BIGCOMMERCE HOLDINGS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in "Risk Factors." See "Special Note Regarding Forward-Looking Statements." OverviewBigCommerce is leading a new era of ecommerce. Our SaaS platform simplifies the creation of beautiful, engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. We allow merchants to build their ecommerce solution their way with the flexibility to fit their unique business and product offerings. We power both our customers' branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline POS systems. Our strategy is to provide the world's best combination of freedom of choice and flexibility in a multi-tenant SaaS platform. We describe this strategy as "Open SaaS." As ofMarch 31, 2022 , we served approximately 60,000 online stores and 12,972 accounts with greater than$2,000 in annual contract value. We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting. All our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation. Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including B2C and B2B. Our customers includeAvery Dennison , Ben & Jerry's,Molton Brown , Burrow, SC Johnson,SkullCandy , SoloStove and Vodafone. We offer access to our platform on a subscription basis. We serve customers with subscription plans tailored to their size and feature needs. For our larger customers, our Enterprise plan offers our full feature set at a monthly subscription price tailored to each business. For SMBs, BigCommerce Essentials offers three retail plans: Standard, Plus, and Pro, priced at$29.95 ,$79.95 , and$299.95 per month, respectively. Our Essentials plans include GMV thresholds with programmatic upgrades built in as merchants exceed each plan's threshold. Our differentiated Open SaaS technology approach combines the flexibility and customization potential of open source software with the performance, security, usability, and value benefits of multi-tenant SaaS. This combination helps businesses turn digital transformation into competitive advantage. While some software conglomerate providers attempt to lock customers into their proprietary suites, we focus on the configurability and flexibility of our open platform, enabling each business to optimize their ecommerce approach based on their specific needs. Partners are essential to our open strategy. We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry. We strategically partner with, rather than compete against, the leading providers in adjacent categories, including payments, shipping, POS, CMS, CRM, and ERP. We focus our research and development investments in our core product to create a best-of-breed ecommerce platform and co-market and co-sell with our strategic technology partners to our mutual prospects and customers. As a result, we earn high-margin revenue share from a subset of our strategic technology partners, which complements the high gross margin of our core ecommerce platform.
Key business metrics
We review the following key business metrics to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Increases or decreases in our key business metrics may not correspond with increases or decreases in our revenue. We have included the activity of Feedonomics in our key business metrics from the acquisition date ofJuly 23, 2021 , throughMarch 31, 2022 . Our key business metrics, such as annual revenue run-rate, average revenue per account and others are calculated as of the end of the last month of the reporting period. We have excluded any activity pertaining to Feedonomics from our key business metrics for all periods presented that precede its acquisition. As a result, year over year or quarter over quarter metrics will not include Feedonomics' impact in the base period. Period over period results will be fully comparable after the one-year anniversary of the acquisition. 25
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Annual revenue run-rate
We calculate annual revenue run-rate ("ARR") at the end of each month as the sum
of: (1) contractual monthly recurring revenue at the end of the period, which
includes platform subscription fees, invoiced growth adjustments, product feed
management subscription fees, recurring professional services revenue, and other
recurring revenue, multiplied by twelve to prospectively annualize recurring
revenue, and (2) the sum of the trailing twelve-month non-recurring and variable
revenue, which includes one-time partner integrations, one-time fees, payments
revenue share, and any other revenue that is non-recurring and variable.
Accounts with greater than
We track the total number of accounts with annual contract value ("ACV") greater
than $2,000 (the "ACV threshold") as of the end of a monthly billing period. To
define this $2,000 ACV cohort, we include only subscription plan revenue and
exclude partner and services revenue and recurring services revenue. We consider
all stores and brands added and subtracted as of the end of the monthly billing
period. This metric includes accounts that may have either one single store or
brand above the ACV threshold or multiple stores or brands that together exceed
the ACV threshold.
Average revenue per account
We calculate average revenue per account ("ARPA") at the end of a period by
including customer-billed revenue and an allocation of partner and services
revenue, where applicable. We bill customers for subscription solutions and
professional services, and we include both in ARPA for the reported period. For
example, ARPA as of March 31, 2022 , includes all subscription solutions and
professional services billed between January 1, 2022 , and March 31, 2022 . We
allocate partner revenue, where applicable, primarily based on each customer's
share of GMV processed through that partner's solution. Partner revenue that is
not directly linked to customer usage of a partner's solution is allocated based
on each customer's share of total platform GMV. Each account's partner revenue
allocation is calculated by taking the account's trailing twelve-month partner
revenue, then dividing by twelve to create a monthly average to apply to the
applicable period in order to normalize ARPA for seasonality.
Enterprise Account metrics
To measure the effectiveness of our ability to execute against our growth strategy, particularly within the mid-market and enterprise business segments, we calculate ARR attributable to Enterprise Accounts. We define Enterprise Accounts as accounts with at least one unique Enterprise plan subscription or an enterprise level feed management subscription (collectively "Enterprise Accounts"). These accounts may have more than one Enterprise plan or a combination of Enterprise plans and Essentials plans.
The chart below illustrates certain of our key business metrics as of the periods ended:
March 31, December 31, September 30,
2022 2021 2021 2021 2021
Total ARR (in
thousands) $ 280,426 $ 268,665 $ 253,524 $ 209,289 $ 196,274
Accounts with ACV
greater than
$2,000 12,972 12,754 12,378 10,986 10,509
% of Total ARR
attributable to
accounts
with ACV greater
than $2,000 89 % 88 % 88 % 85 % 83 %
ARPA attributable to
accounts with
ACV greater than
$2,000 $ 19,234 $ 18,598 $ 17,960 $ 16,133 $ 15,582
ARR Attributable to
Enterprise Accounts
(in thousands) $ 188,983 $ 172,858 $ 159,866 $ 122,737 $ 112,350
% of Total ARR
attributable to
Enterprise Accounts 67 % 64 % 63 % 59 % 57 %
Net revenue retention
We use net revenue retention ("NRR") to evaluate our ability to maintain and
expand our revenue with our account base of customers exceeding the ACV
threshold over time. The total billings and allocated partner revenue, where
applicable, for the measured period are divided by the total billings and
allocated partner revenue for such accounts, corresponding to the period one
year prior. An NRR greater than 100% implies positive net revenue retention.
This methodology includes stores added to or subtracted from an account's
subscription during the previous twelve months. It also includes changes to
subscription and partner and services
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revenue billings, and revenue reductions from stores or accounts that leave the platform during the previous one-year period. Net new accounts added after the previous one-year period are excluded from our NRR calculations. NRR for accounts with ACV greater than$2,000 was 116% and 113% for the years endedDecember 31, 2021 and 2020, respectively. We update our reported NRR at the end of each fiscal year and do not report quarterly changes in NRR.
Components of results of operations
Revenue
We generate revenue from two sources: (1) subscription solutions revenue and (2) partner and services revenue.
Subscription solutions revenue consists primarily of platform subscription fees from all plans. It also includes recurring professional services and sales of SSL certificates. Subscription solutions are charged monthly, quarterly, or annually for our customers to sell their products and process transactions on our platform. Subscription solutions are generally charged per online store and are based on the store's subscription plan. Our Enterprise plan contracts are generally for a fixed term of one to three years and are non-cancelable. Our retail plans are generally month-to-month contracts. Monthly subscription fees for Pro and Enterprise plans are adjusted if a customer's GMV or orders processed are outside of specified plan thresholds on a trailing twelve-month basis. Fixed monthly fees and any transaction charges related to subscription solutions are recognized as revenue in the month they are earned. Subsequent to our acquisition of Feedonomics onJuly 23, 2021 , subscription revenue also includes revenue from Feedonomics. Through Feedonomics,BigCommerce provides feed management solutions under service contracts which are generally one year or less and, in many cases, month-to-month. These service types may be sold stand-alone or as part of a multi-service bundle (e.g. both marketplaces and advertising) and are billed monthly in arrears.
We generate partner revenue from our technology application ecosystem. Customer's tailor their stores to meet their feature needs by integrating applications developed by our strategic technology partners. We enter into contracts with our strategic technology partners that are generally for one year or longer. We generate revenue from these contracts in three ways: (1) revenue-sharing arrangements, (2) technology integrations, and (3) partner marketing and promotion. We recognize revenue on a net basis from revenue-sharing arrangements when the underlying transaction occurs.
We also generate revenue from non-recurring professional services that we provide to complement the capabilities of our customers and their agency partners. Our services help improve customers' time-to-market and the success of their businesses usingBigCommerce . Our non-recurring services include education packages, launch services, solutions architecting, implementation consulting, and catalog transfer services.
Cost of revenue
Cost of revenue consists primarily of: (1) personnel-related costs (including stock-based compensation expense) for our customer success teams, (2) costs that are directly related to hosting and maintaining our platform, (3) fees for processing customer payments, and (4) the 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 our mix between business lines change and we build out additional localized support as we expand internationally. With our acquisition of Feedonomics onJuly 23, 2021 , cost of revenue also includes personnel and other costs related to feed management along with other customer support personnel.
Sales and marketing
Sales and marketing expenses consist primarily of: (1) personnel-related expenses (including stock-based compensation expense), (2) sales commissions, (3) marketing programs, (4) travel-related expenses, and (5) allocated overhead costs. We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand. We plan to increase our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness. Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers. No incremental sales commissions are incurred on renewals of customer contracts. We expect our sales and marketing expenses will increase in absolute dollars, but will decrease as a percentage of total revenue over time.
Research and development
Research and development expenses consist primarily of personnel-related
expenses (including stock-based compensation expense) incurred in maintaining
and developing enhancements to our ecommerce platform and allocated overhead
costs. To date, software development costs eligible for capitalization have not
been significant.
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We believe delivering new functionality is critical to attracting new customers and enhancing the success of existing customers. We expect to continue to make substantial investments in research and development. We expect our research and development expenses to increase in absolute dollars, but decrease as a percentage of total revenue over time, as we continue to leverage and expand our engineering center inKyiv, Ukraine and other lower-cost international locations. We expense research and development expenses as incurred.
General and administrative
General and administrative expenses consist primarily of: (1) personnel-related expenses (including stock-based compensation expense) for finance, legal and compliance, human resources, and IT, (2) external professional services, and (3) allocated overhead costs. We incur additional general and administrative expenses as a result of operating as a public company and have increased the size of our general and administrative functions to support the growth of our business. As a result, we expect that general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period. Acquisition related expenses
Acquisition related expenses consists of cash payments for third-party acquisition costs and other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions.
Amortization of intangible assets
Amortization of intangible assets consist of non-cash amortization of acquired intangible assets which were recognized as a result of business combinations and are being amortized over their expected useful life.
Other expenses, net
Other expenses, net consists primarily of interest expense on our convertible debt partially offset by interest income on corporate funds invested in money market instruments and highly liquid short-term investments.
Provision for income taxes
Provision for income taxes consists primarily of deferred income taxes associated with amortization of tax deductible goodwill and current income taxes related to certain foreign and state jurisdictions in which we conduct business. ForU.S. federal income tax purposes and in certain foreign and state jurisdictions, we have NOL carryforwards. The foreign jurisdictions in which we operate have different statutory tax rates than those ofthe United States . Additionally, certain of our foreign earnings may also be currently taxable inthe United States . Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. 28
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Results of operations
The following table sets forth our results of operations for the periods
presented:
Three months ended March 31,
2022 2021
(in thousands)
Revenue $ 66,050 $ 46,660
Cost of revenue(1) 17,103 9,250
Gross profit 48,947 37,410
Operating expenses:
Sales and marketing(1) 32,173 20,809
Research and development(1) 20,944 13,535
General and administrative(1) 17,312 11,608
Acquisition related expenses 12,660 - Amortization of intangible assets 2,037 - Total operating expenses 85,126 45,952 Loss from operations (36,179 ) (8,542 ) Interest income 122 12 Interest expense (709 ) - Other expense (156 ) (14 ) Loss before provision for income taxes (36,922 ) (8,544 ) Provision for income taxes 115 0 Net loss$ (37,037 ) $ (8,544 )
(1) Includes stock-based compensation expense as follows:
Three months ended March 31,
2022 2021
(in thousands)
Cost of revenue $ 862 $ 387
Sales and marketing 2,583 1,579
Research and development 2,526 1,148
General and administrative 2,991 2,057
Total stock-based compensation expense
Revenue by geographic region
The composition of our revenue by geographic region during the three months
ended
Three months ended March 31, Change
2022 2021 Amount %
(dollars in thousands)
Revenue
Americas - U.S. $ 51,500 $ 36,117 $ 15,383 42.6
Americas - other 2,684 1,734 950 54.8
EMEA 6,284 4,397 1,887 42.9
APAC 5,582 4,412 1,170 26.5
Total Revenue $ 66,050 $ 46,660 $ 19,390 41.6
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Comparison of the three and three months endedMarch 31, 2022 , andMarch 31, 2021 Revenue Three months ended March 31, Change 2022 2021 Amount % (dollars in thousands) Revenue Subscription solutions$ 47,987 $ 32,004 $ 15,983 49.9 % Partner and services 18,063 14,656 3,407 23.2 % Total revenue$ 66,050 $ 46,660 $ 19,390 41.6 % Revenue increased$19.4 million , or 41.6%, to$66.1 million for the three months endedMarch 31, 2022 , from$46.7 million for the three months endedMarch 31, 2021 , as a result of increases in both subscription solutions and partner and services revenue as well as the revenue pertaining to the acquisition of Feedonomics. Subscription solutions revenue increased$16.0 million , or 49.9%, to$48.0 million for the three months endedMarch 31, 2022 , from$32.0 million for the three months endedMarch 31, 2021 , primarily due to growth in mid-market and enterprise activity along with strong overall retention. Feedonomics contributed$8.8 million in subscription revenue for the three months endedMarch 31, 2022 . Partner and services revenue increased$3.4 million , or 23.2%, to$18.1 million for the three months endedMarch 31, 2022 , from$14.7 million for the three months endedMarch 31, 2021 , primarily as a result of increases in revenue-sharing activity with our technology partners and improved monetization of partner revenue share.
Cost of revenue, gross profit, and gross margin
Three months ended March 31, Change
2022 2021 Amount %
(dollars in thousands)
Cost of revenue $ 17,103 $ 9,250 $ 7,853 84.9
Gross profit $ 48,947 $ 37,410 $ 11,537 30.8
Gross margin 74.1 % 80.2 %
Cost of revenue increased $7.9 million , or 84.9%, to $17.1 million for the three
months ended March 31, 2022 , from $9.2 million for the three months ended March
31, 2021 , primarily as a result of higher hosting costs, resulting from
increased transactions processed, of $1.1 million , higher personnel costs,
including stock-based compensation expense amounting to $2.9 million and
expenses as a result of the acquisition of Feedonomics of $3.5 million . Gross
margin decreased to 74.1% during the three months ended March 31, 2022 , from
80.2% during the three months ended March 31, 2021 .
Operating expenses
Sales and marketing
Three months ended March 31, Change
2022 2021 Amount %
(dollars in thousands)
Sales and marketing $ 32,173 $ 20,809 $ 11,364 54.6
Percentage of revenue 48.7 % 44.6 %
Sales and marketing expenses increased $11.4 million , or 54.6%, to $32.2 million
for the three months ended March 31, 2022 , from $20.8 million for the three
months ended March 31, 2021 , primarily due to higher staffing costs, including
stock-based compensation expense of $4.8 million , additional spend to support
revenue growth of $2.9 million and operating expenses as a result of the
acquisition of Feedonomics of $2.3 million . As a percentage of total revenue,
sales and marketing expenses increased to 48.7% during the three months ended
March 31, 2022 , from 44.6% during the three months ended March 31, 2021 ,
primarily due to increased marketing spend and travel costs experienced as
COVID-19 pandemic restrictions are lifted.
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Research and development
Three months ended March 31, Change
2022 2021 Amount %
(dollars in thousands)
Research and development $ 20,944 $ 13,535 $ 7,409 54.7
Percentage of revenue 31.7 % 29.0 %
Research and development expenses increased $7.4 million , or 54.7%, to
$20.9 million for the three months ended March 31, 2022 , from $13.5 million for
the three months ended March 31, 2021 , primarily due to higher staffing costs,
including stock-based compensation expense of $4.5 million , additional spend to
support engineering projects of $0.2 million and expenses as a result of the
acquisition of Feedonomics of $2.7 million . As a percentage of total revenue,
research and development expenses increased to 31.7% during the three months
ended March 31, 2022 , from 29.0% during the three months ended March 31, 2021 ,
primarily due to increased investment in product development.
General and administrative
Three months ended March 31, Change
2022 2021 Amount %
(dollars in thousands)
General and administrative $ 17,312 $ 11,608 $ 5,704 49.1
Percentage of revenue 26.2 % 24.9 %
General and administrative expenses increased $5.7 million , or 49.1%, to
$17.3 million for the three months ended March 31, 2022 , from $11.6 million for
the three months ended March 31, 2021 . The increase was primarily due to higher
staffing costs, including stock-based compensation expense of $3.0 million ,
costs associated with operating as a public company amounting to $1.5 million
and expenses as a result of the acquisition of Feedonomics of $1.0 million .
Acquisition related expenses
Acquisition related expense was$12.7 million for the three months endedMarch 31, 2022 , as a result of acquisition related compensation in conjunction with our business combinations. Interest income
Interest income was insignificant for each of the three-month periods ended
Interest expense
Interest expense increased to
Other expense
Other expense was insignificant for the three months ended
Provision for income taxes
Our provision for income taxes was insignificant in the three months ended
Liquidity and capital resources
We have incurred losses since our inception and anticipate continuing to generate negative operating cash flow, however we believe we have sufficient cash and cash equivalents and marketable securities to continue to fund operations. During the year endedDecember 31, 2021 , we issued approximately$335.0 million in convertible debt, net of offering costs and used$35.6 million of the proceeds to enter into capped call transactions. Our operational short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. We have generated significant operating losses and negative cash flows from operations as reflected in our 31
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accumulated deficit and condensed consolidated statements of cash flows. We expect to continue to incur operating losses and negative cash flows from operations in the future and may require additional capital resources to execute strategic initiatives to grow our business. Our future capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, the timing of new product introductions, and the continued impact of the COVID-19 pandemic on the global economy and our business, financial condition, and results of operations. We believe that our existing cash and cash equivalents and our cash flows from operating activities will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing. In particular, our acquisition of Feedonomics also requires up to$65.0 million in two annual installments of up to$32.5 million each, within ten business days after the first and second anniversary dates of the acquisition, or the earlier achievement of certain product and financial milestones. We may elect, in our sole discretion, to make these post-closing payments partially or entirely in cash or shares of BigCommerce Series 1 common stock. If we choose to issue stock to settle these payments, we will be required to register these shares with theSecurities and Exchange Commission . The sale of additional equity would be dilutive to our stockholders. Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. Cash flows The following table sets forth a summary of our cash flows for the periods indicated. Three months ended March 31, 2022 2021 (in thousands) Net cash used in operating activities$ (21,985 ) $ (12,758 ) Net cash used in investing activities$ (24,813 ) $ (18,854 ) Net cash provided by financing activities $ 184
As ofMarch 31, 2022 , we had$377.3 million in cash, cash equivalents, and restricted cash, an increase of$168.2 million compared to$209.1 million as ofMarch 31, 2021 . Cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months. Our restricted cash balance of$1.2 million atMarch 31, 2022 and 2021, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions. Our marketable securities balance of$125.2 million and$18.4 million atMarch 31, 2022 and 2021 respectively, consists of investments in debt securities. We maintain cash account balances in excess ofFDIC -insured limits.
Operating activities
Net cash used in operating activities for the three months endedMarch 31, 2022 , and 2021 was$22.0 million and$12.8 million , respectively. This consisted primarily of our net losses adjusted for certain non-cash items including depreciation, stock-based compensation, debt discount amortization, amortization of intangible assets, bad debt expense, and the effect of changes in working capital. Investing activities Net cash used in investing activities during the three months endedMarch 31, 2022 , and 2021 was$24.8 million and$18.9 million , respectively. In the three months endedMarch 31, 2022 , this consists primarily of the purchases of marketable securities of$32.5 million , the purchases of property and equipment of$1.3 million partially offset by the maturity of marketable securities of$9.0 million . In the three months endedMarch 31, 2021 , this consisted primarily of purchases of marketable securities of$18.4 million and the purchases of property and equipment of$0.5 million .
Financing activities
Net cash provided by financing activities during the three months endedMarch 31, 2022 , and 2021 was$0.2 million and$1.7 million , respectively. In the three months endedMarch 31, 2022 , this consisted of the proceeds from the issuance of shares of Series 1 32
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common stock pursuant to the exercise of stock options of$0.2 million . In the three months endedMarch 31, 2021 , this consisted of the proceeds from the issuance of shares of Series 1 common stock pursuant to the exercise of stock options of$1.7 million . Indebtedness
2021 Convertible senior notes
InSeptember 2021 , we issued$345,000,000 principal amount of 0.25% Convertible Senior Notes due 2026 (the "Convertible Notes"). The Convertible Notes were issued pursuant to, and are governed by, an indenture (the "Convertible Notes Indenture"), dated as ofSeptember 14, 2021 , between us andU.S. Bank National Association , as trustee. The Convertible Notes are our senior, unsecured obligations and are (i) equal in right of payment with our future senior, unsecured indebtedness; (ii) senior in right of payment to our future indebtedness that is expressly subordinated to the Convertible Notes in right of payment; (iii) effectively subordinated to our future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Convertible Notes accrue interest at a rate of 0.25% per annum, payable semi-annually in arrears onApril 1 andOctober 1 of each year, beginning onApril 1, 2022 . The Convertible Notes will mature onOctober 1, 2026 , unless earlier repurchased, redeemed or converted. BeforeJuly 1, 2026 , noteholders have the right to convert their Convertible Notes only upon the occurrence of certain events. From and afterJuly 1, 2026 , noteholders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate was 13.6783 shares of common stock per$1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately$73.11 per share of common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a "Make-Whole Fundamental Change" (as defined in the Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. We may not redeem the Convertible Notes at our option at any time beforeOctober 7, 2024 . The Convertible Notes will be redeemable, in whole or in part (subject to the "Partial Redemption Limitation" (as defined in the Convertible Notes Indenture)), at our option at any time, and from time to time, on or afterOctober 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. The redemption price will be a cash amount equal to the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. Pursuant to the Partial Redemption Limitation, we may not elect to redeem less than all of the outstanding Convertible Notes unless at least$150.0 million aggregate principal amount of Convertible Notes are outstanding and not subject to redemption as of the time we send the related redemption notice. If certain corporate events that constitute a "Fundamental Change" (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock. The Convertible Notes have customary provisions relating to the occurrence of "Events of Default" (as defined in the Convertible Notes Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Convertible Notes Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Convertible Notes Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of us and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least$65,000,000 ; and (vi) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries. 33
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If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of us) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of Convertible Notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Convertible Notes.
Off-balance sheet arrangements
We did not have any off-balance sheet arrangements as of
Critical accounting policies and estimates
Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these 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. We also make estimates and assumptions on 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 these estimates 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. Except for changes resulting from the acquisition of Feedonomics inJuly 2021 , including purchase price allocation and valuation of acquired intangibles, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
While our significant accounting policies are described in the notes to our included consolidated financial statements, we believe the following critical accounting policies are most important to understanding and evaluating our reported financial results.
Recent accounting pronouncements
A discussion of recent accounting pronouncements is included in Note 2 to our
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q.
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