10-Q 1 ayx-20210930.htm 10-Q ayx-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  _____________________________________________________
FORM 10-Q
 _____________________________________________________
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 001-38034
  _____________________________________________________
Alteryx, Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Delaware90-0673106
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3345 Michelson Drive,Suite 400,Irvine,California92612
(Address of principal executive offices)(Zip Code)
(888) 836-4274
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common Stock, $0.0001 par value per shareAYXNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
On October 27, 2021, there were 59,690,434 shares of the registrant’s Class A common stock outstanding and 7,763,420 shares of the registrant’s Class B common stock outstanding.




Alteryx, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2021
TABLE OF CONTENTS
 
  Page Number
Part I:
A.
B.
C.
D.
E.
Part II:




SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the federal securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. In some cases, forward-looking statements can be identified by the use of terminology such as “believe,” “may,” “will,” “intend,” “expect,” “plan,” “anticipate,” “estimate,” “potential,” “continue,” “would,” “target,” or “project,” or other comparable terminology. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our expectations regarding:
 
the successful transition and onboarding of our new chief executive officer, chief product officer, chief revenue officer and other senior management roles;
our investments in cloud infrastructure and the cost of third-party data center hosting fees;
the duration and impact of the novel coronavirus and the coronavirus disease, or COVID-19, pandemic;
trends in revenue, cost of revenue, and gross margin;
our ability to attract and retain personnel, particularly with respect to our direct sales force and software engineers;
trends in operating expenses, including research and development expense, sales and marketing expense, and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;
expansion of our international operations and the impact on foreign tax expense;
the impact of foreign currency exchange rates;
maintaining a valuation allowance for net deferred tax assets to the extent they are not expected to be recoverable;
the timing and method of settlement of any series of our convertible senior notes;
the global opportunity for our analytic process automation software platform;
our investments in our marketing efforts and sales organization, including indirect sales channels and headcount, and the impact of any changes to our sales organization on revenue and growth;
the continued development and success of Alteryx Community, our online user community, distribution channels and our partner relationships, including the ability of our partners to successfully enable and deliver specialized support to our customers;
our expectations for the Alteryx APA platform, Alteryx Connect, Alteryx Promote and Alteryx Intelligence Suite and the speed of, and ability to deliver, additional product innovation, including Designer Cloud and Alteryx Machine Learning;
our efforts at incorporating a SaaS business model;
our ability to manage our product lifecycle, including the discontinuation of any of our products or any acquired technology and the migration of those customers to other products that we offer;
expansion of and within our customer base;
competitors and competition in our markets;
legal proceedings and the impact of such proceedings;
cash and cash equivalents and short-term investments and any positive cash flows from operations being sufficient to support our working capital and capital expenditure requirements for at least the next 12 months; and
other statements regarding our future operations, financial condition, and prospects and business strategies.
Although we believe that the expectations reflected in the forward-looking statements contained in this document are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to risks and uncertainties, including, but not limited to, the factors set forth in this Quarterly Report on Form 10-Q under Part II, Item 1A. Risk Factors. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all 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 we may make. In light of these risks, uncertainties, and assumptions, the forward-looking statements made in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
All forward-looking statements and reasons why results may differ included in this Quarterly Report on Form 10-Q are made as of the date of the filing of this Quarterly Report on Form 10-Q, and we assume no obligation to update any such forward-looking statements or reasons why actual results may differ. The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

1


PART I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited).
Alteryx, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share data)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenue:
Subscription-based software license$37,477 $63,144 $120,851 $148,534 
PCS and services86,024 66,573 241,479 186,247 
Total revenue123,501 129,717 362,330 334,781 
Cost of revenue:
Subscription-based software license1,264 1,022 3,739 3,949 
PCS and services14,202 9,392 35,498 29,147 
Total cost of revenue15,466 10,414 39,237 33,096 
Gross profit108,035 119,303 323,093 301,685 
Operating expenses:
Research and development33,457 25,232 95,645 74,669 
Sales and marketing83,034 60,920 232,597 184,026 
General and administrative37,125 23,518 104,291 71,256 
Total operating expenses153,616 109,670 432,533 329,951 
Income (Loss) from operations(45,581)9,633 (109,440)(28,266)
Interest expense(9,973)(9,603)(29,206)(28,402)
Other income (expense), net(2,363)5,136 (1,561)7,204 
Income (Loss) before provision for (benefit of) income taxes(57,917)5,166 (140,207)(49,464)
Provision for (benefit of) income taxes122 809 1,928 (3,055)
Net income (loss)$(58,039)$4,357 $(142,135)$(46,409)
Net income (loss) per share attributable to common stockholders, basic$(0.86)$0.07 $(2.12)$(0.70)
Net income (loss) per share attributable to common stockholders, diluted$(0.86)$0.06 $(2.12)$(0.70)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, basic67,325 66,265 67,109 65,895 
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, diluted67,325 69,774 67,109 65,895 
Other comprehensive income (loss), net of tax:
Net unrealized holding gain (loss) on investments, net of tax(61)(1,310)(1,619)1,750 
Foreign currency translation adjustments769 (1,250)(133)361 
Other comprehensive income (loss), net of tax708 (2,560)(1,752)2,111 
Total comprehensive income (loss)$(57,331)$1,797 $(143,887)$(44,298)
The accompanying notes are an integral part of these condensed consolidated financial statements
2


Alteryx, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(unaudited)
 
September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$184,523 $171,891 
Short-term investments411,922 584,445 
Accounts receivable, net 72,686 136,985 
Prepaid expenses and other current assets98,734 79,144 
Total current assets767,865 972,465 
Property and equipment, net58,460 40,645 
Operating lease right-of-use assets107,674 62,508 
Long-term investments413,806 265,800 
Goodwill36,968 37,070 
Intangible assets, net12,676 16,191 
Other assets76,338 70,616 
Total assets$1,473,787 $1,465,295 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$12,365 $5,340 
Accrued payroll and payroll related liabilities39,882 46,569 
Accrued expenses and other current liabilities43,060 34,987 
Deferred revenue117,986 108,664 
Convertible senior notes, net76,166 72,619 
Total current liabilities289,459 268,179 
Convertible senior notes, net678,701 657,501 
Deferred revenue4,527 3,806 
Operating lease liabilities82,972 53,860 
Other liabilities8,801 5,158 
Total liabilities1,064,460 988,504 
Stockholders’ equity:
Preferred stock, $0.0001 par value: 10,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively; no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
  
Common stock, $0.0001 par value: 500,000 Class A shares authorized, 59,597 and 58,634 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively; 500,000 Class B shares authorized, 7,788 and 8,108 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
7 7 
Additional paid-in capital565,448 489,025 
Accumulated deficit(152,883)(10,748)
Accumulated other comprehensive loss(3,245)(1,493)
Total stockholders’ equity409,327 476,791 
Total liabilities and stockholders’ equity$1,473,787 $1,465,295 
The accompanying notes are an integral part of these condensed consolidated financial statements
3


Alteryx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Three and Nine Months Ended September 30, 2021
 Common StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Total
SharesAmount
Balances at December 31, 202066,742 $7 $489,025 $(10,748)$(1,493)$476,791 
Shares issued pursuant to restricted stock unit awards, net of tax withholdings related to vesting of restricted stock units204 — (13,071)— — (13,071)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan125 — 5,243 — — 5,243 
Stock-based compensation— — 24,439 — — 24,439 
Cumulative translation adjustment— — — — (662)(662)
Unrealized loss on investments— — — — (598)(598)
Net loss— — — (40,656)— (40,656)
Balances at March 31, 202167,071 $7 $505,636 $(51,404)$(2,753)$451,486 
Shares issued pursuant to restricted stock unit awards, net of tax withholdings related to vesting of restricted stock units98 — (3,881)— — (3,881)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan49 — 521 — — 521 
Stock-based compensation— — 28,148 — — 28,148 
Cumulative translation adjustment— — — — (240)(240)
Unrealized loss on investments— — — — (960)(960)
Net loss— — — (43,440)— (43,440)
Balances at June 30, 202167,218 $7 $530,424 $(94,844)$(3,953)$431,634 
Shares issued pursuant to restricted stock unit awards, net of tax withholdings related to vesting of restricted stock units72 — (2,942)— — (2,942)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan95 — 4,502 — — 4,502 
Stock-based compensation— — 33,464 — — 33,464 
Cumulative translation adjustment— — — — 769 769 
Unrealized loss on investments— — — — (61)(61)
Net loss— — — (58,039)— (58,039)
Balances at September 30, 202167,385 $7 $565,448 $(152,883)$(3,245)$409,327 
The accompanying notes are an integral part of these condensed consolidated financial statements
4


Alteryx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (continued)
(in thousands)
(unaudited)
Three and Nine Months Ended September 30, 2020
 Common StockAdditional
Paid-in
Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Gain (Loss)
Total
SharesAmount
Balances at December 31, 201965,260 $7 $412,191 $14,235 $(1,526)$424,907 
Cumulative effect of adoption of ASC 326— — — (609)— (609)
Shares issued pursuant to restricted stock unit awards, net of tax withholdings related to vesting of restricted stock units143 — (9,945)— — (9,945)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan482 — 11,600 — — 11,600 
Stock-based compensation— — 13,664 — — 13,664 
Cumulative translation adjustment— — — — 998 998 
Unrealized gain on investments— — — — 1,243 1,243 
Net loss— — — (15,473)— (15,473)
Balances at March 31, 202065,885 $7 $427,510 $(1,847)$715 $426,385 
Shares issued pursuant to restricted stock unit awards, net of tax withholdings related to vesting of restricted stock units92 — (4,143)— — (4,143)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan167 — 3,176 — — 3,176 
Stock-based compensation— — 16,923 — — 16,923 
Cumulative translation adjustment— — — — 613 613 
Unrealized loss on investments, net of tax— — — — 1,817 1,817 
Net loss— — — (35,293)— (35,293)
Balances at June 30, 202066,144 $7 $443,466 $(37,140)$3,145 $409,478 
Shares issued pursuant to stock
 awards, net of tax withholdings
 related to vesting of restricted
 stock units
23 — (1,807)— — (1,807)
Exercise of stock options and issuance of shares in connection with employee stock purchase plan376 — 5,726 — — 5,726 
Conversion on 2023 Notes, net of tax— — (1)— — (1)
Stock-based compensation— — 20,697 — — 20,697 
Cumulative translation adjustment— — — — (1,250)(1,250)
Unrealized loss on investments, net of tax— — — — (1,310)(1,310)
Net income— — — 4,357 — 4,357 
Balances at September 30, 202066,543 $7 $468,081 $(32,783)$585 $435,890 
The accompanying notes are an integral part of these condensed consolidated financial statements
5


Alteryx, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 Nine Months Ended September 30,
 20212020
Cash flows from operating activities:
Net loss$(142,135)$(46,409)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization11,588 8,425 
Non-cash operating lease cost11,625 5,594 
Stock-based compensation85,556 51,284 
Amortization (accretion) of discounts and premiums on investments, net3,562 (83)
Amortization of debt discount and issuance costs24,379 23,553 
Deferred income taxes224 (4,266)
Other non-cash operating activities, net590 4,923 
Changes in operating assets and liabilities:
Accounts receivable64,126 67,148 
Deferred commissions(52)(1,283)
Prepaid expenses, other current assets, and other assets(30,172)(45,807)
Accounts payable5,058 (3,056)
Accrued payroll and payroll related liabilities(6,896)(20,507)
Accrued expenses, other current liabilities, operating lease liabilities, and other liabilities(13,941)(11,085)
Deferred revenue10,831 (12,138)
Net cash provided by operating activities24,343 16,293 
Cash flows from investing activities:
Purchases of property and equipment(20,627)(14,257)
Purchases of investments(765,140)(884,063)
Sales and maturities of investments785,211 564,274 
Net cash used in investing activities(556)(334,046)
Cash flows from financing activities:
Proceeds from exercise of stock options10,266 20,502 
Minimum tax withholding paid on behalf of employees for restricted stock units(19,894)(15,895)
Other financing activity (538)
Net cash provided by (used in) financing activities(9,628)4,069 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,002)(311)
Net increase (decrease) in cash, cash equivalents and restricted cash13,157 (313,995)
Cash, cash equivalents and restricted cash—beginning of period173,665 411,424 
Cash, cash equivalents and restricted cash—end of period$186,822 $97,429 
The accompanying notes are an integral part of these condensed consolidated financial statements
6


Alteryx, Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
 
 Nine Months Ended September 30,
 20212020
Supplemental disclosure of cash flow information:
Cash paid for interest$6,212 $6,029 
Cash paid for income taxes$1,710 $1,788 
Cash paid for amounts included in the measurement of operating lease liabilities$13,356 $7,177 
Supplemental disclosure of noncash investing and financing activities:
Property and equipment recorded in accounts payable and accrued expenses and other current liabilities$5,508 $5,316 
Right-of-use assets obtained in exchange for new operating lease liabilities$57,179 $34,915 
Reduction of right-of-use assets due to remeasurement $(122)$(5,948)
The accompanying notes are an integral part of these condensed consolidated financial statements
7


Alteryx, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Business
Our Company
Alteryx, Inc. and its subsidiaries, or we, our, or us, is a leader in Analytic Process Automation, or APA. The Alteryx APA software platform unifies analytics, data science and business process automation in one self-service platform to accelerate digital transformation, deliver high-impact business outcomes, accelerate the democratization of data and rapidly upskill modern workforces. Data workers, regardless of technical acumen, are empowered to be curious and solve problems. With the Alteryx APA software platform, users can automate the full range of analytics, data science and processes, embed intelligent decision-making and actions, and empower their organization to enable top and bottom line impact, efficiency gains, and rapid upskilling.
Basis of Presentation
Our unaudited interim condensed consolidated financial statements are presented in accordance with accounting standards generally accepted in the United States of America, or U.S. GAAP, for interim financial information. Certain information and disclosures normally included in consolidated financial statements presented in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission, or SEC, on February 12, 2021. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and reflect all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair statement of the condensed consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.
The operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full year ending December 31, 2021.
2. Significant Accounting Policies
There have been no changes to our accounting policies disclosed in our audited consolidated financial statements and the related notes for the year ended December 31, 2020.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions.
On an ongoing basis, our management evaluates these estimates and assumptions, including those related to determination of standalone selling prices of our products and services, income tax valuations, stock-based compensation, and goodwill and intangible assets valuations and recoverability. We base our estimates on historical data and experience, as well as various other factors that our management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities.
Due to the COVID-19 pandemic, there has been continued uncertainty and disruption in the global economy and financial markets. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the pandemic and the impact on our customers, prospective customers, sales cycles, and employees as well as the availability, adoption, and efficacy of available vaccines, all of which are uncertain and cannot be predicted. We are not aware of any specific event or circumstance that would require an update to our estimates or assumptions or a revision of the carrying value of our assets or liabilities as of the date of this Quarterly Report on Form 10-Q. These estimates and assumptions may change as new events occur and additional information is obtained. As a result, actual results could differ materially from these estimates and assumptions.
8


Operating Segments
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker, or CODM, who is our chief executive officer, in deciding how to allocate resources and assess our financial and operational performance. Our CODM evaluates our financial information and resources and assesses the performance of these resources on a consolidated and aggregated basis. As a result, we have determined that our business operates in a single operating segment.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocations and calculating income taxes in interim periods. The standard also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill, allocating taxes to members of a consolidated group, and the recognition of deferred tax liabilities for outside basis differences. We adopted ASU 2019-12 prospectively as of the reporting period beginning January 1, 2021. Adoption of this update did not have a material impact on our condensed consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, or ASU 2020-06, which simplifies the accounting for convertible instruments by removing certain separation models required under current U.S. GAAP, including the beneficial conversion feature and cash conversion models. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This guidance will be effective for us for annual reporting periods beginning after December 15, 2021 and for interim periods within those annual periods, and can be applied utilizing either a modified or full retrospective transition method. Early adoption is permitted in the first interim period of a fiscal year. We currently account for our Notes (as defined and described in Note 7, Convertible Senior Notes) utilizing the cash conversion model. We intend to adopt this standard in the first quarter of 2022 and are currently evaluating the impact of adopting this guidance. We currently expect that the adoption will have a material impact on our condensed consolidated financial statements and related disclosures.
3. Revenue
Disaggregation of Revenue
The disaggregation of revenue by region was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenue by region:
United States$81,813 $81,065 $240,110 $227,569 
International41,688 48,652 122,220 107,212 
Total$123,501 $129,717 $362,330 $334,781 
Revenue attributable to the United Kingdom comprised 10.8% of the total revenue for the nine months ended September 30, 2021. Other than the United Kingdom for the nine months ended September 30, 2021, no other country outside the United States comprised more than 10% of revenue for any of the periods presented. Our operations outside the United States include sales offices in Australia, Canada, France, Germany, Japan, Singapore, the United Arab Emirates, and the United Kingdom, and a research and development center in Ukraine and the Czech Republic. Revenue by location is determined by the billing address of the customer.
Revenue related to our subscription-based software licenses is recognized at a point in time when the platform is first made available to the customer, or the beginning of the subscription term, if later. Revenue related to post-contract support, or PCS, service, and hosted services is recognized ratably over the subscription term, with the exception of professional services related to training services. Revenue related to professional services is recognized at a point in time as the services are performed and represents less than 5% of total revenue for all periods presented.
9


Contract Assets and Contract Liabilities
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. Contract liabilities, or deferred revenue, are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue.
As of September 30, 2021, our contract assets are expected to be transferred to receivables within the next 12 to 24 months and, with respect to these contract assets, $47.9 million is included in prepaid expenses and other current assets and $40.4 million is included in other assets on our condensed consolidated balance sheet. As of December 31, 2020, we had contract assets of $25.4 million included in prepaid expenses and other current assets and $37.2 million included in other assets on our consolidated balance sheet. There were no impairments of contract assets during each of the three and nine months ended September 30, 2021 and 2020.
During the nine months ended September 30, 2021 and 2020, we recognized $99.7 million and $76.0 million, respectively, of revenue related to amounts that were included in deferred revenue as of December 31, 2020 and 2019, respectively. During the three months ended September 30, 2021 and 2020, we recognized $50.1 million and $47.0 million, respectively, of revenue related to amounts that were included in deferred revenue as of June 30, 2021 and 2020, respectively.
Assets Recognized from the Costs to Obtain our Contracts with Customers
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. This primarily consists of sales commissions and partner referral fees that are earned upon execution of the related contracts. We amortize these deferred commissions, which include partner referral fees, proportionate with related revenues over the benefit period. A summary of the activity impacting our deferred commissions during the nine months ended September 30, 2021 and 2020 is presented below (in thousands):
Nine Months Ended September 30,
20212020
Beginning balance$51,186 $43,035 
Additional deferred commissions(1)
32,984 26,821 
Amortization of deferred commissions(2)
(30,853)(25,470)
Effects of foreign currency translation(432)(97)
Ending balance$52,885 $44,289 
(1) Of the amount of additional commissions earned during the nine months ended September 30, 2021, $2.6 million is anticipated to be paid in shares of the Company’s Class A common stock in the three months ended March 31, 2022.
(2) Of the amount amortized from deferred commissions through September 30, 2021, $0.5 million is anticipated to be paid in shares of the Company’s Class A common stock in the three months ended March 31, 2022.
As of September 30, 2021 and 2020, $26.9 million and $21.1 million, respectively, of our deferred commissions were expected to be amortized within the next 12 months and therefore were included in prepaid expenses and other current assets. The remaining amount of our deferred commissions is included in other assets. There were no impairments of assets related to deferred commissions during each of the nine months ended September 30, 2021 and 2020. There were no assets recognized related to the costs to fulfill contracts during each of the nine months ended September 30, 2021 and 2020 as these costs were not material.
Remaining Performance Obligations
Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue on our condensed consolidated balance sheets and unbilled amounts that will be recognized as revenue in future periods. As of September 30, 2021, we had an aggregate transaction price of $412.0 million allocated to unsatisfied performance obligations related primarily to PCS, cloud-based offerings, and subscriptions to third-party syndicated data. We expect to recognize $388.5 million as revenue over the next 24 months, with the remaining amount recognized thereafter.
10


4. Fair Value Measurements
Instruments Measured at Fair Value on a Recurring Basis. The following tables present our cash and cash equivalents’ and investments’ costs, gross unrealized gains (losses), and fair value by major security type recorded as cash and cash equivalents or short-term or long-term investments as of September 30, 2021 and December 31, 2020 (in thousands):
 
 As of September 30, 2021
 CostNet
Unrealized
Gains (Losses)
Fair ValueCash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Cash$75,073 $— $75,073 $75,073 $— $— 
Level 1:
Money market funds$79,454 $— $79,454 $79,454 $— $— 
Subtotal$79,454 $— $79,454 $79,454 $— $— 
Level 2:
Commercial paper$248,711 $7 $248,718 $29,996 $218,722 $ 
Certificates of deposit3,500 8 3,508   3,508 
U.S. Treasury and agency bonds452,787 (3)452,784  121,858 330,926 
Corporate bonds150,785 (71)150,714  71,342 79,372 
Subtotal$855,783 $(59)$855,724 $29,996 $411,922 $413,806 
Level 3:$ $ $ $ $ $ 
Total$1,010,310 $(59)$1,010,251 $184,523 $411,922 $413,806 
 As of December 31, 2020
 CostNet
Unrealized
Gains (Losses)
Fair ValueCash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Cash$88,991 $— $88,991 $88,991 $— $— 
Level 1:
Money market funds$35,010 $— $35,010 $35,010 $— $— 
Subtotal$35,010 $— $35,010 $35,010 $— $— 
Level 2:
Commercial paper$161,124 $(8)$161,116 $46,491 $114,625 $ 
Certificates of deposit2,800  2,800  2,800  
U.S. Treasury and agency bonds554,860 1,220 556,080 1,399 358,822 195,859 
Corporate bonds177,790 349 178,139  108,198 69,941 
Subtotal$896,574 $1,561 $898,135 $47,890 $584,445 $265,800 
Level 3:$ $ $ $ $ $ 
Total$1,020,575 $1,561 $1,022,136 $171,891 $584,445 $265,800 
All long-term investments had maturities of between one and two years in duration as of September 30, 2021.
As of September 30, 2021, we had gross unrealized losses of $0.2 million with respect to our available-for-sale securities, and we do not intend to sell, nor is it more likely than not that we will be required to sell, these investments before recovery of their amortized cost basis. These gross unrealized losses were classified in accumulated other comprehensive loss in our condensed consolidated balance sheets as of September 30, 2021.
Instruments Not Recorded at Fair Value on a Recurring Basis. We estimate the fair value of our Notes carried at face value, less unamortized discount and issuance costs, quarterly for disclosure purposes. The estimated fair value of our Notes is determined by Level 2 inputs and is based on observable market data including prices for similar instruments. As of September 30, 2021, the fair value of our Notes was $892.1 million. The carrying amounts of our cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities approximate their current fair value because of their nature and relatively short maturity dates or durations.
11


5. Allowance for Doubtful Accounts and Sales Reserves
The following table summarizes the changes in the allowances applied to accounts receivable and contract assets in our condensed consolidated balance sheets (in thousands):
Accounts Receivable ReserveContract Asset Reserve
Nine Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Beginning Balance$3,114 $2,662 $2,438 $205 
Adoption of new accounting standard   609 
Provision669 1,600 (539)1,832 
Recoveries(611)(613)(49)(32)
Charge-offs(530)(721)(59)(67)
Ending Balance$2,642 $2,928 $1,791 $2,547 

6. Goodwill and Intangible Assets
The change in carrying amount of goodwill for the nine months ended September 30, 2021 was as follows (in thousands):
Goodwill as of December 31, 2020$37,070 
Effects of foreign currency translation(102)
Goodwill as of September 30, 2021$36,968 
Intangible assets consisted of the following (in thousands, except years):
 As of September 30, 2021
 Weighted-
Average Useful
Life in Years
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
Customer relationships7.0$1,544 $(799)$745 
Developed technology5.721,764 (9,833)11,931 
$23,308 $(10,632)$12,676 
 As of December 31, 2020
 Weighted-
Average Useful
Life in Years
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
Customer relationships7.0$1,652 $(678)$974 
Developed technology5.721,780 (6,563)15,217 
$23,432 $(7,241)$16,191 
12


During the nine months ended September 30, 2020, we recorded an impairment charge of $2.0 million related to certain developed technology assets, due to our strategic decision to discontinue further investment and enhancements in the standalone existing technology.
We classified intangible asset amortization expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss) as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Cost of revenue$1,106 $773 $3,282 $2,653 
Sales and marketing56 56 173 156 
Total$1,162 $