ne
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of August 5, 2024, there were
BRIGHTCOVE INC.
Table of Contents
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Such forward-looking statements include any expectation of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; factors that may affect our operating results; statements related to adding employees; statements related to potential benefits of acquisitions; statements related to future capital expenditures; statements related to future economic conditions or performance; statements as to industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form 10-Q, and the risks discussed in our other Securities and Exchange Commission, or SEC, filings. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. However, any further disclosures made on related subjects in our subsequent reports filed with the SEC should be consulted. Forward-looking statements in this Quarterly Report on Form 10-Q may include statements about:
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Brightcove Inc.
Condensed Consolidated Balance Sheets
(unaudited)
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June 30, 2024 |
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December 31, 2023 |
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(in thousands, except share |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use asset |
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Intangible assets, net |
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Goodwill |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Operating lease liability |
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Deferred revenue |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Other liabilities |
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Total liabilities |
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$ |
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(Note 8) |
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Stockholders’ equity: |
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Undesignated preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock, at cost; |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Brightcove Inc.
Condensed Consolidated Statements of Operations
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(in thousands, except share and per share data) |
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Revenue: |
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Subscription and support revenue |
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$ |
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$ |
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$ |
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$ |
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Professional services and other revenue |
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Total revenue |
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Cost of revenue: |
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Cost of subscription and support revenue |
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Cost of professional services and other revenue |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Merger-related |
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Gain on sale of assets |
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( |
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— |
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Total operating expenses |
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Loss from operations |
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Other income (expense), net |
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Loss before income taxes |
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Provision for income taxes |
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Net loss |
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$ |
( |
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$ |
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$ |
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$ |
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Net loss per share—basic and diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average number of common shares used in computing net loss per share |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Brightcove Inc.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(in thousands) |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Other comprehensive income: |
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Foreign currency translation adjustments |
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( |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Brightcove Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(in thousands, except share data) |
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Shares of common stock issued |
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Balance, beginning of period |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units |
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Balance, end of period |
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Shares of treasury stock |
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Balance, beginning of period |
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( |
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Balance, end of period |
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Par value of common stock issued |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Value of treasury stock |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Additional paid-in capital |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock upon exercise of stock options and vesting of restricted stock units, net of tax |
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( |
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Stock-based compensation expense |
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Withholding tax on restricted stock |
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( |
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( |
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( |
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Balance, end of period |
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$ |
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$ |
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$ |
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$ |
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Accumulated deficit |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss |
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( |
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( |
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( |
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( |
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Balance, end of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Accumulated other comprehensive loss |
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Balance, beginning of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Foreign currency translation adjustment |
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( |
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( |
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( |
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Balance, end of period |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Total stockholders’ equity |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Six Months Ended June 30, |
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2024 |
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2023 |
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(in thousands) |
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Operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Provision for reserves on accounts receivable |
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Gain on sale of assets |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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Prepaid expenses and other current assets |
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( |
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Other assets |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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Operating leases |
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Deferred revenue |
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Net cash provided by (used in) operating activities |
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Investing activities |
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Gain on sale of assets |
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Purchases of property and equipment |
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( |
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Capitalized internal-use software costs |
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( |
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Net cash provided by (used in) investing activities |
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Financing activities |
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Deferred acquisition payments |
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Other financing activities |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net increase (decrease) in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information |
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Cash paid for operating lease liabilities |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Brightcove Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in thousands, except share and per share data, unless otherwise noted)
1. Business Description and Basis of Presentation
Business Description
Brightcove Inc. (the “Company”) is a leading global provider of cloud services for video which enable its customers to publish, deliver, and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner.
The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on August 24, 2004.
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements and notes have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2023 contained in the Company’s Annual Report on Form 10-K and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the three and six months ended June 30, 2024 and 2023. These interim periods are not necessarily indicative of the results to be expected for any other interim period or the full year.
2. Quarterly Update to Significant Accounting Policies
Allowance for Doubtful Accounts
The following details the changes in the Company’s reserve allowance for estimated credit losses for accounts receivable for the period:
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Allowance for Credit Losses |
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(in thousands) |
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Balance as of December 31, 2023 |
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$ |
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Current provision for credit losses |
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Write-offs against allowance |
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( |
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Recoveries |
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( |
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Balance as of June 30, 2024 |
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$ |
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Estimated credit losses for unbilled trade accounts receivable were not material.
Recently Issued and Adopted Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, which improves the transparency and decision usefulness of income tax disclosures, specifically to enhance investors' ability to: (1) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. This guidance will be effective for the Company on January 1, 2025. The Company does not expect the application of this guidance to have a material impact on its consolidated financial statements.
9
3. Revenue from Contracts with Customers
The Company primarily derives revenue from the sale of its online video platform, which enables its customers to publish and distribute video to Internet-connected devices quickly, easily and in a cost-effective and high-quality manner. Revenue is derived from three primary sources: (1) the subscription to its technology and related support; (2) hosting, bandwidth and encoding services; and (3) professional services, which include initiation, set-up and customization services.
The following summarizes the opening and closing balances of receivables, contract assets and contract liabilities from contracts with customers.
(in thousands) |
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Accounts Receivable, net |
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Contract Assets (current) |
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Deferred Revenue (current) |
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Deferred Revenue (non-current) |
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Total Deferred Revenue |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at June 30, 2024 |
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Revenue recognized for the three and six months ended June 30, 2024 from amounts included in deferred revenue at the beginning of the period was approximately $
The assets recognized for costs to obtain a contract were $
Transaction Price Allocated to Future Performance Obligations
As of June 30, 2024, the total aggregate transaction price allocated to the unsatisfied performance obligations for subscription and support contracts was approximately $
4. Cash and Cash Equivalents
Cash and cash equivalents as of June 30, 2024 consist of the following:
|
|
June 30, 2024 |
|
|||||||
Description |
|
Contracted |
|
Cost |
|
|
Fair Market |
|
||
|
|
(in thousands) |
|
|||||||
Cash |
|
Demand |
|
$ |
|
|
$ |
|
||
Money market funds |
|
Demand |
|
|
|
|
|
|
||
Total cash and cash equivalents |
|
|
|
$ |
|
|
$ |
|
Cash and cash equivalents as of December 31, 2023 consist of the following:
|
|
December 31, 2023 |
|
|||||||
Description |
|
Contracted |
|
Cost |
|
|
Fair Market |
|
||
|
|
(in thousands) |
|
|||||||
Cash |
|
Demand |
|
$ |
|
|
$ |
|
||
Money market funds |
|
Demand |
|
|
|
|
|
|
||
Total cash and cash equivalents |
|
|
|
$ |
|
|
$ |
|
10
5. Net Loss per Share
The Company calculates basic and diluted net loss per common share by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has excluded other potentially dilutive shares, which includes the effects of the assumed exercise of any outstanding common stock options and the assumed vesting of restricted stock units, where the effect would be anti-dilutive.
The following outstanding common shares have been excluded from the computation of dilutive net loss per share as of the periods indicated:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(shares in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Options outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted stock units outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
6. Stock-based Compensation
In 2022, the Company adopted the 2022 Inducement Plan (“2022 Plan”). The 2022 Plan provides for the grant of “employment inducement awards” within the meaning of NASDAQ Listing Rule 5635(c)(4). In connection with the commencement of his employment, the Company granted
For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected dividends and the correlation coefficient.
On March 20, 2023, the Company granted
The weighted-average assumptions utilized to determine the weighted-average fair value of options are presented in the following table:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average fair value of options granted during the period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Risk-free interest rate |
|
|
|
|
|
|
|
|
|
|
||||||
Expected volatility |
|
|
|
|
|
|
|
|
|
|
||||||
Expected dividend yield |
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2024, there was $
11
compensation expense as included in the consolidated statement of operations for the three and six months ended June 30, 2024 and 2023:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Stock-based compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of subscription and support revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of professional services and other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The following is a summary of the stock option activity during the six months ended June 30, 2024.
|
|
Number of |
|
|
Weighted-Average |
|
|
Weighted-Average |
|
|
Aggregate |
|
||||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
$ |
|
|||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canceled |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Exercisable at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
The following table summarizes the restricted stock unit activity for our service-based awards (“S-RSU”) and our performance-based awards (“P-RSU”) during the six months ended June 30, 2024:
|
|
S-RSU Shares |
|
|
Weighted |
|
|
P-RSU Shares |
|
|
Weighted |
|
|
Total RSU Shares |
|
|
Weighted |
|
||||||
Unvested at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||||
Vested and issued |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Canceled |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Unvested at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
7. Income Taxes
The income tax expense relates principally to the Company’s foreign operations.
The Company is required to compute income tax expense in each jurisdiction in which it operates. This process requires the Company to project its current tax liability and estimate its deferred tax assets and liabilities, including net operating loss (“NOL”) and tax credit carry-forwards. In assessing the ability to realize the net deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized.
The Company has provided a valuation allowance against its remaining U.S. net deferred tax assets as of June 30, 2024 and December 31, 2023, based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences.
12
8. Commitments and Contingencies
Legal Matters
The Company, from time to time, is party to litigation arising in the ordinary course of business. Management does not believe that the outcome of these claims will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company based on the status of proceedings at this time.
Guarantees and Indemnification Obligations
The Company typically enters into indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses and costs incurred by the indemnified party, generally the Company’s customers, in connection with patent, copyright, trade secret, or other intellectual property or personal right infringement claims by third parties with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual after execution of the agreement. Based on when customers first subscribe for the Company’s service, the maximum potential amount of future payments the Company could be required to make under certain of these indemnification agreements is unlimited, however, more recently the Company has typically limited the maximum potential value of such potential future payments in relation to the value of the contract. Based on historical experience and information known as of June 30, 2024, the Company has not incurred any costs for the above guarantees and indemnities. The Company has received requests for indemnification from customers in connection with patent infringement suits brought against the customer by a third party. To date, the Company has not agreed that the requested indemnification is required by the Company’s contract with any such customer.
In certain circumstances, the Company warrants that its products and services will perform in all material respects in accordance with its standard published specification documentation in effect at the time of delivery of the licensed products and services to the customer for the warranty period of the product or service. To date, the Company has not incurred significant expense under its warranties and, as a result, the Company believes the estimated fair value of these agreements is immaterial.
9. Debt
On
10. Segment Information
Geographic Data
Total revenue from unaffiliated customers by geographic area, based on the location of the customer, was as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Japan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
North America is comprised of revenue from the United States, Canada and Mexico. Revenue from customers located in the United States was $
13
customers located in the United States was $
Other than the United States, no other country contributed more than
11. Goodwill and intangible assets
During the three months ended June 30, 2024, indicators of potential impairment were identified, which included a continued decline in the Company's stock price and market capitalization.
The Company reviewed its quantitative analysis for its definite-lived intangible assets as of October 31, 2023, that used undiscounted cash flow models, and determined that the assumptions used in the undiscounted cash flow model were still applicable as of June 30, 2024 and that there was