Restatement of Previously Issued Consolidated Financial Statements

12 Months Ended

Dec. 31, 2022

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Consolidated Financial Statements

Restatement of Previously Issued Consolidated Financial Statements

As previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 24, 2023, certain of the Company’s previously filed interim unaudited and annual audited consolidated financial statements should no longer be relied upon and a restatement is required for these previously issued consolidated financial statements. The consolidated financial statements for the year ended December 31, 2022 include restated consolidated financial statements for the years ended December 31, 2021 and 2020. In addition, we have restated our unaudited quarterly financial data for the first three quarters of the year ended December 31, 2022 and for each quarter of the years ended December 31, 2021 and 2020 as presented in Note 21, Quarterly Financial Information. We have also restated impacted amounts within the notes to the consolidated financial statements, as applicable.

Restatement Background

Understatement of End-User Liability

The Company identified an error in its end-user liability balance, which is included in other current liabilities on the consolidated balance sheets. The error was the result of a design deficiency in the Company’s reconciliation process for the end-user liability balance. If uncorrected, the error would have resulted in an understatement of sales and marketing expense, an overstatement of revenue and an understatement of other current liabilities in the consolidated financial statements. As a result, sales and marketing expense for the years ended December 31, 2021 and 2020 was understated by $1.8 million and $2.3 million, respectively, and revenue for the years ended December 31, 2021 and 2020 was overstated by $0.1 million in the Company’s previously reported consolidated statements of operations and comprehensive loss. The impact on the consolidated balance sheets was an understatement of other current liabilities by $8.2 million and $6.3 million as of December 31, 2021 and 2020, respectively.

Reserve for Indirect Tax Liabilities

During 2022, the Company determined that it is liable for indirect taxation in various jurisdictions within the United States and other countries around the world based on its operations. As a result, the Company determined that it should accrue for indirect taxes, and the related interest and penalties, in the current and prior years. The error was due to the lack of appropriate risk assessment to identify the potential for a material indirect tax exposure. The error if uncorrected would have resulted in an overstatement of revenue, an understatement of general and administrative expenses and an understatement of other current liabilities in the Company’s consolidated financial statements.

As a result, revenue was overstated by $3.8 million and $1.0 million for the years ended December 31, 2021 and 2020, respectively, and general and administrative expense was understated by $0.7 million, and $0.2 million for the years ended December 31, 2021 and 2020, respectively, in the consolidated statements of operations and comprehensive loss. The impact on the consolidated balance sheets was an understatement of other current liabilities of $6.2 million and $1.7 million as of December 31, 2021 and 2020, respectively.

Other Adjustments

In addition to the misstatements identified above, the Company has corrected other immaterial errors. While these other errors are quantitatively and qualitatively immaterial, individually and in the aggregate, because the Company is correcting for the material errors, the Company has decided to correct these other errors as well. These include adjustments to correct errors in the purchase price allocation and subsequent accounting associated with the acquisition of Aarki. Upon the acquisition, we had previously incorrectly recorded a liability for and continued to accrue for the Aarki bonus program liability as well as incorrectly recorded Aarki finance leases under ASC 842. If uncorrected, the error would have resulted in an understatement of Goodwill and an understatement of accumulated deficit in the consolidated financial statements. As a result, as of and for the year ended December 31, 2021, goodwill was overstated by $1.0 million, cost of revenue was understated by $0.5 million, research and development expense was understated by $0.2 million, sales and marketing expense was understated by $0.2 million, and general and administrative expense was understated by $0.1 million in the Company’s previously reported consolidated financial statements. Other immaterial adjustments resulted in an overstatement of sales and marketing expense of $0.7 million for the year ended December 31, 2021. There were no other adjustments identified for the year ended December 31, 2020.

These misstatements, both individually and in the aggregate, had no impact to previously reported total cash flows from operating, investing or financing activities, or the timing of cash payments.

Below are our restated consolidated balance sheets as of December 31, 2021 and 2020 and the restated consolidated statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows for each of the years ended December 31, 2021 and 2020. The amounts as previously reported for the years ended December 31, 2021 and 2020 were derived from our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 1, 2022.

Consolidated Statements of Operations and Comprehensive Loss

	Year Ended December 31, 2021
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Revenue	$	384,089	$	(138)	$	(3,797)	$	—	$	380,154
Cost of revenue	24,711		—		—		532		25,243
Research and development	46,017		—		—		215		46,232
Sales and marketing	465,457		1,780		—		(546)		466,691
General and administrative	135,026		—		691		85		135,802
Total costs and expenses	671,211		1,780		691		286		673,968
Loss from operations	(287,122)		(1,918)		(4,488)		(286)		(293,814)
Loss before income taxes	(200,373)		(1,918)		(4,488)		(286)		(207,065)
Benefit for income taxes	(18,996)		—		—		(144)		(19,140)
Net loss	$	(181,377)	$	(1,918)	$	(4,488)	$	(142)	$	(187,925)
Net loss per share attributable to common stockholders: (1)
Basic	$	(0.47)	$	—	$	(0.01)	$	—	$	(0.49)
Diluted	$	(0.69)	$	—	$	(0.01)	$	—	$	(0.71)
Total comprehensive loss	$	(181,625)	$	(1,918)	$	(4,488)	$	(142)	$	(188,173)

(1) Due to differences in rounding to the nearest cent per basic or diluted share, totals may not equal the sum of the line items.

	Year Ended December 31, 2020
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Revenue	$	230,115	$	(87)	$	(981)	$	—	$	229,047
Cost of revenue	12,281		—		—		—		12,281
Research and development	23,225		—		—		—		23,225
Sales and marketing	251,941		2,328		—		—		254,269
General and administrative	42,289		—		173		—		42,462
Total costs and expenses	329,736		2,328		173		—		332,237
Loss from operations	(99,621)		(2,415)		(1,154)		—		(103,190)
Loss before income taxes	(145,395)		(2,415)		(1,154)		—		(148,964)
Net loss	$	(145,510)	$	(2,415)	$	(1,154)	$	—	$	(149,079)
Net loss per share attributable to common stockholders:(1)
Basic	$	(0.49)	$	(0.01)	$	—	$	—	$	(0.51)
Diluted	$	(0.49)	$	(0.01)	$	—	$	—	$	(0.51)
Total comprehensive loss	$	(145,510)	$	(2,415)	$	(1,154)	$	—	$	(149,079)

(1) Due to differences in rounding to the nearest cent per basic or diluted share, totals may not equal the sum of the line items.

Consolidated Balance Sheets

	Year Ended December 31, 2021
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Accounts receivable, net	$	13,497	$	—	$	—	$	(728)	$	12,769
Total current assets	590,588		—		—		(728)		589,860
Goodwill	86,845		—		—		(973)		85,872
Total assets	1,022,825		—		—		(1,701)		1,021,124
Other current liabilities	64,969		8,168		6,232		(1,416)		77,953
Total current liabilities	86,832		8,168		6,232		(1,416)		99,816
Other long-term liabilities	13,544		—		—		(144)		13,400
Total liabilities	399,125		8,168		6,232		(1,560)		411,965
Accumulated deficit	(419,692)		(8,168)		(6,232)		(141)		(434,233)
Total stockholders' equity	623,700		(8,168)		(6,232)		(141)		609,159
Total liabilities and stockholders' equity	$	1,022,825	$	—	$	—	$	(1,701)	$	1,021,124

	Year Ended December 31, 2020
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Other current liabilities	$	25,317	$	6,250	$	1,744	$	(1)	$	33,310
Total current liabilities	47,356		6,250		1,744		(1)		55,349
Total liabilities	225,634		6,250		1,744		(1)		233,627
Accumulated deficit	(238,315)		(6,250)		(1,744)		1		(246,308)
Total stockholders' equity	$	56,787	$	(6,250)	$	(1,744)	$	1	$	48,794

Consolidated Statements of Stockholders’ Equity

Accumulated Deficit	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Balance at December 31, 2019 (1)	$	(90,256)	$	(3,835)	$	(590)	$	1	$	(94,680)
Net loss	(145,510)		(2,415)		(1,154)		—		(149,079)
Balance at December 31, 2020	$	(238,315)	$	(6,250)	$	(1,744)	$	1	$	(246,308)
Net loss	(181,377)		(1,918)		(4,488)		(142)		(187,925)
Balance at December 31, 2021	$	(419,692)	$	(8,168)	$	(6,232)	$	(141)	$	(434,233)

(1) The cumulative impact of the misstatements related to the years ended prior to January 1, 2020 is reflected in this line.

Consolidated Statements of Cash Flows

	Year Ended December 31, 2021
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Net loss	$	(181,377)	$	(1,918)	$	(4,488)	$	(142)	$	(187,925)
Depreciation and amortization	$	11,133	$	—	$	—	$	532	$	11,665
Deferred income taxes	$	(19,233)	$	—	$	—	$	(144)	$	(19,377)
Accounts receivable, net	$	203	$	—	$	—	$	728	$	931
Other accruals and liabilities	$	23,228	$	1,918	$	4,488	$	(974)	$	28,660

	Year Ended December 31, 2020
	As Reported		End-User Liability		Indirect Taxes		Other Adjustments		As Restated
Net loss	$	(145,510)	$	(2,415)	$	(1,154)	$	—	$	(149,079)
Other accruals and liabilities	$	12,045	$	2,415	$	1,154	$	—	$	15,614