ALTERYX, INC. You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , or Annual Report, filed with theSecurities and Exchange Commission , or theSEC , onFebruary 15, 2022 . This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors," set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. See "Special Note Regarding Forward-Looking Statements" above. Overview We are a leader in Analytic Process Automation, or Alteryx APA. The Alteryx APA software platform unifies analytics, data science and business process automation in one self-service platform to accelerate digital transformation, deliver high-impact business outcomes, accelerate the democratization of data, and rapidly upskill modern workforces. Data workers, regardless of technical acumen, are empowered to be curious and solve problems. With the Alteryx APA software platform, users can automate the full range of analytics, data science and processes, embed intelligent decision-making and actions, and empower their organization to enable top and bottom line impact, efficiency gains, and rapid upskilling. Our platform includes Alteryx Designer, our data profiling, preparation, blending, analytics, data science and process automation product deployable to the cloud and on premise, Alteryx Server, our secure and scalable server-based product for managing, automating and governing processes and applications in a web-based environment, Alteryx Intelligence Suite, our augmented machine learning, auto-modeling, and text mining product, Alteryx Connect, our collaborative data exploration platform for discovering information assets and sharing recommendations across the enterprise, and Alteryx Promote, our advanced analytics model management product for data scientists and analytics teams to build, manage, monitor and deploy predictive models into real-time production applications. Our platform also offers cloud-native products, includingAlteryx Designer Cloud, the browser-based version of our Alteryx Designer product, Alteryx Machine Learning, our automated machine learning product for building, validating, iterating, and exploring machine learning models with a fully-guided user experience, Alteryx Auto Insights, our analytics solution that automates insights for business users, and Alteryx Trifacta, our open and interactive cloud platform for data engineers and analysts to collaboratively profile, prepare, and pipeline data for analytics and machine learning. In addition,Alteryx Community , our online user community, allows users to gain valuable insights from one another, collaborate and share their experiences and ideas, and innovate around our platform. Our platform has been adopted by organizations across a wide variety of industries and sizes. As ofMarch 31, 2022 , we had nearly 8,200 customers in more than 80 countries, including over 890 of the Global 2000 companies. We derive a large portion of our revenue from subscriptions for use of our platform. Our software can be licensed for use on a desktop or server, or it can be deployed in the cloud or through a browser. Subscription periods for our platform generally range from one to three years and the subscription fees are typically billed annually in advance. We also generate revenue from professional services, including training and consulting services. Revenue from subscriptions, including related PCS, represented over 95% of revenue for each of the three months endedMarch 31, 2022 and 2021, respectively. Our business model involves both a "land and expand" sales motion as well as an enterprise sales motion. Our go-to-market approach often begins with a free trial of Alteryx Designer and is followed by an initial purchase of our offerings. As organizations quickly realize the benefits derived from our platform, use frequently spreads across departments, divisions, and geographies through word-of-mouth, collaboration, and standardization and automation of business processes. Both for an initial purchase and as part of expanding a current customer's use of our products, we also employ an enterprise-focused sales motion that identifies and involves members of a customer's senior management team to accelerate acceptance and adoption of our platform within their organization. Over time, many of our customers find that the use of our platform is strategic and collaborative in nature and it becomes a fundamental element of their operational, analytical and business processes. We sell our platform primarily through direct sales and marketing channels utilizing a wide range of online and offline sales and marketing activities. In addition, we have cultivated strong relationships with channel partners to help us extend the reach of our sales and marketing efforts, especially internationally. Our channel partners include technology alliances, solution providers, global strategic integrators, and value-added resellers, or VARs. These channel partners also provide solution-based selling, services, and training internationally. 25 -------------------------------------------------------------------------------- COVID-19 Impact InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a pandemic, which has resulted in authorities implementing and re-implementing numerous measures from time to time to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that the COVID-19 pandemic has had or will have on our operating results, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic, any resurgences of the pandemic locally or globally, and the evolution and impact of COVID-19 variants, our compliance with these measures has impacted our day-to-day operations and could continue to disrupt our business and operations, as well as that of certain of our customers whose industries are more severely impacted by these factors, for an indefinite period of time. To support the health and well-being of our employees, customers, partners and communities, the majority of our offices worldwide were closed fromMarch 2020 throughMay 2021 . Beginning inJune 2021 and continuing into the three months endedMarch 31, 2022 , as conditions have improved, vaccination rates have increased, and local authorities have permitted, we have reopened most of our offices worldwide. Starting inApril 2022 , we are also encouraging ourU.S. -based employeeswho are local to an office to begin returning at least one day per week. We have also reduced restrictions on travel and have seen increases in travel in the three months endedMarch 31, 2022 . We anticipate that costs related to travel will continue to increase as government-imposed travel restrictions are eased and lifted. InFebruary 2022 , we transitioned our corporate headquarters to our new facilities inIrvine, California . Although we were able to secure a subtenant for our previous corporate headquarters, the impact of the pandemic on the commercial real estate market and the increase in work-from-home arrangements has caused a decline in demand for office space and market rates, which contributed to the long-lived asset impairment incurred upon our ceasing use of that space. Key Business Metrics
We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions:
Annual Recurring Revenue. We derive a large portion of our revenue from subscriptions for use of our platform. Subscription periods for our platform generally range from one to three years and the subscription fees are typically billed annually in advance. A portion of revenue from our subscriptions is recognized at the point in time when the platform is first made available to the customer, or the beginning of the subscription term, if later. The remaining portion is recognized ratably over the life of the contract. This revenue recognition creates variability in the revenue we recognize period to period based on the timing of subscription start dates and the subscription term. In order to measure the underlying performance of our subscription-based contracts, we calculate annual recurring revenue, or ARR, which represents the annualized recurring value of all active subscription contracts at the end of a reporting period and excludes the value of non-recurring revenue streams, such as certain professional services. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. Both multi-year contracts and contracts with terms less than one year are annualized by dividing the total committed contract value by the number of months in the subscription term and then multiplying by twelve.
The following table summarizes our annual recurring revenue (in millions) for each quarter end for the periods indicated:
As of
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31,
2021 2021 2021 2021 2022
Annual recurring revenue $ 512.7 $ 547.6 $ 578.6 $ 638.0 $ 683.6
26-------------------------------------------------------------------------------- Dollar-Based Net Expansion Rate. Our dollar-based net expansion rate is a trailing four-quarter average of the annual contract value, or ACV, which is defined as the subscription revenue that we would contractually expect to recognize over the term of the contract divided by the term of the contract, in years, from a cohort of customers in a quarter as compared to the same quarter in the prior year. A dollar-based net expansion rate equal to 100% would generally imply that we received the same amount of ACV from our cohort of customers in the current quarter as we did in the same quarter of the prior year. A dollar-based net expansion rate less than 100% would generally imply that we received less ACV from our cohort of customers in the current quarter than we did in the same quarter of the prior year. A dollar-based net expansion rate greater than 100% would generally imply that we received more ACV from our cohort of customers in the current quarter than we did in the same quarter of the prior year. To calculate our dollar-based net expansion rate, we first identify a cohort of customers, or the Base Customers, in a particular quarter, or theBase Quarter . A customer will not be considered a Base Customer unless such customer has an active subscription on the last day of theBase Quarter . We then divide the ACV in the same quarter of the subsequent year attributable to the Base Customers, or theComparison Quarter , including Base Customers from which we no longer derive ACV in theComparison Quarter , by the ACV attributable to those Base Customers in theBase Quarter . Our dollar-based net expansion rate in a particular quarter is then obtained by averaging the result from that particular quarter with the corresponding result from each of the prior three quarters. The dollar-based net expansion rate excludes contract value relating to professional services from that cohort.
The following table summarizes our dollar-based net expansion rate at the end of each quarter for the periods indicated:
Three Months Ended
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31,
2021 2021 2021 2021 2022
Dollar-based net expansion rate 120 % 120 % 119 % 119 % 119 %
Number of Customers. We believe that our ability to expand our customer base is
a key indicator of our market penetration, the growth of our business, and our
future potential business opportunities. We define a customer at the end of any
particular period as an entity with a subscription agreement that runs through
the current or future period as of the measurement date. Organizations with free
trials have not entered into a subscription agreement and are not considered
customers. A single organization with separate subsidiaries, segments, or
divisions that use our platform may represent multiple customers, as we treat
each entity that is invoiced separately as a single customer. In cases where
customers subscribe to our platform through our channel partners, each end
customer is counted separately.
The following table summarizes the number of our customers at each quarter end
for the periods indicated:
As of
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31,
2021 2021 2021 2021 2022
Customers 7,214 7,405 7,689 7,936 8,195
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Results of Operations
The following table sets forth our results of operations for the periods
indicated. The period-to-period comparison of financial results is not
necessarily indicative of financial results to be achieved in future periods.
Three Months Ended March 31,
2022 2021
(in thousands)
Revenue:
Subscription-based software license $ 63,089 $ 43,358
PCS and services 94,852 75,401
Total revenue 157,941 118,759
Cost of revenue:
Subscription-based software license 2,102 1,249
PCS and services 22,139 9,592
Total cost of revenue(1) 24,241 10,841
Gross profit 133,700 107,918
Operating expenses:
Research and development(1) 50,150 31,322
Sales and marketing(1) 115,610 71,907
General and administrative(1) 59,440 33,500
Impairment of long-lived assets 8,239 -
Total operating expenses 233,439 136,729
Loss from operations (99,739) (28,811)
Interest expense (2,390) (9,598)
Other expense, net (1,950) (1,254)
Loss before provision for income taxes (104,079) (39,663)
Provision for income taxes 1,488 993
Net loss $ (105,567) $ (40,656) (1) Amounts include stock-based compensation expense as follows:
Three Months Ended March 31,
2022 2021
(in thousands)
Cost of revenue $ 3,404 $ 1,108
Research and development 11,174 6,325
Sales and marketing 15,220 7,045
General and administrative 15,364 9,961
Total $ 45,162 $ 24,439
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The following table sets forth selected historical financial data for the periods indicated, expressed as a percentage of revenue:
Three Months Ended March 31,
2022 2021
Revenue:
Subscription-based software license 39.9 % 36.5 %
PCS and services 60.1 63.5
Total revenue 100.0 100.0
Cost of revenue:
Subscription-based software license 1.3 1.1
PCS and services 14.0 8.1
Total cost of revenue 15.3 9.2
Gross profit 84.7 90.8
Operating expenses:
Research and development 31.8 26.4
Sales and marketing 73.2 60.5
General and administrative 37.6 28.2
Impairment of long-lived assets 5.2 -
Total operating expenses 147.8 115.1
Loss from operations (63.1) (24.3)
Interest expense (1.5) (8.1)
Other expense, net (1.3) (1.1)
Loss before provision for income taxes (65.9) (33.5)
Provision for income taxes 0.9 0.8
Net loss (66.8) % (34.3) %
Comparison of the Three Months Ended March 31, 2022 and 2021
Revenue
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Subscription-based software license $ 63,089 $ 43,358 $ 19,731 45.5 %
PCS and services 94,852 75,401 19,451 25.8
Total revenue $ 157,941 $ 118,759 $ 39,182 33.0 %
Subscription-based software license revenue increased for the three months ended
March 31, 2022 as compared to the three months ended March 31, 2021 primarily
due to an increase in sales to new and existing customers during the three
months ended March 31, 2022 as compared to the three months ended March 31,
2021 . In addition, as a result of a determination to cease the inclusion of a
certain performance obligation previously included in subscriptions to our
platform, we recognized a larger portion of the total transaction price at the
point in time when the platform was first made available to the customer, or the
beginning of the subscription term, if later, during the three months ended
March 31, 2022 as compared to the three months ended March 31, 2021 .
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PCS and services revenue is primarily recognized ratably over the subscription
term. Due to the ratable recognition of this revenue over time, the increase in
PCS and services revenue is primarily attributed to sales to customers in prior
periods and the growth in our customer base between March 31, 2021 and March 31,
2022 . Our product pricing was not a significant driver of the changes in
subscription-based software license or PCS and services revenue for the periods
presented. In addition, our new cloud-based product offerings, including Alteryx
Designer Cloud, Alteryx Machine Learning, Alteryx Auto Insights, and products
acquired as part of our Trifacta acquisition, did not represent a material
amount of revenue for the three months ended March 31, 2022 .
The disaggregation of revenue by region was as follows:
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
United States $ 110,033 $ 77,237 $ 32,796 42.5 %
International 47,908 41,522 6,386 15.4
Total revenue $ 157,941 $ 118,759 $ 39,182 33.0 %
Cost of Revenue and Gross Margin
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Subscription-based software license $ 2,102 $ 1,249 $ 853 68.3 %
PCS and services 22,139 9,592 12,547 130.8
Total cost of revenue $ 24,241 $ 10,841 $ 13,400 123.6 %
% of revenue 15.3 % 9.2 %
Gross margin 84.7 % 90.8 %
Cost of revenue increased for the three months ended March 31, 2022 as compared
to the three months ended March 31, 2021 primarily due to $8.8 million in
increased employee-related costs driven by incremental headcount, a broad-based
wage increase to improve retention and productivity, and merit increases, as
well as additional stock awards granted to new hires and as part of our equity
refresh programs. Additionally, there was an increase in amortization of
intangibles associated with our recent acquisitions of $1.2 million ,
depreciation of capitalized software development costs of $1.0 million , and
higher information technology and overhead costs of $0.8 million to support the
increased headcount. In addition, we have made significant investments in our
cloud infrastructure and customer success organizations, including through the
acquisition of Trifacta , which has contributed to the increase to cost of
revenue and the resulting decrease to gross margin.
As of March 31, 2022 , we had 262 cost of revenue personnel as compared to 111 as
of March 31, 2021 .
Research and Development
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Research and development $ 50,150 $ 31,322 $
18,828 60.1 %
% of revenue 31.8 % 26.4 %
30-------------------------------------------------------------------------------- Research and development expense increased for the three months endedMarch 31, 2022 as compared to the three months endedMarch 31, 2021 primarily due to$15.2 million in increased employee-related costs driven by incremental headcount, a broad-based wage increase to improve retention and productivity, merit increases, and additional stock awards granted to new hires and as part of our equity refresh programs. In addition, there was an increase in consulting and outsourced labor costs of$2.0 million to assist in certain development projects, as well as higher information technology costs of$0.9 million related primarily to additional software licenses and web services procured and overhead costs of$0.6 million due to office expansion and fit-outs.
As of
Sales and Marketing
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Sales and marketing $ 115,610 $ 71,907 $ 43,703 60.8 %
% of revenue 73.2 % 60.5 %
Sales and marketing expense increased for the three months ended March 31, 2022
as compared to the three months ended March 31, 2021 primarily due to an
increase in employee-related costs of $27.7 million . The overall increase in
employee-related costs was a result of increased headcount, a broad-based wage
increase to improve retention and productivity, merit increases, and additional
stock awards granted as part of our equity refresh programs. There was an
additional increase related to the effect of higher travel and entertainment
expenses of $8.4 million due primarily to increased international travel as well
as the overall easing of travel restrictions associated with the COVID-19
pandemic. Furthermore, there was an increase of $2.5 million in information
technology and overhead costs as a result of office expansion and fit outs, an
increase of $2.3 million in marketing programs due in part to our brand
awareness campaigns, such as the ongoing sponsorship of McLaren Racing , and an
increase in consulting and outsourced labor costs of $1.5 million related to
go-to-market projects and global campaign integration.
As of
General and Administrative
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
General and administrative $ 59,440 $ 33,500 $ 25,940 77.4 %
% of revenue 37.6 % 28.2 %
General and administrative expense increased for the three months ended March
31, 2022 as compared to the three months ended March 31, 2021 primarily due to
$13.1 million in increased employee-related costs from incremental headcount, a
broad-based wage increase to improve retention and productivity, merit
increases, and additional stock awards granted to new hires and as part of our
equity refresh programs, including the market-based PRSUs granted to certain
executives. In addition, there was an increase in consulting and outsourced
labor costs of $10.6 million primarily due to higher legal and accounting
professional services fees related to our recent acquisition of Trifacta , as
well as an increase in overhead costs of $1.4 million due to office expansion
and fit outs, including our new corporate headquarters.
As of
31
--------------------------------------------------------------------------------Impairment of Long-lived Assets
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Impairment of long-lived assets $ 8,239 $ - $ 8,239 *
* Not meaningful
The long-lived asset impairment is attributable to the cease-use and sublease of
our previous corporate headquarters during the three months ended
Interest Expense
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Interest expense $ (2,390) $ (9,598) $ 7,208 (75.1) %
Interest expense is primarily attributable to our 2023 Notes and 2024 & 2026
Notes issued during the three months ended June 30, 2018 and September 30, 2019 ,
respectively. Interest expense decreased in the three months ended March 31,
2022 as compared to the three months ended March 31, 2021 due to the removal of
the equity component and related amortization of the debt discount as part of
the adoption of ASU 2020-06.
Other Expense, Net
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Other expense, net $ (1,950) $ (1,254) $ (696) *
* Not meaningful
Other expense, net consists primarily of gains and losses on foreign currency
remeasurement and transactions and interest income from our available-for-sale
securities. The increase in other expense, net for the three months ended March
31, 2022 as compared to the three months ended March 31, 2021 was related to
greater realized losses in securities of $1.3 million resulting from sales of
our short-term available-for-sale investments and a decrease in investment
income of $0.2 million due to lower interest rates, offset in part by a decrease
in loss in foreign currency remeasurement of $0.9 million due to fluctuations in
the United States Dollar as compared to other major currencies in which we
transact.
Provision for Income Taxes
Three Months Ended
March 31, Change
2022 2021 Amount %
(in thousands, except percentages)
Provision for income taxes $ 1,488 $ 993 $ 495 *
* Not meaningful
32-------------------------------------------------------------------------------- The change in the provision for income taxes for the three months endedMarch 31, 2022 as compared to the three months endedMarch 31, 2021 was primarily due to an increase in pre-tax loss at the annualized effective tax rate for the three months endedMarch 31, 2022 . Liquidity and Capital Resources We had$598.3 million and$1.0 billion of cash and cash equivalents and short-term and long-term investments in marketable securities with$564.7 million and$972.3 million held domestically, as ofMarch 31, 2022 andDecember 31, 2021 , respectively. The decrease in cash and cash equivalents and investments is primarily due to the acquisition ofTrifacta for$389.8 million , net of cash acquired.
Our principal uses of cash are funding our operations and other working capital requirements.
In the short term, we believe that our existing cash and cash equivalents, marketable securities, and cash flow from operations (in periods in which we generate cash flow from operations) will be sufficient for at least the next 12 months to meet our requirements and plans for cash, including meeting our working capital and capital expenditure requirements. In the long term, our ability to support our requirements and plans for cash, including meeting our working capital and capital expenditure requirements, will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the cost to develop and support our offering, the introduction of new products and services, the continuing adoption of our products by customers, any acquisitions or investments that we make in complementary businesses, products, and technologies, and our ability to obtain equity or debt financing. To the extent existing cash and cash equivalents and short-term investments and cash from operations are not sufficient to fund future activities, we may need to raise additional funds. We may seek to raise additional funds through equity, equity-linked, or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict operations. Any additional equity or convertible debt financing may be dilutive to stockholders. If we are unable to raise additional capital or refinance our existing indebtedness when desired, our business, operating results, and financial condition could be adversely affected. There were no material changes in our contractual obligations and commitments during the three months endedMarch 31, 2022 from the contractual obligations and commitments disclosed in the Annual Report. See Note 8, Convertible Senior Notes, Note 10, Leases, and Note 11, Contingencies, of the notes to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding contractual obligations and commitments. We do not have any relationships with unconsolidated entities or financial relationships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. Cash Flows
The following table sets forth cash flows for the periods indicated:
Three Months Ended March 31,
2022 2021
(in thousands)
Net cash provided by operating activities $ 8,818 $ 25,968
Net cash provided by (used in) investing activities (3,986) 64,611
Net cash used in financing activities (9,385) (7,828)
Operating Activities
Net cash provided by operating activities was $8.8 million for the three months
ended March 31, 2022 . Net cash provided by operating activities primarily
reflected net non-cash activity of $72.2 million and a change in operating
assets and liabilities of $42.2 million , offset in part by a net loss of $105.6
million .
Net cash provided by operating activities was $26.0 million for the three months
ended March 31, 2021 . Net cash provided by operating activities primarily
reflected net non-cash activity of $41.1 million and a change in operating
assets and liabilities of $25.6 million , offset in part by a net loss of $40.7
million .
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Changes in operating assets and liabilities is primarily driven by the
seasonality of our sales cycle. The fourth quarter of each fiscal year has
historically been our strongest quarter for new business and renewals and,
correspondingly, the first quarter of the subsequent fiscal year has
historically been the strongest for cash collections on accounts receivable and
highest for payments of sales commissions. As a result of this seasonality, our
accounts receivable decreased during each of the three months ended March 31,
2021 and 2022 compared to the year ended December 31, 2020 and 2021,
respectively. These decreases were offset in part by a decrease to accrued
payroll and payroll-related liability and a net increase in contract asset
balances during each respective period. In addition to the sales cycle, our cash
flow from operations is also impacted by the payment of our annual cash
incentive bonuses to our non-commissioned employees in the first quarter of the
fiscal year and the timing of obligations on accounts payable.
Investing Activities
Net cash used in investing activities for the three months endedMarch 31, 2022 was$4.0 million , consisting of$389.8 million of cash paid in connection with our acquisition ofTrifacta and$9.3 million of purchases of property and equipment, offset in part by$395.1 million of sales and maturities of investments, net of purchases. Net cash provided by investing activities for the three months endedMarch 31, 2021 was$64.6 million , consisting of$70.2 million of sales and maturities of investments, net of purchases, offset in part by$5.6 million of purchases of property and equipment. Financing Activities Net cash used in financing activities for the three months endedMarch 31, 2022 was$9.4 million , consisting primarily of the minimum tax withholding paid on behalf of employees for RSU settlements of$14.1 million , offset in part by proceeds from stock option exercises of$4.7 million . Net cash used in financing activities for the three months endedMarch 31, 2021 was$7.8 million , consisting primarily of the minimum tax withholding paid on behalf of employees for RSU settlements of$13.0 million , offset in part by proceeds from stock option exercises of$5.2 million . The timing and number of stock option exercises and employee stock purchases and the amount of proceeds we receive from these equity awards is not within our control. As it is now our general practice to issue principally RSUs to our employees, cash paid on behalf of employees for minimum statutory withholding taxes on RSU settlements will likely increase. Critical Accounting Policies and Estimates Our condensed consolidated financial statements and the related notes have been prepared in accordance withU.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and operating expenses, provision for income taxes, and related disclosures. Generally, we base our estimates on historical experience and on various other assumptions in accordance withU.S. GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
There have been no changes to our critical accounting policies disclosed in our Annual Report.
Recent Accounting Pronouncements
See Note 2, Significant Accounting Policies, of the notes to our condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.
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