$ 0.0001
Common Class A | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Conversion ratio for legacy shares	84.5320916792
Conversion ratio for founder shares	1.20

XML

Business Combination - Schedule of Net Impact (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Net cash received from recapitalization	$ 0	$ 463,522	$ 0
Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Cash - Mosaic (net of redemptions)	35,344
Cash - Subscribers and Forward Purchasers	453,221
Less fees to underwriters and other transaction costs	(25,043)
Net cash received from recapitalization	463,522
Less: Warrant derivative liabilities assumed	(40,094)
Less: non-cash net liabilities assumed from Mosaic	(5)
Less: deferred and accrued transaction costs	(1,304)
Net contributions from recapitalization	$ 422,119

XML

Business Combination - Schedule of Shares Issued (Details) - shares	Jan. 17, 2020	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, outstanding (in shares)	154,730,618	208,734,193	202,216,341
Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares from Additional Forward Purchaser Subscription Agreement (in shares)	5,000,000
Shares from IPO Forward Purchaser Investment (in shares)	15,789,474
Shares from Fortress Subscription And Backstop Agreement (in shares)	2,698,753
Shares from Mosaic Founder Shares (in shares)	10,379,386
Recapitalization transaction (in shares)	59,793,021
Mosaic | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common Stock outstanding prior to Business Combination (in shares)	34,500,000
Less redemption of Mosaic Shares (in shares)	(31,074,592)
Common Stock of Mosaic (in shares)	3,425,408
Fortress Investment Group | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares issued from PIPE (in shares)	12,500,000
Blackstone Management Partners L.L.C. | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Shares issued from PIPE (in shares)	10,000,000
Legacy Vivint Smart Home | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Common stock, outstanding (in shares)	94,937,597

XML

Business Combination - Earnout Consideration (Details) - $ / shares		1 Months Ended
	Jan. 17, 2020	Feb. 29, 2020
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Earnout consideration, shares issued (in shares)		37,323,959
Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Earnout consideration, contingent shares (in shares)	37,500,000
First Share Issuance | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Earnout consideration, contingent stock, first issuance (in shares)	12,500,000
Earnout consideration, threshold share price (in dollars per share)	$ 12.50
Earnout consideration, threshold trading days	20 days
Earnout consideration, threshold trading day period	30 days
Second Share Issuance | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Earnout consideration, contingent stock, first issuance (in shares)	12,500,000
Earnout consideration, threshold share price (in dollars per share)	$ 15.00
Earnout consideration, threshold trading days	20 days
Earnout consideration, threshold trading day period	30 days
Third Share Issuance | Merger
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Earnout consideration, contingent stock, first issuance (in shares)	12,500,000
Earnout consideration, threshold share price (in dollars per share)	$ 17.50
Earnout consideration, threshold trading days	20 days
Earnout consideration, threshold trading day period	30 days

XML

Balance Sheet Components - Schedule of Balance Sheet Component Balances (Detail) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid expenses	$ 12,791	$ 11,286
Deposits	627	1,308
Other	5,967	1,744
Total prepaid expenses and other current assets	19,385	14,338
Capitalized contract costs
Capitalized contract costs	4,103,683	3,491,629
Accumulated amortization	(2,698,241)	(2,173,131)
Capitalized contract costs, net	1,405,442	1,318,498
Long-term notes receivables and other assets
RIC receivables, gross	52,934	93,995
RIC allowance	(12,384)	(27,061)
RIC imputed interest	(7,469)	(13,275)
Deferred income tax assets	2,022	0
Other	9,650	4,658
Total long-term notes receivables and other assets, net	44,753	58,317
Accrued payroll and commissions
Accrued commissions	47,879	46,353
Accrued payroll	35,468	41,590
Total accrued payroll and commissions	83,347	87,943
Accrued expenses and other current liabilities
Accrued interest payable	40,333	33,340
Current portion of derivative liability	140,394	142,755
Service warranty accrual	5,992	5,711
Current portion of warrant derivative liabilities	0	8,063
Accrued taxes	10,758	8,700
Accrued payroll taxes and withholdings	14,392	14,391
Loss contingencies	8,150	26,200
Other	16,231	8,164
Total accrued expenses and other current liabilities	$ 236,250	$ 247,324

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Property Plant and Equipment - Components of Property and Equipment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 187,085	$ 169,051
Accumulated depreciation and amortization	(131,637)	(116,672)
Property, plant and equipment, net	55,448	52,379
Vehicles
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 40,103	39,735
Vehicles | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	3 years
Vehicles | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	5 years
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 83,479	72,616
Computer equipment and software | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	3 years
Computer equipment and software | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 30,087	29,126
Leasehold improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	2 years
Leasehold improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	15 years
Office furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 22,327	21,394
Office furniture, fixtures and equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	2 years
Office furniture, fixtures and equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives	7 years
Construction in process
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 11,089	$ 6,180

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Property Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Abstract]
Finance lease, right-of-use asset, net	$ 16,474	$ 17,595
Accumulated amortization	24,465	22,976
Depreciation and amortization expense	$ 16,500	$ 20,200	$ 25,700

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Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Goodwill [Roll Forward]
Goodwill beginning balance	$ 837,077	$ 836,540
Effect of Foreign Currency Translation	76	537
Goodwill ending balance	$ 837,153	$ 837,077

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Goodwill and Intangible Assets - Schedule of Intangible Asset Balances (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	$ 1,009,381	$ 1,008,826
Accumulated Amortization	(957,518)	(897,417)
Definite-lived intangible assets, net carrying amount	51,863	111,409
Indefinite-lived intangible assets:	65	65
Total intangible assets, gross carrying amount	1,009,446	1,008,891
Total intangible assets, net carrying amount	51,928	111,474
Domain names
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets:	65	65
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	969,376	969,158
Accumulated Amortization	(920,617)	(862,352)
Definite-lived intangible assets, net carrying amount	$ 48,759	106,806
Estimated Useful Lives	10 years
2GIG 2.0 technology
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	$ 17,000	17,000
Accumulated Amortization	(17,000)	(17,000)
Definite-lived intangible assets, net carrying amount	$ 0	0
Estimated Useful Lives	8 years
Other technology
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	$ 4,725	4,725
Accumulated Amortization	(4,725)	(4,309)
Definite-lived intangible assets, net carrying amount	$ 0	416
Other technology | Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	2 years
Other technology | Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	7 years
Space Monkey technology
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	$ 7,100	7,100
Accumulated Amortization	(7,100)	(7,100)
Definite-lived intangible assets, net carrying amount	$ 0	0
Estimated Useful Lives	6 years
Patents
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, gross carrying amount	$ 11,180	10,843
Accumulated Amortization	(8,076)	(6,656)
Definite-lived intangible assets, net carrying amount	$ 3,104	$ 4,187
Estimated Useful Lives	5 years

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Amortization expense related to intangible assets	$ 60.0	$ 69.5	$ 80.5
Definite-lived intangible assets, remaining amortization period	1 year
Finite-lived patents, gross	$ 0.1
Patents
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets	$ 0.4	$ 3.1

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Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Intangible Assets Excluding Patents Currently in Process (Detail) $ in Thousands	Dec. 31, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2022	$ 49,889
2023	795
2024	610
2025	514
2026	4
Thereafter	0
Total estimated amortization expense	$ 51,812

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Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Cash and cash equivalents	$ 208,509	$ 313,799	$ 4,549	$ 12,773
Corporate securities, fair value	$ 2,400

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Financial Instruments - Debt Fair Value and Carrying Value (Detail) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	$ 2,712,345,000	$ 2,825,600,000
Senior Notes | 2022 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated Interest Rate	7.875%	7.875%
Senior Notes | 2023 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated Interest Rate	7.625%	7.625%
Senior Notes | 2024 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated Interest Rate	8.50%	8.50%
Senior Notes | 2027 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated Interest Rate	6.75%	6.75%
Senior Notes | 2029 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated Interest Rate	5.75%
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	$ 2,746,625,000	$ 2,844,875,000
Estimated Fair Value	2,775,965,000	2,919,123,000
Level 2 | Senior Notes | 2022 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	0	677,000,000
Estimated Fair Value	0	677,203,000
Level 2 | Senior Notes | 2023 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	0	400,000,000
Estimated Fair Value	0	415,200,000
Level 2 | Senior Notes | 2024 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	0	225,000,000
Estimated Fair Value	0	238,545,000
Level 2 | Senior Notes | 2027 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	600,000,000	600,000,000
Estimated Fair Value	633,660,000	645,300,000
Level 2 | Senior Notes | 2029 Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	800,000,000	0
Estimated Fair Value	795,680,000	0
Level 2 | Term Loan
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Face Value	1,346,625,000	942,875,000
Estimated Fair Value	$ 1,346,625,000	$ 942,875,000

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Financial Instruments - Derivative Fair Value (Details) - Level 2 - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Fair value	$ 216,795	$ 227,896
Notional amount	1,160,278	912,626
Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Fair value	140,394	142,755
Other long-term obligations
Derivatives, Fair Value [Line Items]
Fair value	$ 76,401	$ 85,141

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Financial Instruments - Level 3 (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance, beginning of period	$ 227,896	$ 136,863
Additions	94,995	167,055
Settlements	(91,826)	(71,962)
Gains included in earnings	(14,270)	(4,060)
Balance, end of period	$ 216,795	$ 227,896

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Financial Instruments - Change in Fair Value of Derivative Warrant Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Warrant Derivative Liabilities [Roll Forward]
Warrant liability assumed from the Business Combination	$ 75,531
Balance, December 31, 2020	24,564	$ 75,531
Change in fair value of warrant liability	(49,617)	109,250
Warrant liability assumed from the Business Combination	83,594	40,094
Write-off fair value of unexercised expired warrants	(490)
Reclassification of derivative liabilities for exercised warrants	(8,923)	(65,750)
Balance, December 31, 2020	24,564	83,594
Public Warrants
Warrant Derivative Liabilities [Roll Forward]
Warrant liability assumed from the Business Combination	8,063	9,775
Change in fair value of warrant liability	1,350	64,038
Write-off fair value of unexercised expired warrants	(490)
Reclassification of derivative liabilities for exercised warrants	(8,923)	(65,750)
Balance, December 31, 2020	0	8,063
Private Placement Warrants
Warrant Derivative Liabilities [Roll Forward]
Warrant liability assumed from the Business Combination	75,531	30,319
Change in fair value of warrant liability	(50,967)	45,212
Write-off fair value of unexercised expired warrants	0
Reclassification of derivative liabilities for exercised warrants	0	0
Balance, December 31, 2020	$ 24,564	$ 75,531

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Financial Instruments - Quantitative Information Regarding Level 3 Measurements Inputs (Details)	Dec. 31, 2021 $ / shares shares	Dec. 31, 2020 $ / shares shares
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding (shares)	0
Private placement warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding (shares)	5,933,334
Expiration term (in years)	5 years
Warrant | Private placement warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding (shares)	5,933,334	5,933,334
Warrant | Private placement warrants | Exercise price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input | $ / shares	11.50	11.50
Warrant | Private placement warrants | Stock price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input | $ / shares	9.78	20.75
Warrant | Private placement warrants | Expiration term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Expiration term (in years)	3 years 18 days	4 years 18 days
Warrant | Private placement warrants | Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	0.70	0.60
Warrant | Private placement warrants | Risk-free Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	0.0098	0.0027
Warrant | Private placement warrants | Dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants outstanding, measurement input	0	0

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Restructuring and Asset Impairment Charges - Additional Information (Detail) - USD ($) $ in Thousands		12 Months Ended
	Jul. 31, 2019	Dec. 31, 2020
Severance and Termination Benefits Expenses | 2020 Cost Reductions
Restructuring Cost and Reserve [Line Items]
Cash-based restructuring charges		$ 20,900
Stock-based Compensation Expense | 2020 Cost Reductions
Restructuring Cost and Reserve [Line Items]
Share-based payment arrangement, accelerated cost		$ 11,100
Subscriber Contracts In New Zealand And Puerto Rico
Restructuring Cost and Reserve [Line Items]
Amortization of subscriber acquisition costs	$ 4,800

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Restructuring and Asset Impairment Charges - Results of Operations of Wireless (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Restructuring Cost and Reserve [Line Items]
Recurring and other revenue	$ 1,479,388	$ 1,252,267	$ 1,151,100
Operating expenses	384,365	352,343	369,285
Selling expenses	379,497	302,287	191,800
General and administrative expenses	268,312	267,923	193,480
Depreciation and amortization	601,452	570,831	543,592
Total costs and expenses	1,633,626	1,514,325	1,298,157
Loss from operations	(154,238)	(262,058)	(147,057)
Interest expense	184,993	221,175	260,014
Net loss	$ (305,552)	$ (603,331)	(400,696)
Wireless
Restructuring Cost and Reserve [Line Items]
Operating expenses			5,455
Selling expenses			137
General and administrative expenses			5,291
Depreciation and amortization			68
Total costs and expenses			10,951
Loss from operations			(8,143)
Interest expense			0
Other income, net			(2,100)
Net loss			(6,043)
Recurring and other revenue | Wireless
Restructuring Cost and Reserve [Line Items]
Recurring and other revenue			$ 2,808

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Income Taxes - Income Tax Provision (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current income tax:
Federal	$ 0	$ 0	$ 0
State	2,359	2,174	703
Foreign	3,641	764	(2)
Total	6,000	2,938	701
Deferred income tax:
Federal	0	0	(380)
State	(263)	(851)	(73)
Foreign	(3,266)	(1,004)	1,065
Total	(3,529)	(1,855)	612
Income tax expense	$ 2,471	$ 1,083	$ 1,313

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Income Taxes - Reconciliation of Tax Expense Computed at Statutory Federal Rate and Company's Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Computed expected tax benefit	$ (63,647)	$ (126,472)	$ (82,833)
State income taxes, net of federal tax effect	1,556	882	483
Foreign income taxes	221	(383)	232
Other reconciling items	(1,235)	(714)	2,988
Permanent differences	(8,753)	36,423	5,694
Excess deductible compensation limitation	10,463	9,667	1,313
Change in valuation allowance	63,866	81,680	73,436
Income tax expense	$ 2,471	$ 1,083	$ 1,313

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Income Taxes - Significant Portions of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Gross deferred tax assets:
Net operating loss carryforwards	$ 546,693	$ 558,972
Deferred subscriber income	326,759	254,722
Interest expense limitation	142,919	119,402
Accrued expenses and allowances	56,495	52,031
Lease liabilities	13,356	15,342
Purchased intangibles and deferred financing costs	9,687	13,765
Inventory reserves	1,859	2,801
Research and development credits	41	41
Deferred capitalized contract costs	1,800	0
Property and equipment	1,888	2
Valuation allowance	(740,397)	(664,191)
Total	361,100	352,887
Gross deferred tax liabilities:
Deferred capitalized contract costs	(346,887)	(338,141)
Right of use assets	(11,430)	(13,119)
Purchased intangibles and deferred financing costs	(959)	(2,092)
Property and equipment	(443)	(1,703)
Total	(359,719)	(355,055)
Net deferred tax assets (liabilities)		$ (2,168)
Net deferred tax assets (liabilities)	$ 1,381

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Income Taxes - Summary of Net Operating Loss Carryforwards (Detail) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Operating Loss Carryforwards [Line Items]
Net operating loss carry forwards	$ 4,265,000	$ 4,290,585
Internal Revenue Service (IRS) | Federal
Operating Loss Carryforwards [Line Items]
Net operating loss carry forwards	2,229,000	2,294,340
Internal Revenue Service (IRS) | States
Operating Loss Carryforwards [Line Items]
Net operating loss carry forwards	$ 2,036,000	$ 1,996,245

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Income Taxes - Additional Information (Detail) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Income Taxes And Tax Related [Line Items]
Net operating loss carry forwards	$ 4,265,000,000	$ 4,290,585,000
Valuation allowance	740,397,000	664,191,000
Uncertain tax positions	0
Federal
Income Taxes And Tax Related [Line Items]
Research and development credits	41,000	$ 41,000
Canada | Canada Revenue Agency
Income Taxes And Tax Related [Line Items]
Net operating loss carry forwards	$ 0

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Stock-Based Compensation and Equity - Additional Information (Detail)		1 Months Ended	3 Months Ended	12 Months Ended
	Jan. 17, 2020 shares	Jun. 30, 2018	Mar. 31, 2021 USD ($) shares	Dec. 31, 2021 USD ($) anniversary shares $ / shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) shares	Jul. 01, 2021 $ / shares	Jan. 07, 2021 $ / shares	Nov. 30, 2020 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $				$ 19,600,000
Share-based compensation expense | $			$ 37,200,000	$ 166,428,000	$ 198,213,000	$ 4,241,000
Common stock, authorized (in shares)				3,000,000,000	3,000,000,000
Common stock, par value (in dollars per share) | $ / shares				$ 0.0001	$ 0.0001
Common stock, issued (in shares)				208,734,193	202,216,341
Common stock, outstanding (in shares)	154,730,618			208,734,193	202,216,341
Preferred stock, authorized (in shares)				300,000,000	300,000,000
Preferred stock, par value (in dollars per share) | $ / shares				$ 0.0001	$ 0.0001
Preferred stock, issued (in shares)				0	0
Preferred stock, outstanding (in shares)				0	0
Warrants outstanding (shares)				0
Number of common shares called by each warrant (shares)				1
Warrant exercise price (dollars per share) | $ / shares				$ 11.50
Warrants, period before warrants become exercisable				30 days
Call price, cash (in dollars per share) | $ / shares				$ 0.01
Warrants, call feature notice period				30 days
Warrants, call feature, threshold closing share price for cash redemption (in dollars per share) | $ / shares				$ 18.00
Warrant, call feature, threshold trading days				20 days
Warrant, call feature, trading day period				30 days
Warrant, call feature, threshold closing share price for share redemption (in dollars per share) | $ / shares				$ 10.00
Warrant, redemption price per warrant (in dollars per share) | $ / shares								$ 0.01
Warrant redemption, exercise price (in dollars per share) | $ / shares								$ 11.50
Warrants, unexercised, redemption price (in dollars per share) | $ / shares							$ 0.01
Proceeds from warrant exercises | $				$ 10,819,000	$ 120,802,000	0
Capital contributions from parent | $				$ 0	$ 0	4,700,000
Capital contribution returned to parent | $						(4,800,000)
Private placement warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants outstanding (shares)				5,933,334
Warrants, period before warrants become transferable, assignable or salable				30 days
Expiration term (in years)				5 years
Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, authorized (in shares)				3,000,000,000
Common stock, par value (in dollars per share) | $ / shares				$ 0.0001
Common stock, issued (in shares)				208,734,193
Common stock, outstanding (in shares)				208,734,193
Warrants exercised (in shares)				825,016	10,504,533
Selling expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense | $				$ 103,239,000	$ 101,623,000	508,000
Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense | $				$ 16,567,000	$ 20,157,000	$ 320,000
Rollover LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
LTIP, strike price (in dollars per share) | $ / shares				$ 7.22
Shares issued (shares)			1,609,627
Share price (in dollars per share) | $ / shares									$ 23.08
Rollover LTIPs | Selling expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense | $			$ 32,700,000
Rollover LTIPs | Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense | $			$ 4,500,000
Incentive Units | Ratable Vesting from the Applicable Reference Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, award vesting rights, annual vesting percentage	33.33%
Incentive Units | Subject to Achievement of Certain Return Thresholds by The Blackstone GroupInc. and Its Affiliates
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, award vesting rights, annual vesting percentage	33.33%
Incentive Units | Ratable Vesting from June 2018 for Grants Prior to the Modification or from the Applicable Reference Date for Grants after Modification
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, award vesting rights, annual vesting percentage	33.33%
Tracking Units | Holdback Executives
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $				$ 1,200,000
Unrecognized stock compensation, recognition period	1 year 4 months 24 days
Shares outstanding (in shares)				1,121,681
Award vesting period		5 years
Tracking Units | Time-based Vesting | Holdback Executives
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (shares)				560,841
Rollover SARs | Vivint
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $				$ 0
Vested (shares)				0
Shares outstanding (in shares)				2,004,712	2,474,011	3,603,537
Earnout Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation, recognition period				1 year 6 months
Granted (shares)				847,141
Vested (shares)				1,235,897
Shares outstanding (in shares)				24,060	412,816
Weighted average grant date fair value of the outstanding units (in dollars per share) | $ / shares				$ 21.98	$ 21.98
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (shares)				5,865,475
Vested (shares)				2,162,984
Shares outstanding (in shares)				9,570,667	8,640,418
Restricted Stock Units (RSUs) | 2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of vesting installments | anniversary				4
Unrecognized stock compensation expense | $				$ 114,800,000
Unrecognized stock compensation, recognition period				2 years 9 months 18 days
Share based compensation, award vesting rights, annual vesting percentage				25.00%
Award vesting period				4 years
Number of shares each equity instrument has the right to receive				1
Restricted Stock Units (RSUs) | 2020 Plan | Non-employee Board Member
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				1 year
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $				$ 61,700,000
Unrecognized stock compensation, recognition period				1 year 9 months 18 days
Share based compensation, award vesting rights, annual vesting percentage				25.00%
Granted (shares)				5,993,063
Vested (shares)				2,348,957
Shares outstanding (in shares)				9,643,666	4,877,277
Number of shares each equity instrument has the right to receive				1

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Stock-Based Compensation and Equity - Restricted Stock and Earnout Share Activity (Details) - Earnout Shares	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Shares
Outstanding, Beginning Balance (shares) | shares	412,816
Granted (shares) | shares	847,141
Vested (shares) | shares	(1,235,897)
Outstanding, Ending Balance (shares) | shares	24,060
Weighted Average Grant-Date Fair Value per Share
Weighted average grant-date fair value per share, outstanding, beginning balance (in dollars per share) | $ / shares	$ 21.98
Granted (in USD per share) | $ / shares	23.08
Vested (in USD per share) | $ / shares	22.73
Weighted average grant-date fair value per share, outstanding, ending balance (in dollars per share) | $ / shares	$ 21.98

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Stock-Based Compensation and Equity - Summary of the SARs Activity (Detail) - Vivint - Rollover SARs - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Rollover SARs
Outstanding, Beginning Balance (shares)	2,474,011	3,603,537
Forfeited (shares)	(409,566)	(1,055,978)
Exercised (shares)	(59,733)	(73,548)
Outstanding, Ending Balance (shares)	2,004,712	2,474,011	3,603,537
Unvested Rollover SARs expected to vest (shares)	0
Exercisable (shares)	2,004,712
Weighted Average Grant-Date Fair Value per Share
Weighted average exercise price per share, outstanding, beginning balance (in dollars per share)	$ 17.59	$ 18.17
Weighted average exercise price per share, forfeited (in dollars per share)	18.50	18.03
Weighted average exercise price per share, exercised (in dollars per share)	9.32	12.35
Weighted average exercise price per share, outstanding, ending balance (in dollars per share)	17.65	$ 17.59	$ 18.17
Weighted average exercise price per share, unvested shares expected to vest (in dollars per share)	0
Weighted average exercise price per share, Exercisable (in dollars per share)	$ 17.65
Outstanding, weighted average remaining contractual life	5 years 7 months 13 days	6 years 7 months 6 days	7 years 10 months 9 days
Exercisable at end of period, weighted average remaining contractual life	5 years 7 months 13 days
Outstanding, aggregate intrinsic value	$ 0.0	$ 7.8	$ 0.9
Unvested shares expected to vest, aggregate intrinsic value		$ 0.0
Exercisable, aggregate intrinsic value	$ 0.0

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Stock-Based Compensation and Equity - Summary of Incentive Unit Activity (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Restricted Stock Units (RSUs)
Shares
Shares outstanding (in shares)	9,570,667	8,640,418
Modified (in shares)	1,842,146
Granted (shares)	5,865,475
Vested (in shares)	2,162,984
Forfeited (shares)	(930,096)
Weighted Average Grant-Date Fair Value per Share
Weighted average exercise price per share, outstanding, beginning balance (in dollars per share)	$ 22.76
Weighted average exercise price per share, modified (in dollars per share)	22.86
Weighted average exercise price per share, granted (in dollars per share)	13.33
Weighted average exercise price per share, vested (in dollars per share)	22.62
Weighted average exercise price per share, forfeited (in dollars per share)	20.43
Weighted average exercise price per share, outstanding, ending balance (in dollars per share)	$ 16.12	$ 22.76
PSUs
Shares
Shares outstanding (in shares)	9,643,666	4,877,277
Modified (in shares)	1,842,146
Granted (shares)	5,993,063
Vested (in shares)	2,348,957
Forfeited (shares)	(719,863)
Weighted Average Grant-Date Fair Value per Share
Weighted average exercise price per share, outstanding, beginning balance (in dollars per share)	$ 22.67
Weighted average exercise price per share, modified (in dollars per share)	22.86
Weighted average exercise price per share, granted (in dollars per share)	15.72
Weighted average exercise price per share, vested (in dollars per share)	22.83
Weighted average exercise price per share, forfeited (in dollars per share)	19.12
Weighted average exercise price per share, outstanding, ending balance (in dollars per share)	$ 17.23	$ 22.67

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Stock-Based Compensation and Equity - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 37,200	$ 166,428	$ 198,213	$ 4,241
Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation		16,567	20,157	320
Selling expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation		103,239	101,623	508
General and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation		$ 46,622	$ 76,433	$ 3,413

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions		1 Months Ended
	May 03, 2021	Jan. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Loss Contingencies [Line Items]
Loss contingency accrual			$ 8.2	$ 26.2
DOJ FIRREA Investigation
Loss Contingencies [Line Items]
Payment for legal settlement		$ 3.2
FTC Investigation
Loss Contingencies [Line Items]
Payment for legal settlement	$ 20.0

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Operating and finance leases, renewal term	10 years
Operating and finance leases, options to terminate lease, term	1 year
Operating lease cost	$ 15,689	$ 16,784
Finance lease cost:
Amortization of right-of-use assets	2,375	5,090
Interest on lease liabilities	264	453
Total finance lease cost	$ 2,639	$ 5,543
Minimum
Lessee, Lease, Description [Line Items]
Operating and finance leases, remaining lease term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating and finance leases, remaining lease term	7 years

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ (16,877)	$ (17,635)
Operating cash flows from finance leases	(264)	(453)
Financing cash flows from finance leases	(3,158)	(7,657)	$ (9,781)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	4,490	3,420
Finance leases	$ 1,808	$ 1,228

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Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Operating Leases
Operating lease right-of-use assets	$ 46,000	$ 52,880
Current operating lease liabilities	12,033	12,135
Operating lease liabilities	41,713	49,692
Total operating lease liabilities	53,746	61,827
Finance Leases
Property, plant and equipment, gross	40,939	40,571
Accumulated depreciation	(24,465)	(22,976)
Property, plant and equipment, net	16,474	17,595
Current finance lease liabilities	2,854	3,356
Finance lease liabilities	1,416	2,460
Total finance lease liabilities	$ 4,270	$ 5,816
Weighted Average Remaining Lease Term
Operating leases	5 years	5 years
Finance leases	2 years 8 months 12 days	1 year 7 months 6 days
Weighted Average Discount Rate
Operating leases	7.00%	7.00%
Finance leases	4.00%	4.00%
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, plant and equipment, net	Property, plant and equipment, net

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Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Operating Leases
2022	$ 15,858
2023	15,199
2024	14,392
2025	8,764
2026	5,008
Thereafter	4,494
Total lease payments	63,715
Less imputed interest	(9,969)
Total	53,746	$ 61,827
Finance Leases
2022	3,025
2023	847
2024	514
2025	0
2026	0
Thereafter	0
Total lease payments	4,386
Less imputed interest	(116)
Total	$ 4,270	$ 5,816

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Related Party Transactions (Detail) - USD ($)		1 Months Ended		12 Months Ended
	Mar. 03, 2020	Jul. 31, 2019	Sep. 30, 2018	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jul. 31, 2021	Feb. 29, 2020	Jan. 17, 2020
Related Party Transaction [Line Items]
Additional expenses incurred for other related-party transactions				$ 900,000	$ 600,000	$ 2,500,000
Accrued expenses and other current liabilities				236,250,000	247,324,000
Monitoring fees				700,000	8,100,000
Face Value				2,712,345,000	2,825,600,000
Blackstone Management Partners L.L.C.
Related Party Transaction [Line Items]
Percentage of voting shares held, threshold									5.00%
Fair market value of voting share held, threshold									$ 25,000,000
Solar
Related Party Transaction [Line Items]
Related-party agreement, term	1 year
Related-party agreement, renewal term	1 year
Related-party agreement, renewal notification period	90 days
Blackstone Management Partners L.L.C.
Related Party Transaction [Line Items]
Monitoring fee (percent)									1.00%
Solar | Affiliated Entity
Related Party Transaction [Line Items]
Sublease and other administrative expenses					3,300,000	9,200,000
Vivint Gives Back
Related Party Transaction [Line Items]
Accrued expenses and other current liabilities				100,000	100,000
Wireless | Affiliated Entity
Related Party Transaction [Line Items]
Due from related party				0	0
Transactions associated with spin-off services				0	1,300,000	1,300,000
Due to related parties				0	0
Blackstone Management Partners L.L.C. | Affiliated Entity
Related Party Transaction [Line Items]
Prepaid expenses and other current assets				5,700,000	8,100,000	5,600,000
Blackstone Management Partners L.L.C. | Affiliated Entity | Minimum
Related Party Transaction [Line Items]
Annual monitoring base fee, minimum				2,700,000
Blackstone Management Partners L.L.C. | Blackstone Management Partners LLC Support And Services Agreement | Affiliated Entity
Related Party Transaction [Line Items]
Accrued expenses and other current liabilities				1,300,000
Fee paid for support services by BMP to Company				1,500,000
Expenses from transactions with related party				0	0	$ 0
Due to related parties				1,800,000
Blackstone Advisory Partners L.P. | Senior Notes | Affiliated Entity | 2029 Notes
Related Party Transaction [Line Items]
Deferred financing cost, net				3,000,000
Face Value				18,500,000
Blackstone Advisory Partners L.P. | Term Loan | Affiliated Entity
Related Party Transaction [Line Items]
Deferred financing cost, net							$ 1,300,000
Face Value				201,200,000	166,100,000
Fortress Investment Group | Senior Notes | Affiliated Entity | 2023 Notes
Related Party Transaction [Line Items]
Face Value					72,500,000
Fortress Investment Group | Senior Notes | Affiliated Entity | 2024 Notes
Related Party Transaction [Line Items]
Face Value					19,900,000
Fortress Investment Group | Senior Notes | Affiliated Entity | 2027 Notes
Related Party Transaction [Line Items]
Face Value				11,700,000	11,700,000
Fortress Investment Group | Term Loan | Affiliated Entity
Related Party Transaction [Line Items]
Face Value				$ 119,700,000	$ 173,700,000
Fortress Investment Group | Term Loan | Affiliated Entity | 6.750% Senior Secured Noes Due 2027
Related Party Transaction [Line Items]
Deferred financing cost, net								$ 900,000
Fortress Investment Group | Term Loan | Affiliated Entity | 2029 Notes
Related Party Transaction [Line Items]
Deferred financing cost, net							$ 800,000
Vivint Smart Home, Inc. | Affiliated Entity
Related Party Transaction [Line Items]
Proceeds from contributed capital		$ 4,700,000	$ 4,700,000

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Segment Reporting and Business Concentrations - (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) Country Segment	Dec. 31, 2020 USD ($) Country Segment	Dec. 31, 2019 USD ($) Country Segment
Segment Reporting Information [Line Items]
Number of operating segments | Segment	1	1	1
Number of geographic regions | Country	2	2	2
Revenues	$ 1,479,388	$ 1,252,267	$ 1,151,100
United States
Segment Reporting Information [Line Items]
Revenues	1,418,700	1,186,218	1,079,246
Canada
Segment Reporting Information [Line Items]
Revenues	$ 60,688	$ 66,049	$ 71,854

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Employee Benefit Plan (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Postemployment Benefits [Abstract]
Employer matching contribution, percent of employees' gross pay	3.00%
Employer matching contribution, amount for every employees' dollar contributed	$ 0.50
Employer matching contribution, percent of employees' gross pay for 50% matching for every dollar contributed	2.00%
Maximum annual contributions per employee, percent	4.00%
Matching contributions to the plan	$ 10,300,000	$ 4,300,000	$ 6,500,000

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Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Net loss attributable to common stockholders	$ (305,552)	$ (603,331)	$ (400,696)
Gain on change in fair value of warrants, diluted	(50,967)	0	0
Net loss attributable to common stockholders, diluted (in thousands)	$ (356,519)	$ (603,331)	$ (400,696)
Denominator:
Shares used in computing net loss attributable per share to common stockholders, basic (in shares)	208,265,631	179,071,278	94,805,201
Weighted-average effect of potentially dilutive shares to purchase common stock (in shares)	812,536	0	0
Weighted Average Number of Shares Outstanding, Diluted, Total	209,078,167	179,071,278	94,805,201
Net loss attributable per share to common stockholders:
Basic (in dollars per share)	$ (1.47)	$ (3.37)	$ (4.23)
Diluted (in dollars per share)	$ (1.71)	$ (3.37)	$ (4.23)

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Basic and Diluted Net Loss Per Share - Schedule of Potentially Antidilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Rollover SARs | Rollover Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	2,004,712	2,474,011	3,603,537
Rollover LTIPs | Rollover Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	0	2,316,869	4,633,738
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	9,570,667	8,692,347	51,929
PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	9,643,666	4,877,277	0
Public warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	0	878,346	0
Private placement warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	0	5,933,334	0
Earnout shares reserved for future issuance
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares excluded from computation of basic and diluted earnings per share (in shares)	24,060	1,260,281	0