You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. You should read the sections titled "Special Note Regarding Forward-Looking Statements" and "Risk Factors" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year end isJune 30 , and our fiscal quarters end onSeptember 30 ,December 31 , andMarch 31 . Overview We are a leading provider of cloud-based software that simplifies, digitizes, and automates complex back-office financial operations for SMBs. By transforming how SMBs manage their cash inflows and outflows, we create efficiencies and free our customers to run their businesses. Our vision is to become the leading one-stop solution that helps millions of businesses around the world manage their financial operations. Our purpose-built, artificial-intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Customers use our platform to generate and process invoices, streamline approvals, make and receive payments, reconcile their books, and manage their cash. We have built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services through a single connection. In essence, we sit at the center of an SMB's accounts payable and accounts receivable operations. We efficiently reach SMBs through our proven direct and indirect go-to-market strategies. We acquire customers directly through digital marketing and inside sales, and indirectly through accounting firms and strategic partnerships. As ofDecember 31, 2021 , our partners included some of the most trusted brands in the financial services business, including 85 of the top 100 accounting firms and six of the top ten largest financial institutions in theU.S. , includingBank of America , JPMorgan Chase,Wells Fargo Bank and American Express. As we add customers and partners, we expect our network to continue to grow organically. OnSeptember 1, 2021 , we completed our acquisition ofInvoice2go, Inc. (Invoice2go ), a provider of mobile-first accounts receivable software that empowers SMBs and freelancers to grow their client base, manage invoicing and payments, and build their brand, for an aggregate purchase price of$674.3 million . OnJune 1, 2021 , we completed our acquisition ofDivvyPay, Inc. (Divvy), a leading provider of cloud-based spend management application and smart corporate cards to SMBs in theU.S. , for an aggregate purchase price of$2.3 billion . Following the acquisitions,Invoice2go and Divvy became our wholly-owned subsidiaries. Our condensed consolidated results of operations shown below for the three and six months endedDecember 31, 2021 include the operating results ofInvoice2go and Divvy from the dates of the acquisitions. See Note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional discussion about our acquisitions. We have grown rapidly and scaled our business operations in recent periods. Our revenue was$156.5 million and$54.0 million during the three months endedDecember 31, 2021 and 2020, respectively, an increase of 190%, and$274.8 million and$100.3 million during the six months endedDecember 31, 2021 and 2020, respectively, an increase of 174%. We generated net losses of$80.4 million and$17.2 million during the three months endedDecember 31, 2021 and 2020, respectively, and$154.7 million and$30.1 million during the six months endedDecember 31, 2021 and 2020, respectively. Impact of COVID-19 The full impact of the COVID-19 pandemic is inherently uncertain at the time of this report. The COVID-19 pandemic has resulted in travel restrictions and greater uncertainty in global financial markets. As the COVID-19 pandemic persists, including the outbreak of new variants of COVID-19, it has significantly impacted the health and economic environment around the world. Many public and commercial establishments, including schools, restaurants, and shopping malls, have restricted their operations or closed due to restrictions imposed by the government. Our customers, spending businesses, and subscribers have been, and may continue to be, negatively impacted by government restrictions, the closure of manufacturing sites and country borders, and the increase in unemployment. These conditions may continue to have 34
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negative consequences on the demand for goods, the supply chain, the production of goods and transportation. Negatively impacting our customers, spenders, and subscribers may cause them to close their doors, request discounts, extend payment terms, or stop using our services. Each of these actions may adversely impact our future results of operations, liquidity and financial condition.
Although we have not experienced significant business disruptions thus far from the COVID-19 pandemic and there have been positive developments recently in theU.S. and in other countries in combating the COVID-19 pandemic because of vaccinations, we are unable to predict the full impact that the COVID-19 pandemic will have on our future results of operations, liquidity and financial condition due to numerous uncertainties, including the duration of the pandemic, the actions that may be taken by government authorities across theU.S. or other countries, the efficacy of vaccinations, the impact to our customers, strategic partners, and suppliers, and other factors described in the section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. Our Revenue Model
We generate revenue primarily from subscription and transaction fees.
Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue is comprised of transaction fees and interchange income on a fixed or variable rate per transaction. Transactions primarily include card payments, check issuance, ACH origination, cross-border payments, and creation of invoices. Much of our revenue comes from repeat transactions, which are an important contributor to our recurring revenue. Our Receivables Purchases and Servicing Model We market Divvy charge cards to potential spending businesses and issue business-purpose charge cards through our partnerships with card issuing banks. When a business applies for a Divvy card, we utilize proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a Divvy card pursuant to our credit policies. Once approved for a Divvy card, the business is provided a credit limit and can use the Divvy software to request virtual cards or physical cards. The majority of cards on our platform are issued byCross River Bank , anFDIC -insuredNew Jersey state chartered bank, andWEX Bank , anFDIC -insuredUtah state chartered bank. Under our arrangements with these banks, we must comply with their respective credit policies and underwriting procedures, and the banks maintain ultimate authority to decide whether to issue a card or approve a transaction. We are responsible for all fraud and unauthorized use of a card and generally are required to hold the bank harmless from such losses unless claims regarding fraud or unauthorized use are due to the sole gross negligence of the bank. When a spending business completes a purchase transaction, the payment to the merchant is made by our bank partner that issued the card. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the bank's balance sheet. The bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits. When we purchase the participation right in the receivable, the purchase price is equal to the outstanding principal balance of the receivable. We act as the servicer on all receivables we purchase from our issuing bank partners and earn a servicing fee on loans we sell to our funding sources. We do not sell the servicing rights on any of the loans, allowing us to control the consumer experience end-to-end. In order to purchase the participation rights in the receivables, we maintain a variety of funding arrangements, including warehouse facilities and other purchase arrangements with a diverse set of funding sources. We typically fund a substantial portion of these receivable purchases by borrowing under our credit facilities, although we may also fund receivables purchases using corporate cash. Typically, we immediately sell a portion of the receivables interests we have purchased to our warehousing subsidiary which funds the purchases through loans provided by our financing partners, and we may sell a portion of our receivables to a third-party institution pursuant to a purchase arrangement. As ofDecember 31, 2021 , we had$155.0 million in committed credit facility capacity, with$77.5 million drawn, and this is shown on our condensed consolidated balance sheets included elsewhere in this Quarterly Report on Form 10-Q. On average, our spending businesses pay their statement balances in approximately 20 days. 35
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Key Business Metrics We regularly review several metrics, including the metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key business metrics provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of the key metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts or investors. The table below excludes the metrics of the Divvy andInvoice2go businesses. Relevant metrics for Divvy andInvoice2go are set forth in the footnotes to the table. As of December 31, 2021 2020 % Growth Number of customers (1) 135,000 109,200 24% Three months ended Six months ended December 31, December 31, 2021 2020 % Growth 2021 2020 % Growth
Total volume of payments (amounts in millions) (2)
Three months ended Six months ended
December 31, December 31,
2021 2020 % Growth 2021 2020 % Growth
Transactions
processed (3) 9,802,000 7,243,000 35% 18,591,000 13,769,000 35%
(1) As of December 31, 2021 , the total number of spending businesses that used
Divvy's spend management platform was approximately 15,500 and the total number
of Invoice2go subscribers was approximately 223,000.
(2) The total card payment volume transacted by spending businesses that used
Divvy cards was approximately $1.9 billion and $3.3 billion during the three and
six months ended December 31, 2021 , respectively. The total payment volume
transacted by Invoice2go subscribers was approximately $275.0 million and $369.0
million , during the three and six months ended December 31, 2021 , respectively.
(3) The total transactions executed by spending businesses that used Divvy cards
were approximately 5.3 million and 9.9 million during the three and six months
ended December 31, 2021 . The total transactions executed by Invoice2go
subscribers were over 335,000 and 453,000 during the three and six months ended
December 31, 2021 , respectively.
Number of clients
For the purposes of measuring our key business metrics, we define customers as entities that are either billed directly by us or for which we bill our strategic partners during a particular period. Customers who are using our solutions during a trial period are not counted as new customers during that period. If an organization has multiple entities billed separately for the use of our platform, each entity is counted as a customer. The number of customers in the table above represents the total number of customers at the end of each fiscal quarter. Total Payment Volume (TPV) To grow revenue from customers we must deliver a product experience that helps them automate their back-office financial operations. The more they use the product and rely upon our features to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the value of transactions that customers are completing on the platform and is an indicator of our ability to generate revenue from our customers. We define TPV as the value of customer transactions that we process on our platform during a particular period. Our calculation of TPV includes payments that are subsequently reversed. Such payments comprised approximately 1% of TPV during the three and six months endedDecember 31, 2021 and 2020. The TPV in the table above does not include transactions made by spending businesses on our spend management platform and subscribers ofInvoice2go .
Transactions processed
We define transactions processed as the number of customer payment and spend
transactions initiated and processed through our platform during a particular
period. Payment transactions include checks, ACH items, wire
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transfers and card payments. The transactions processed in the table above do not include transactions made by spending businesses on our spend management platform and subscribers ofInvoice2go . Components of Results of Operations
Income
We generate revenue primarily from subscription and transaction fees.
Subscription fees are fixed monthly or annually and charged to our customers for the use of our platform to process transactions. Subscription fees are generally charged on a per user per period basis, normally monthly or annually. Transaction fees are fees collected for each transaction processed through our platform, on either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, cross-border payments, virtual cards, and the creation of invoices. Transaction fees also include interchange fees paid by suppliers that accept cards as a means of payment. Our contracts with SMB and accounting firm customers provide them with access to the functionality of our cloud-based payments platform to process transactions. These contracts are either monthly contracts paid in arrears or annual arrangements paid up front. We charge our SMB and accounting firm customers subscription fees to access to our platform based on the number of users and level of service. We also charge these customers transaction fees based on transaction volume and the category of transaction. The contractual price for subscription and transaction services is based on either negotiated fees or the rates published on our website. We account for our annual and monthly contracts as a series of distinct services that are satisfied over time. We determine the transaction price for such contracts by estimating the total consideration to be received over the contract term from subscription and transaction fees. We recognize the transaction price as a single performance obligation based on the proportion of transactions processed to the total estimated transactions to be processed over the contract period. Revenues recognized exclude amounts collected on behalf of third parties, such as sales taxes collected and remitted to governmental authorities. We maintain agreements withWEX Bank andCross River Bank for card transactions on the MasterCard andVisa networks, respectively. We facilitate the extension of credit to spending businesses through our Divvy platform in the form of Divvy cards, which are originated through our agreements withWEX Bank andCross River Bank . The spending businesses utilize the credit on the Divvy cards as a means of payment for goods and services provided by suppliers. On a transaction basis, these suppliers are required to pay interchange fees to the issuer of the credit. Based on our agreement withWEX Bank , we recognize interchange fees net of the rebate we receive fromWEX Bank as we are the agent in the card transactions and recognize the interchange fees on the gross amount under our agreement withCross River Bank , as we are the principal in the card transactions. We enter into multi-year contracts with financial institution customers to provide access to our cloud-based payments platform to process transactions. These contracts typically include fees for initial implementation services that are paid during the period the implementation services are provided as well as fees for subscription and transaction processing services, which are subject to guaranteed monthly minimum fees that are paid monthly over the contract term. These contracts enable the financial institutions to provide their customers with access to online bill pay services through the financial institutions' online platforms. Implementation services are required up-front to establish an infrastructure that allows the financial institutions' online platforms to communicate with our online platform. A financial institution's customers cannot access online bill pay services until implementation is complete. Initial implementation services and transaction processing services are not capable of being distinct from the subscription for online bill pay services and are combined into a single performance obligation. The total consideration in these contracts varies based on the number of users and transactions to be processed. We determined the variable consideration allocation exception is met for these contracts and therefore recognize guaranteed monthly payments and any overages as revenue in the month they are earned. Implementation fees are recognized based on the proportion of transactions processed to the total estimated transactions to be processed over the contract period.
Cost of income and expenses
Cost of revenue - Cost of revenue consists primarily of personnel-related costs,
including stock-based compensation expenses, for our customer success and
payment operations teams, certain costs that are directly attributed to
processing customers' transactions (such as the cost of printing checks),
postage for mailing checks, expenses for processing payments (ACH, check, and
cross-border wires), direct and amortized costs for implementing
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and integrating our cloud-based platform into our strategic partners' systems, costs for maintaining, optimizing, and securing our cloud payments infrastructure, amortization of capitalized internal-use developed software, amortization of developed technology, fees on the investment of customer funds, and allocation of overhead costs. We expect that cost of revenue will increase in absolute dollars, but may fluctuate as a percentage of total revenue from period to period, as we continue to invest in growing our business. Research and development - Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, incurred in developing new products or enhancing existing products, and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our platform and amortize such costs in cost of revenue over the estimated life of the new product or incremental functionality, which is generally three years. We expense a substantial portion of research and development expenses as incurred. We believe that delivering new functionality is critical to attract new customers and expand our relationship with existing customers. We expect to continue to make investments in and expand our offerings to enhance our customers' experience and satisfaction, and to attract new customers. We expect our research and development expenses to increase in absolute dollars, but they may fluctuate as a percentage of total revenue from period to period as we expand our research and development team to develop new products and product enhancements. Sales and Marketing - Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, rewards expense in connection with our card rewards programs, sales commissions, marketing program expenses, travel-related expenses and costs to market and promote our platform through advertisements, marketing events, partnership arrangements, direct customer acquisition, amortization of intangible assets, and allocated overhead costs. Sales commissions that are incremental to obtaining new customer contracts are deferred and amortized ratably over the estimated period of our relationship with new customers. We focus our sales and marketing efforts on generating awareness of our company, platform, and products, creating sales leads, and establishing and promoting our brand. We plan to continue investing in sales and marketing efforts by driving our go-to-market strategies, building our brand awareness, and sponsoring additional marketing events; however, we will adjust our sales and marketing spend level as needed, as the spend may fluctuate from period to period, in response to changes in the economic environment. General and Administrative - General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for finance, risk management, legal and compliance, human resources and information technology, costs incurred for external professional services, provision for credit losses, losses from fraud, and allocated overhead costs. We expect to incur additional general and administrative expenses as we explore various growth initiatives, which include incurring higher costs for professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period. Other expenses, net - Other expenses, net consist primarily of the amortization of debt discount and issuance costs in connection with our issuance of the Notes, interest expense on our borrowings from credit agreements, lower of cost or market adjustment on card receivables sold and held for sale, interest income on corporate funds, accretion of debt premium, and gains or losses resulting from remeasurement of foreign currency transactions.
Income tax benefit – The income tax benefit consists primarily of a reduction in the valuation allowance related to the acquisition of
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Operating results
The following table sets forth our results of operations for the periods
presented (in thousands):
Three months ended Six months ended
December 31, December 31,
2021 (1) 2020 2021 (1) 2020
Revenue $ 156,478 $ 54,045 $ 274,827 $ 100,254
Cost of revenue (2) 34,386 13,973 64,221 26,079
Gross profit 122,092 40,072 210,606 74,175
Operating expenses
Research and development (2) 51,954 20,486 94,426 38,272
Sales and marketing (2) 80,817 14,174 143,129 27,082
General and administrative (2) 65,396 19,583 123,331 36,773
Total operating expenses 198,167 54,243 360,886 102,127
Loss from operations (76,075 ) (14,171 ) (150,280 ) (27,952 )
Other expenses, net (5,000 ) (3,341 ) (8,475 ) (2,511 )
Loss before benefit from income taxes (81,075 ) (17,512 ) (158,755 ) (30,463 )
Benefit from income taxes (635 ) (333 ) (4,056 ) (333 )
Net loss $ (80,440 ) $ (17,179 ) $ (154,699 ) $ (30,130 )
(1) Includes the results of Divvy and
(2) Includes stock-based compensation expense as follows (in thousands):
Three months ended Six months ended
December 31, December 31,
2021 (1) 2020 2021 (1) 2020
Cost of revenue $ 1,285 $ 642 $ 2,412 $ 1,243
Research and development 14,280 3,246 24,840 6,315
Sales and marketing 11,039 1,871 19,153 3,375
General and administrative 23,080 4,930 41,166 9,650
Total $ 49,684 $ 10,689 $ 87,571 $ 20,583
The following table presents the components of our Consolidated Statements of Income for the periods presented as a percentage of revenue:
Three months ended Six months ended
December 31, December 31,
2021 (1) 2020 2021 (1) 2020
Revenue 100 % 100 % 100 % 100 %
Cost of revenue 22 % 26 % 23 % 26 %
Gross margin 78 % 74 % 77 % 74 %
Operating expenses
Research and development 33 % 38 % 34 % 38 %
Sales and marketing 52 % 26 % 52 % 27 %
General and administrative 42 % 36 % 45 % 37 %
Total operating expenses 127 % 100 % 131 % 102 %
Loss from operations (49 )% (26 )% (54 )% (28 )%
Other expenses, net (3 )% (6 )% (3 )% (3 )%
Loss before benefit from income taxes (52 )% (32 )% (57 )% (31 )%
Benefit from income taxes (- )% (1 )% (1 )% -
Net loss (52 )% (31 )% (56 )% (31 )%
(1) Includes the results of Divvy and
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Comparison of the three months ended
Income
Turnover during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Income
(1) Includes the results of Divvy and
Revenue, which is comprised mainly of subscription and transactions fees, increased to$156.5 million during the three months endedDecember 31, 2021 from$54.0 million during the three months endedDecember 31, 2020 , an increase of$102.5 million or 190%. The increase was due primarily to the following:
•
Subscription fees increased to$49.2 million during the three months endedDecember 31, 2021 from$26.6 million during the three months endedDecember 31, 2020 , an increase of$22.6 million or 85%, driven primarily by the increase in customers and average subscription revenue per customer. • Transaction fees increased to$106.3 million during the three months endedDecember 31, 2021 from$25.7 million during the three months endedDecember 31, 2020 , an increase of$80.6 million or 313%, due primarily to increased adoption of new product offerings and the mix of transaction revenues shifting to variable-priced products. We expect revenue to be affected by fluctuations in foreign currency rates in the future, especially if our revenue through our Australian subsidiary grows as a percentage of our total revenue or our operations inAustralia increase.
Cost of revenue, gross profit and gross margin
Cost of sales, gross profit and gross margin during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Cost of revenue$ 34,386 $ 13,973 $ 20,413 146 % Gross profit$ 122,092 $ 40,072 $ 82,020 205 % Gross margin 78 % 74 %
(1) Includes the results of Divvy and
Cost of revenue increased to$34.4 million during the three months endedDecember 31, 2021 from$14.0 million during the three months endedDecember 31, 2020 , an increase of$20.4 million or 146%. The increase was due primarily to the following:
•
a$9.3 million increase in amortization of acquired developed technology; • a$4.5 million increase in direct costs associated with the processing of our customers' payment transactions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increased adoption of new product offerings, and an increase in the volume of transactions; • a$4.4 million increase in personnel-related costs, including stock-based compensation expense and amortization of increased deferred service costs, due to the hiring of additional personnel who were directly engaged in providing implementation and support services to our customers, including the headcount from the 40
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acquisitions of Divvy andInvoice2go . Our average headcount of such personnel during the three months endedDecember 31, 2021 increased by 117% compared to the same period in fiscal 2021; and • a$2.2 million increase in costs for consultants, temporary contractors, and shared overhead and other costs. Gross margin increased to 78% during the three months endedDecember 31, 2021 from 74% during the same period in fiscal 2021 due primarily to a higher mix of variable-priced transaction revenue.
Research and development costs
Research and development expenses during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Research and development costs
154 % Percentage of revenue 33 % 38 %
(1) Includes the results of Divvy and
Research and development expenses increased to$52.0 million during the three months endedDecember 31, 2021 from$20.5 million during the three months endedDecember 31, 2020 , an increase of$31.5 million or 154%. The increase was due primarily to the following:
•
a$26.6 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel, who were directly engaged in developing new product offerings, and the acquisitions of Divvy andInvoice2go . Our average research and development headcount during the three months endedDecember 31, 2021 increased by 199% compared to the same period in fiscal 2021; and • a$4.9 million increase in shared overhead costs, costs for engaging consultants and temporary contractors who provided product development services, and other costs. As a percentage of total revenue, research and development expenses decreased to 33% during the three months endedDecember 31, 2021 from 38% during the three months endedDecember 31, 2020 due primarily to the leveraging of our total research and development spend relative to the increase in our total revenue. We expect research and development expenses to be affected by fluctuations in foreign currency rates in the future, especially if our operations inAustralia increase.
Sales and marketing expenses
Sales and marketing expenses during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Sales and marketing expenses
52 % 26 %
(1) Includes the results of Divvy and
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Sales and marketing expenses increased to$80.8 million during the three months endedDecember 31, 2021 from$14.2 million during the three months endedDecember 31, 2020 , an increase of$66.6 million or 470%. The increase was due primarily to the following:
•
a$21.5 million increase in personnel-related costs, including stock-based compensation expense, due to the hiring of additional personnel, who were directly engaged in acquiring new customers and in marketing our products and services, and the acquisitions of Divvy andInvoice2go . Our average sales and marketing headcount during the three months endedDecember 31, 2021 increased by 260% compared to the same period in fiscal 2021; • a$21.5 million increase in rewards expense in connection with our rewards programs. We offer promotion programs whereby spending businesses who use the spend management application can earn rewards based on transaction volume on the cards issued to them. Rewards can be redeemed by spending businesses on cash back, statement credit, gift cards and travel. Rewards expense is driven by transaction volume and an estimate of the cost of earned rewards that are expected to be redeemed; • a$10.5 million increase in amortization of acquired intangible assets; • a$10.4 million increase in advertising spend and various marketing initiatives and activities, such as engaging consultants and attending marketing events, as we increased our efforts in promoting our products and services and in increasing brand awareness; and • a$2.7 million increase in shared overhead and other costs. As a percentage of total revenue, sales and marketing expenses increased to 52% during the three months endedDecember 31, 2021 from 26% during the three months endedDecember 31, 2020 due mainly to the rewards expense and the amortization of acquired intangible assets that were recognized during the current fiscal quarter and none in the same quarter in fiscal 2021. Additionally, the increase was attributed to higher stock-based compensation expense during the current fiscal quarter.
General and administrative expenses
General and administrative expenses during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
General and administrative expenses
234 % Percentage of revenue 42 % 36 %
(1) Includes the results of Divvy and
General and administrative expenses increased to$65.4 million during the three months endedDecember 31, 2021 from$19.6 million during the three months endedDecember 31, 2020 , an increase of$45.8 million or 234%. The increase was due primarily to the following:
•
a$28.8 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional general and administrative personnel and the acquisitions of Divvy andInvoice2go . Our average general and administrative headcount during the three months endedDecember 31, 2021 increased by 235% compared to the same period in fiscal 2021; • a$7.2 million increase in provision for card and fraud losses; • a$5.5 million increase in professional and consulting fees as we obtained additional external assistance to support certain corporate initiatives, including the integration of our acquired businesses; and • a$4.3 million increase in shared overhead costs and other costs. 42
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As a percentage of total revenue, general and administrative expenses increased to 42% during the three months endedDecember 31, 2021 from 36% during the three months endedDecember 31, 2020 due primarily to the increase in stock-based compensation expense and provision for card and fraud losses.
Other expenses, net
Other expenses, net during the three months ended
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Other expenses, net $ (5,000 ) $ (3,341 ) $ (1,659 ) 50 %
(1) Includes the results of Divvy and
Other expenses, net increased to$5.0 million during the three months endedDecember 31, 2021 from$3.3 million during the three months endedDecember 31, 2020 , an increase of$1.7 million or 50%. The increase was due primarily to the increase in the amount of discount associated with the measurement of cards receivable sold and held for sale at a lower of cost or market, partially offset by a decrease in interest expense due to the lower amortization of debt discount and issuance costs associated with our 2025 Notes.
Benefit from income tax
Benefit from income taxes in the completed three months
Three months ended
December 31, Change
2021 (1) 2020 Amount %
Benefit from income taxes $ (635 ) $ (333 ) $ (302 ) (91 )%
(1) Includes the results of Divvy and
Benefit from income taxes during the three months endedDecember 31, 2021 pertained mainly to the tax benefit of the net loss incurred during the period. The benefit from income taxes during the three months endedDecember 31, 2020 pertained to a partial reversal of net deferred income tax liability that was established in connection with our issuance of the 2025 Notes.
Comparison of the six months ended
Income
Turnover during the half-year ended
Six months ended
December 31 , Change
2021 (1) 2020 Amount % Revenue
(1) Includes the results of Divvy and
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Revenue, which is comprised mainly of subscription and transactions fees, increased to$274.8 million during the six months endedDecember 31, 2021 from$100.3 million during the six months endedDecember 31, 2020 , an increase of$174.5 million or 174%. The increase was due primarily to the following:
•
Subscription fees increased to$86.2 million during the six months endedDecember 31, 2021 from$51.2 million during the six months endedDecember 31, 2020 , an increase of$35.0 million or 68%, driven primarily by the increase in customers and average subscription revenue per customer. • Transaction fees increased to$186.8 million during the six months endedDecember 31, 2021 from$44.9 million during the six months endedDecember 31, 2020 , an increase of$141.9 million or 316%, due primarily to increased adoption of new product offerings and the mix of transaction revenues shifting to variable-priced products. We expect revenue to be affected by fluctuations in foreign currency rates in the future, especially if our revenue through our Australian subsidiary grows as a percentage of our total revenue or our operations inAustralia increase.
Cost of revenue, gross profit and gross margin
Cost of sales, gross profit and gross margin during the six months ended
Six months ended
December 31, Change
2021 (1) 2020 Amount %
Cost of revenue $ 64,221 $ 26,079 $ 38,142 146 %
Gross profit $ 210,606 $ 74,175 $ 136,431 184 %
Gross margin 77 % 74 %
(1) Includes the results of Divvy and
Cost of revenue increased to$64.2 million during the six months endedDecember 31, 2021 from$26.1 million during the six months endedDecember 31, 2020 , an increase of$38.1 million or 146%. The increase was due primarily to the following:
•
a$17.7 million increase in amortization of acquired developed technology; • an$8.4 million increase in direct costs associated with the processing of our customers' payment transactions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increased adoption of new product offerings, and an increase in the volume of transactions; • an$8.2 million increase in personnel-related costs, including stock-based compensation expense and amortization of increased deferred service costs, due to the hiring of additional personnel who were directly engaged in providing implementation and support services to our customers, including the headcount from the acquisitions of Divvy andInvoice2go . Our average headcount of such personnel during the six months endedDecember 31, 2021 increased by 108% compared to the same period in fiscal 2021; and • a$3.8 million increase in costs for consultants, temporary contractors, and shared overhead and other costs.
Gross margin increased to 77% during the six months ended
compared to 74% during the six months ended
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Research and development costs
Research and development expenses during the half-year ended
and 2020 were as follows (amounts in thousands):
Six months ended
December 31, Change
2021 (1) 2020 Amount %
Research and development costs
147 % Percentage of revenue 34 % 38 %
(1) Includes the results of Divvy and
Research and development expenses increased to$94.4 million during the six months endedDecember 31, 2021 from$38.3 million during the six months endedDecember 31, 2020 , an increase of$56.1 million or 147%. The increase was due primarily to the following:
•
a$47.4 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel, who were directly engaged in developing new product offerings, and the acquisitions of Divvy andInvoice2go . Our average research and development headcount during the six months endedDecember 31, 2021 increased by 179% compared to the same period in fiscal 2021; and • an$8.7 million increase in shared overhead costs, costs for engaging consultants and temporary contractors who provided product development services, and other costs. As a percentage of total revenue, research and development expenses decreased to 34% during the six months endedDecember 31, 2021 from 38% during the six months endedDecember 31, 2020 due primarily to the leveraging of our total research and development spend relative to the increase in our total revenue. We expect research and development expenses to be affected by fluctuations in foreign currency rates in the future, especially if our operations inAustralia increase.
Sales and marketing expenses
Sales and marketing expenses during the six months ended
Six months ended
December 31, Change
2021 (1) 2020 Amount %
Sales and marketing expenses
52 % 27 %
(1) Includes the results of Divvy and
Sales and marketing expenses increased to$143.1 million during the six months endedDecember 31, 2021 from$27.1 million during the six months endedDecember 31, 2020 , an increase of$116.0 million or 429%. The increase was due primarily to the following:
•
a$37.3 million increase in personnel-related costs, including stock-based compensation expense, due to the hiring of additional personnel, who were directly engaged in acquiring new customers and in marketing our products and services, and the acquisitions of Divvy andInvoice2go . Our average sales and marketing headcount during the six months endedDecember 31, 2021 increased by 214% compared to the same period in fiscal 2021; • a$37.2 million increase in rewards expense in connection with our rewards programs. We offer promotion programs whereby spending businesses who use the spend management application can earn rewards based 45
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on transaction volume on the cards issued to them. Rewards can be redeemed by spending businesses on cash back, statement credit, gift cards and travel. Rewards expense is driven by transaction volume and an estimate of the cost of earned rewards that are expected to be redeemed; • an$18.8 million increase in amortization of acquired intangible assets; • a$17.3 million increase in advertising spend and various marketing initiatives and activities, such as engaging consultants and attending marketing events, as we increased our efforts in promoting our products and services and in increasing brand awareness; and • a$5.4 million increase in shared overhead and other costs. As a percentage of total revenue, sales and marketing expenses increased to 52% during the six months endedDecember 31, 2021 from 27% during the six months endedDecember 31, 2020 due mainly to the rewards expense and the amortization of acquired intangible assets that were recognized during the current period and none in the same period in fiscal 2021. Additionally, the increase was attributed to higher stock-based compensation expense during the current period.
General and administrative expenses
General and administrative expenses during the half-year ended
Six months ended
December 31, Change
2021 (1) 2020 Amount %
General and administrative expenses
235 % Percentage of revenue 45 % 37 %
(1) Includes the results of Divvy and
General and administrative expenses increased to$123.3 million during the six months endedDecember 31, 2021 from$36.8 million during the six months endedDecember 31, 2020 , an increase of$86.5 million or 235%. The increase was due primarily to the following:
•
a$50.6 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional executive employees and general and administrative personnel and the acquisitions of Divvy andInvoice2go . Our average general and administrative headcount during the six months endedDecember 31, 2021 increased by 210% compared to the same period in fiscal 2021; • a$15.4 million increase in professional and consulting fees as we obtained additional external assistance to support certain corporate initiatives, including the acquisitions of Divvy andInvoice2go ; • a$12.5 million increase in provision for card and fraud losses; and • an$8.0 million increase in shared overhead and other costs. As a percentage of total revenue, general and administrative expenses increased to 45% during the six months endedDecember 31, 2021 from 37% during the six months endedDecember 31, 2020 due primarily to the increase in stock-based compensation expense and provision for card and fraud losses. 46
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Other expenses, net
Other expenses, net during the six months ended
Six months ended
December 31, Change
2021 (1) 2020 Amount %
Other expenses, net $ (8,475 ) $ (2,511 ) $ (5,964 ) 238 %
(1) Includes the results of Divvy and
Other expenses, net increased to$8.5 million during the six months endedDecember 31, 2021 from$2.5 million during the six months endedDecember 31, 2020 , an increase of$6.0 million or 238%, due primarily to the increase in the amount of discount associated with the measurement of cards receivable sold and held for sale at a lower of cost or market and the increase in loss on servicing acquired card receivables sold.
Benefit from income tax
Benefit from income taxes during the closed semester
Six months ended
December 31, Change
2021 (1) 2020 Amount %
Benefit from income taxes$ (4,056 ) $ (333 ) $ (3,723 ) (1,118 )%
(1) Includes the results of Divvy and
Benefit from income taxes during the six months endedDecember 31, 2021 consisted primarily of a reduction of valuation allowance in connection with the acquisition ofInvoice2go . The benefit from income taxes during the six months endedDecember 31, 2020 pertained to a partial reversal of net deferred income tax liability that was established in connection with our issuance of the 2025 Notes. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP metrics to assist investors in seeing our financial performance using a management view. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. 47
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Non-GAAP Gross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit and non-GAAP gross margin as gross profit and
gross margin, respectively, excluding amortization of intangible assets,
stock-based compensation expense, depreciation expense, and payroll taxes
related to stock-based compensation expense. We believe non-GAAP gross profit
and non-GAAP gross margin provide our management and investors' consistency and
comparability with our past financial performance and facilitate
period-to-period comparisons of operations. The following table presents a
reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our
gross profit and gross margin for the periods presented (amounts in thousands):
Three months ended Six months ended
December 31, December 31,
2021 (1) 2020 2021 (1) 2020
Revenue $ 156,478 $ 54,045 $ 274,827 $ 100,254
Gross profit 122,092 40,072 210,606 74,175
Add:
Amortization of intangible assets 9,285 - 17,686 -
Stock-based compensation expense 1,285 642 2,412 1,243
Payroll taxes related to stock-based
compensation expense 89 98 252 143
Depreciation expense 763 833 1,484 1,557
Non-GAAP gross profit $ 133,514 $ 41,645 $ 232,440 $ 77,118
Gross margin 78.0 % 74.1 % 76.6 % 74.0 %
Non-GAAP gross margin 85.3 % 77.1 % 84.6 % 76.9 %
(1) Includes the results of Divvy and
Free movement of capital
Free cash flow is defined as net cash used in operating activities, increased by
purchases of property and equipment and capitalization of internal-use software
costs. We believe free cash flow is an important liquidity measure of the cash
(if any) that is available, after purchases of property and equipment and
capitalization of internal-use software costs, for operational expenses and
investment in our business. Free cash flow is useful to investors as a liquidity
measure because it measures our ability to generate or use cash. Once our
business needs and obligations are met, cash can be used to maintain a strong
balance sheet and invest in future growth. The following table presents a
reconciliation of our free cash flow to net cash used in operating activities
for the periods presented (in thousands):
Three months ended Six months ended
December 31, December 31,
2021 (1) 2020 2021 (1) 2020
Net cash used in operating activities $ (12,930 ) $ (9,227 ) $ (34,064 ) $ (11,583 )
Purchases of property and equipment (1,063 ) (7,742 ) (2,467 ) (13,636 )
Capitalization of internal-use software costs (2,081 ) (346 ) (5,023 ) (660 )
Free cash flow $ (16,074 ) $ (17,315 ) $ (41,554 ) $ (25,879 )
(1) Includes the results of Divvy and
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Liquidity and Capital Resources As ofDecember 31, 2021 , our principal sources of liquidity were our cash and cash equivalents of$1.7 billion , our available-for-sale short-term investments of$1.1 million , and our available lines of credit. Our cash equivalents are comprised primarily of money market funds and investments in debt securities with original maturities of three months or less. Our short-term investments are comprised primarily of available-for-sale investments in corporate bonds, certificates of deposit, asset-backed securities, municipal bonds, andU.S. treasury securities with original maturities of more than three months. Our lines of credit are comprised of credit agreements, under which we have a total borrowing commitment of$155.0 million . We can draw funds from these lines of credit to the extent there is sufficient balance of eligible acquired card receivables that serve as collateral. A significant portion of our cash, cash equivalents and short-term investments as ofDecember 31, 2021 was derived from our recent public offering of our common stock and issuance of 2027 Notes in a private offering onSeptember 24, 2021 , in which we received combined aggregate net proceeds of approximately$1.9 billion , after deducting discounts, commissions and other offering costs. We believe that our cash, cash equivalents, available-for sale short-term investments, and funds available under our lines of credit will be sufficient to meet our working capital requirements for at least the next 12 months. In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements to fund future operations or obligations, including the repayment of the principal amount of the Notes in the event that the Notes become convertible and the noteholders opt to exercise their right to convert. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may have terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.
Cash flow
Below is a summary of our consolidated cash flows for the periods presented (in
thousands):
Six months ended
December 31,
2021 (1) 2020
Net cash provided by (used in):
Operating activities $ (34,064 ) $ (11,583 )
Investing activities $ (969,311 ) $ (179,274 )
Financing activities $ 3,063,290 $ 1,636,278
Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue is comprised of transaction fees on a fixed or variable rate per type of transaction. Our primary uses of cash in our operating activities include payments for employee salary and related costs, payments to third parties to fulfill our payment transactions, payments to sales and marketing partners, payments for card rewards expenses, and other general corporate expenditures. Net cash used in operating activities increased to$34.1 million during the six months endedDecember 31, 2021 from$11.6 million during the six months endedDecember 31, 2020 , due mainly to the increase in payments for costs of our services and operating expenses, partially offset by the increase in revenue. 49
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Our cash proceeds from our investing activities consist primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments. Our cash usage for our investing activities consists primarily of purchases of corporate and customer fund available for-sale investments, business acquisitions, purchases of property and equipment, and capitalization of internal-use software. Additionally, the increase or decrease in our net cash from investing activities is impacted by the net change in acquired card receivable balances. Our net cash used in investing activities increased to$969.3 million during the six months endedDecember 31, 2021 from$179.3 million during the six months endedDecember 31, 2020 due primarily to the increase in purchases of corporate and customer fund short-term investments, payment to acquireInvoice2go , and increase in acquired card receivables; partially offset by the increase in proceeds from maturities and sales of corporate and customer short-term investments.
Net cash provided by financing activities
Our cash proceeds from our financing activities consist primarily of proceeds from public offerings of our common stock, issuance of convertible notes, exercises of stock options, and employee purchases of our common stock under our ESPP. Our cash usage for our financing activities consists primarily of payments of costs related to public offerings of our common stock, and issuance of debt. Additionally, the increase or decrease in our net cash from financing activities is impacted by the change in customer fund deposits liability. Net cash provided by financing activities increased to$3.1 billion during the six months endedDecember 31, 2021 from$1.6 billion during the six months endedDecember 31, 2020 due primarily to the proceeds from the public offering of our common stock and increase in customer funds liability.
Tickets 2027
OnSeptember 24, 2021 , we issued$575.0 million in aggregate principal amount of our 0% convertible senior notes due onApril 1, 2027 . The 2027 Notes are senior, unsecured obligations, and will not accrue interest unless we determine to pay special interest. The 2027 Notes are convertible on or afterJanuary 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date onApril 1, 2027 . The 2027 Notes are convertible by the holders at their option during any calendar quarter afterDecember 31, 2021 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the$414.80 per share initial conversion price. If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock. In conjunction with the issuance of the 2027 Notes, we entered into Capped Call transactions with certain counterparties. The Capped Calls each have an initial strike price of approximately$414.80 per share, subject to certain adjustments. The Capped Calls have an initial cap price of$544.00 per share, subject to certain adjustments; provided that such cap price shall not be reduced to an amount less than the strike price of$414.80 per share. The purpose of the Capped Calls is to reduce the potential dilution of our common stock upon any conversion of the 2027 Notes and/or offset any cash payments that we are required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap.
Tickets 2025
OnNovember 30, 2020 , we issued$1.15 billion in aggregate principal amount of our 0% convertible senior notes due onDecember 1, 2025 . The 2025 Notes are senior, unsecured obligations, and will not accrue interest unless we determine to pay special interest. The 2025 Notes are convertible on or afterSeptember 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date onDecember 1, 2025 . The 2025 Notes are convertible by the holders at their option during any calendar quarter afterMarch 31, 2021 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not 50
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consecutive) for a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the
As ofDecember 31, 2021 , one of the conditions for early conversion of the 2025 Notes was triggered. Specifically, our common stock during the calendar quarter endedDecember 31, 2021 traded at a price greater than 130% of the initial conversion price of the 2025 Notes for more than 20 consecutive trading days. Pursuant to the terms of the 2025 Notes, the holders of the 2025 Notes have the right to convert their notes at their option at any time during the calendar quarter subsequent toDecember 31, 2021 . If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock. As ofDecember 31, 2021 , we classified the net carrying amount of the 2025 Notes as a current liability in the condensed consolidated balance sheets included elsewhere in this Quarterly Report on Form 10-Q. In conjunction with the issuance of the 2025 Notes, we entered into Capped Call transactions with certain counterparties. The Capped Calls each have an initial strike price of approximately$160.88 per share, subject to certain adjustments. The Capped Calls have an initial cap price of$218.14 per share, subject to certain adjustments; provided that such cap price shall not be reduced to an amount less than the strike price of$160.88 per share. The purpose of the Capped Calls is to reduce the potential dilution of our common stock upon any conversion of the 2025 Notes and/or offset any cash payments that we are required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap.
Credit agreements
Our credit agreements consisted of (i) a Revolving Credit and Security Agreement (Revolving Credit Agreement 2021) and (ii) a Warehouse Credit Agreement (Credit Agreement 2019, as amended).
Our 2021 Revolving Credit Agreement has a total commitment of$95.0 million consisting of a Class A facility amounting to$75.0 million and a Class B facility amounting to$20.0 million . The total outstanding borrowings from the Class A and Class B facilities, which bear interest at 2.75% and 10.25% per annum, respectively, plus LIBOR (subject to a floor rate of 0.25%), were$37.5 million and$10.0 million , respectively, as ofDecember 31, 2021 . Our 2021 Revolving Credit Agreement matures inJune 2023 or earlier pursuant to such agreement and the outstanding borrowings are payable on or before the maturity date. Our 2019 Credit Agreement (as amended) has a total commitment of$60.0 million . The outstanding borrowings from the amended 2019 Credit Agreement, which bear interest at 6.0% per annum plus LIBOR (subject to a floor rate of 2.0%), amounted to$30.0 million as ofDecember 31, 2021 . The interest rate dropped to 4.5% per annum plus LIBOR (subject to a floor rate of 0.25%) beginningOctober 2021 . Our 2019 amended Credit Agreement matures inJanuary 2023 and the outstanding borrowings are payable on or before the maturity date.
The funds available under our credit agreements, after deducting our borrowings totaling
Contractual obligations and other commitments
As discussed above, we issued$575.0 million in aggregate principal amount of the 2027 Notes in the first quarter of fiscal 2022. The 2027 Notes are senior, unsecured obligations, and will not accrue interest. The 2027 Notes are convertible on or afterJanuary 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date. For additional discussion about our 2027 Notes, refer to Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Other than the 2027 Notes, there were no material changes in our contractual obligations and other commitments from those disclosed in our Annual Report on Form 10-K for fiscal 2021. For additional discussion on our leases and other contractual commitments, refer to Notes 13 and 14 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Off-balance sheet arrangements
We are contractually obligated to purchase all card receivables fromU.S. based card issuing banks (Issuing Banks) including authorized transactions that have not cleared. The transactions that have been authorized but not cleared 51
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totaled$18.8 million as ofDecember 31, 2021 and have not been recorded on our condensed consolidated balance sheets. We have off-balance sheet credit exposures with these authorized but not cleared transactions; however, our expected credit losses with respect to these transactions was not material as ofDecember 31, 2021 . Other than our expected credit loss exposure on the card transactions that have not cleared, we had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources as ofDecember 31, 2021 .
Critical accounting estimates
Our condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes in our critical accounting estimates from the critical accounting estimates described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10- K for fiscal year 2021.
Recent accounting pronouncements
See "The Company and its Significant Accounting Policies" in Note 1 of the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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