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Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Revenue Recognition and Deferred Revenue

The Company generates a majority of its revenue from the sale of subscriptions to its software products for survey feedback and customer experience. The Company also generates a portion of revenue from its transactional insight/market research solutions services. The Company normally sells each of these products in separate contracts to its customers and each product is distinct. The Company’s policy is to exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements. The Company accounts for revenue contracts with customers through the following steps:

Identification of the contract, or contracts, with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when, or as, the Company satisfies a performance obligation.

For subscription products, the Company provides customers the option of monthly, annual or multi-year contractual terms. In general, the Company’s customers elect contractual terms of one year or less. Subscription revenue is recognized on a straight-line basis over the related subscription term beginning on the date the Company provides access. Access to the Company’s subscription product is an obligation representing a series of distinct services (and which comprise a single performance obligation) that the Company provides to its end customer over the subscription term. The Company recognizes its subscription revenue on a straight-line basis because the customer benefits from access to the products throughout the contractual term.

The transactional insight/market research solution services are generally billed in advance and revenue is recognized after the services have been delivered.

The Company's contracts are generally non-cancellable and do not contain refund-type provisions and are billed in advance. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred or services have been delivered.

The Company records contract liabilities to deferred revenue when cash payments are received or due. Deferred revenue consists of the unearned portion of customer billings.

Cost of Revenue

Cost of revenue associated with the delivery of the Company’s online platform to its users generally consists of infrastructure costs, personnel costs and other related costs. Infrastructure costs generally include expenses related to website hosting costs, amortization of capitalized software, credit card processing fees, charity donations and

external sample costs. Personnel costs include salaries and bonuses, stock-based compensation expense, other employee benefits and travel-related expenses for employees whose primary responsibilities relate to supporting the Company’s infrastructure and delivering user support. Other related costs include amortization of acquired developed technology intangible assets and allocated overhead.

Deferred Commissions

Certain commissions earned by the Company’s salesforce are considered to be incremental and recoverable costs of obtaining a contract with a customer. Such costs are deferred and amortized on a straight-line basis over their estimated period of benefit which is generally estimated as four years. The period of benefit was estimated by considering factors such as historical customer attrition rates, the useful life of the Company’s technology, and the impact of competition in its industry. Amortization of deferred commissions, which is included in the sales and marketing expense line within the consolidated statements of operations, was $9.5 million, $6.9 million and $4.2 million during the years ended December 31, 2022, 2021 and 2020, respectively. There was no impairment loss in relation to the deferred commissions for any period presented.

Stock-Based Compensation

The Company recognizes stock-based compensation expense for all share-based payments to employees, including restricted stock units, stock options, restricted stock awards, and shares issuable under the Company’s 2018 employee stock purchase plan, as amended (“the ESPP”) based on the grant-date fair value of the Company’s common stock estimated in accordance with the provisions of ASC 718, Compensation‑Stock Compensation. For time-based equity awards, stock-based compensation expense is recognized on a straight-line basis over the award’s requisite service period, which is generally four years for new hires and generally three years for subsequent grants to existing employees. For shares issuable under the ESPP, stock-based compensation expense is recognized on a straight-line basis over the award’s requisite service period, which is an offering period. For performance-based stock awards, stock-based compensation expense is recognized using the attribution method over the requisite service period. The Company recognizes excess tax benefits from stock-based compensation expense in earnings, which are substantially offset by a valuation allowance. The Company made a policy election to account for forfeitures as they occur.

The Company estimates the fair value of time-based restricted stock units and restricted stock awards based on the fair value of the Company’s common stock on the grant date. The Company estimates the fair values of its time-based stock options and shares issuable under the ESPP using the Black-Scholes-Merton option-pricing model. The Company uses the Monte Carlo simulation model to determine the fair value of its performance-based stock awards. The valuation models require input of the following key assumptions:

Expected Term: As the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the Company determines the expected term based on the average period the stock options or ESPP are expected to remain outstanding. For stock options, expected term is calculated as the midpoint of the stock options vesting term and contractual expiration period.
Expected Volatility: As the Company does not have sufficient trading history of its common stock, stock price volatility is estimated at the applicable grant date by taking the weighted-average historical volatility
of a group of comparable publicly-traded companies over a period equal to the expected life of the options or ESPP.
Expected Dividend Rate: The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero.
Risk-Free Interest Rate: The Company determined the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate as of the date of grant.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of cash on deposit with banks and investments in money market funds with maturities of 90 days or less from the date of purchase. The Company also classifies amounts in transit from payment processors for customer credit card and debit card transactions as cash equivalents, because such amounts generally convert to cash within five days with little or no default risk.

Accounts Receivable

Accounts receivable are presented at amortized cost net of amounts not expected to be collected.

Accounts receivable are customer obligations that arise due to the time taken to settle transactions through direct customer payments. The Company bills in advance for monthly contracts and generally bills annually in advance for contracts with terms of one year or longer when it has an unconditional contractual right to consideration. The Company also recognizes an immaterial amount of contract assets, or unbilled receivables, primarily relating to rights to consideration for services completed but not billed at the reporting date. Unbilled receivables are classified as receivables when the Company has the right to invoice the customer.

The Company records an allowance for credit losses based upon its assessment of various factors including the Company’s a) historical experience (including historical bad debt expense trends), the age of a customers’ accounts receivable balance, and a customers’ credit quality, b) expected losses over the remaining estimated contractual life of the receivable and c) other reasonable and supportable factors pertaining to a customers’ ability to pay (including consideration of current economic conditions). Amounts deemed uncollectible and expected credit losses are recorded to the allowance for doubtful accounts with an offsetting charge in the consolidated statements of operations. The Company evaluated its allowance for credit losses using its consolidated gross accounts receivable balance as a single portfolio segment. Accounts receivables are written off against the recorded allowance when the Company has exhausted collection efforts without success. Bad debt expense recognized in the consolidated statements of operations was $2.8 million, $1.2 million and $1.4 million during the years ended December 31, 2022, 2021 and 2020, respectively. Write-off of uncollectible accounts receivable was $2.5 million, $0.9 million and $1.0 million during the years ended December 31, 2022, 2021 and 2020, respectively, and was recorded against the allowance for doubtful accounts.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents in banks that management believes are high-credit quality financial institutions. Such amounts may at times exceed the federally insured limits. Cash equivalents consist of short-term money market funds which are managed by reputable financial institutions. As of December 31, 2022, $163.0 million of the Company’s cash and cash equivalents are held in one financial institution. For purposes of its customer concentration disclosure, the Company defines a customer as an organization. An organization may consist of an individual paying user, multiple paying users within an organization or the organization itself. No single customer accounted for more than 10% of revenue during each of the years ended December 31, 2022, 2021 and 2020. No customers accounted for more than 10% of accounts receivable, net as of December 31, 2022 and 2021, respectively.

Business Combinations

When the Company acquires a business, the purchase consideration is allocated to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated respective fair values. The excess of the

fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require the Company to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users including related attrition rates, acquired developed technology including the estimated obsolescence of the technology, and trade names from a market participant perspective, future expected cash flows for operating expenses, useful lives and discount rates. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to non-operating (income) expense in the consolidated statements of operations.

Impairment of Long-Lived Assets

Long-lived assets with finite lives include property and equipment, operating lease assets, capitalized internal-use software and acquisition intangible assets. Long-lived assets are depreciated or amortized over their estimated useful lives which are as follows:

 

Computer equipment

2 to 5 years

Furniture, fixtures, and other assets

5 years

Leasehold improvements

Shorter of remaining lease term or 5 years

Purchased software

3 years

Capitalized internal-use software

3 years

Acquisition intangible assets: customer relationships

3 to 7 years

Acquisition intangible assets: trade name

5 years

Acquisition intangible assets: developed technology

3 years

 

The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of depreciable or amortizable long-lived assets may warrant revision or that the remaining balance may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, the Company uses an estimate of the related undiscounted future cash flows over the remaining life of the long-lived assets in measuring whether they are recoverable. If the estimated undiscounted future cash flows do not exceed the carrying value of the asset, a loss is recorded as the excess of the asset’s carrying value over its fair value.

In 2022, in connection with the restructuring plan implemented in March 2022 (the “March 2022 Restructuring Plan”), the Company executed a partial termination to reduce the leased space for its San Mateo, CA headquarters. As a result, the Company recorded $0.8 million impairment on certain leasehold improvements associated with the vacated space. Also in connection with the March 2022 Restructuring Plan, the Company concluded that the acquired trade name from a prior acquisition had no future economic benefit due to its plan to simplify its brand positioning by the end of 2022. As such, the Company has accelerated the amortization of the related intangible. These charges were included in restructuring in the consolidated statement of operations for the year ended December 31, 2022. See Note 15 for additional information.

In 2021, the Company entered into a sublease agreement for its existing office space in San Francisco, CA. As a result of the sublease transaction, the Company recorded a lease impairment charge of $0.5 million during the year ended December 31, 2021, which was the excess of the carrying value of the associated operating lease ROU asset over its estimated fair value. The Company estimated the fair value using cash flows from the estimated sublease rental income. The impairment charge is included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2021. The Company did not recognize any impairment of long-lived assets during the year ended December 31, 2020.

The Company believes that the carrying values of long-lived assets as of December 31, 2022 are recoverable.

Goodwill is not amortized but rather tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Goodwill impairment is recognized when the carrying value

of goodwill exceeds the implied fair value of the Company. The Company did not recognize any impairment of goodwill during each of the years ended December 31, 2022, 2021 and 2020.

Foreign Currencies

Where the functional currency of the Company’s foreign subsidiaries is the U.S. dollar, monetary assets and liabilities are remeasured using foreign currency exchange rates at the end of the period, and non-monetary assets are remeasured based on historical exchange rates. Gains and losses due to foreign currency are the result of remeasurements of transactions denominated in foreign currencies and are included in other non-operating (income) expense, net in the consolidated statements of operations.

Where the functional currency of the Company’s foreign subsidiaries is the local currency, the assets and liabilities of those foreign subsidiaries are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date and revenue and expense amounts are translated at a rate approximating the average exchange rate for the period. Foreign currency translation gains and losses are recorded to accumulated other comprehensive income (loss).

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, Fair Value Measurement, to assets and liabilities that are required to be measured at fair value, which include investments in marketable debt and equity securities and derivative financial instruments.

Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the consolidated statements of comprehensive loss until realized.

See Note 6 for additional disclosures regarding fair value measurements.

Private Company Investment

The Company accounts for one private company investment, without readily determinable fair value, under the cost method. This investment, for which the Company is not able to exercise significant influence over the investee, is measured and accounted for using an alternative measurement basis of a) the security’s carrying value at cost, b) less any impairment and c) plus or minus any qualifying observable price changes. Observable price changes or impairments recognized on the Company’s private company investment would be classified as a Level 3 financial instrument within the fair value hierarchy based on the nature of the fair value inputs. Any adjustments to the carrying value are recognized in other non-operating (income) expense, net in the consolidated statements of operations. As of December 31, 2021, the carrying value of the Company's private company investment at cost was $3.6 million and was classified as other asset on the consolidated balance sheet as this investment did not have a stated contractual maturity date. There were no impairments or observable price changes during the year ended December 31, 2021.

In December 2022, the Company sold its private company investment for a cash consideration of $6.8 million which was subsequently received in January 2023. As such, the Company included the expected proceeds from the sale as a receivable in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2022, and recorded a gain on the sale within other non-operating (income) expense in the consolidated statement of operations for the year ended December 31, 2022. As of December 31, 2022, the Company had no private company investments.

Impairment of Investments

The Company periodically reviews its investments for impairment. If the Company concludes that if any of these investments are impaired, the Company determines whether such impairment is other-than-temporary. Factors considered to make such determination include the duration and severity of the impairment, the reason for the decline in value and the potential recovery period and the Company’s intent to sell. For debt securities, the Company also considers whether (1) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and (2) the amortized cost basis cannot be recovered as a result of credit losses. If the investment is considered to be other-than-temporarily impaired, the Company will record the investment at

fair value by recognizing an impairment within other non-operating (income) expense in the consolidated statements of operations and establishing a new carrying value for the investment.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Expenditures that improve an asset or extend its estimated useful life are capitalized. Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.

Capitalized Internal-Use Software

The Company incurs development costs relating to its online platform as well as other software solely for internal-use. Costs relating to the planning and post‑implementation phases of development are expensed as incurred. Costs incurred in the application development phase are capitalized and included in capitalized internal-use software, net and amortized over their estimated useful life, generally three years. Maintenance and training costs are expensed as incurred.

Leases

At contract inception, the Company performs an evaluation to determine if it is conveyed the right to control the use of identified property, plant or equipment. To the extent such rights of control are conveyed, the Company further makes an assessment as to the applicable lease classification. The Company leases facilities and equipment, which are generally accounted for as operating leases (as further described in Note 10).

Operating Leases

Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current, and operating lease liabilities, non-current, in the consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating ROU assets and lease liabilities are recognized at the lease inception date based on the present value of lease payments over the lease term discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate (which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease). Because the Company’s operating leases generally do not provide an implicit rate, an analysis of publicly traded debt securities of companies with credit and financial profiles similar to the Company’s is used to estimate the incremental borrowing rate. The Company’s operating lease terms have generally ranged between 1 year to 12 years and may include options to extend the lease term, generally at market rates. The Company’s ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company does not assume renewals or early terminations unless it is reasonably certain to exercise these options at commencement. The Company does not allocate consideration between lease and non-lease components. Lease expense is recognized on a straight-line basis over the lease term.

For short-term leases, the Company records lease expense in its consolidated statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred.

Subleases

The Company additionally has entered into subleases for unoccupied leased office space. To the extent there were losses associated with the sublease, they were recognized in the period the sublease was executed. Gains are recognized over the sublease term. Any sublease payments received in excess of the straight-line rent payments for the sublease are recorded in other non-operating (income) expense. The Company’s sublease agreements do not contain any variable payments, material residual value guarantees or material restrictive covenants.

Restructuring

From time to time, the Company may implement a management-approved restructuring plan to improve efficiencies across the organization, reduce its cost structure, and/or better align its resources with the Company’s strategy. Restructuring charges can include severance costs to eliminate a specified number of employees, expenses to vacate

real estate and consolidate operations, contract cancellation costs, impairment of certain assets, and other related costs.

Costs associated with a restructuring plan are recognized and measured at fair value in the consolidated statement of operations in the period in which the liability is incurred. These restructuring initiatives may require the Company to make estimates in several areas including: (i) expenses for employee severance and other separation costs; and (ii) realizable values of assets made redundant, obsolete, or excessive.

Legal and Other Contingencies

The Company accrues a liability for either claims arising in the ordinary course of business, assessments resulting from non-income-based audits or litigation when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment. See Note 11 for additional information pertaining to legal and other contingencies.

Liability for Sabbatical Leave

The Company provides an employee sabbatical leave program accounted for in accordance with ASC 710, Compensated Absences. As of December 31, 2022, the accrued balance was $5.9 million ($2.9 million included in accrued compensation and $3.0 million in other non-current liabilities). As of December 31, 2021, the accrued balance was $6.5 million ($3.1 million included in accrued compensation and $3.4 million in other non-current liabilities).

Advertising and Promotion Costs

Expenses related to advertising, marketing and promotion of the Company’s product offerings are expensed as incurred. These costs mainly consist of search engine marketing related costs. The Company incurred $70.5 million, $68.5 million and $44.6 million during the years ended December 31, 2022, 2021 and 2020, respectively, which are included in sales and marketing expenses in the consolidated statements of operations.

Other Non-Operating (Income) Expense

Other non-operating (income) expense, net consists primarily of interest income, net foreign currency exchange (gains) losses, gain on sale of private company investments, net realized gains and losses related to investments, and other. The components of other non-operating (income) expense recognized in the consolidated financial statements is as follows:

 

 

 

Year Ended December 31,

 

(in thousands)

 

2022

 

2021

 

2020

 

Interest Income

 

$

(3,263

)

$

(556

)

$

(780

)

Foreign currency (gains) losses, net

 

 

2,045

 

 

1,077

 

 

225

 

Gain on sale of private company investments

 

 

(3,202

)

 

 

 

(1,001

)

Other (income) expense, net

 

 

(93

)

 

413

 

 

120

 

Other non-operating (income) expense, net

 

$

(4,513

)

$

934

 

$

(1,436

)

 

Income Taxes

The Company accounts for income taxes using the asset and liability method. ASC 740, Accounting for Income Taxes, requires the recognition of deferred tax assets and liabilities based upon the temporary differences between the financial reporting and tax bases of assets and liabilities and using enacted rates in effect for the years in which the differences are expected to reverse.

Valuation allowances are established when necessary to reduce the deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will not be realized.

ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company records uncertain tax positions on the basis of a two-step process in which: (1) the Company determines

whether it is more likely than not that the tax positions will be sustained on the basis of technical merits of the position, and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the related tax authority.

From time to time, the Company engages in certain intercompany transactions and legal entity restructurings. The Company considers many factors when evaluating these transactions, including the alignment of their corporate structure with their organizational objectives and the operational and tax efficiency of their corporate structure, as well as the long-term cash flows and cash needs of its business. These transactions may impact the Company’s overall tax rate and/or result in additional cash tax payments. The impact in any period may be significant. These transactions may be complex and the impact of such transactions on future periods may be difficult to estimate.

Accounting Pronouncements Not Yet Adopted

Reference Rate Reform: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. In December 2022, the FASB extended the effective date through December 31, 2024. The Company’s 2018 Credit Facility has clauses to facilitate the use of a successor rate index agreed to by lenders. As such, the Company does not expect this update will have a material impact on its consolidated financial statements and related disclosures.