weav-20220930

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40998

Weave Communications, Inc.

(Exact name of registrant as specified in its charter)


Delaware			26-3302902
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1331 West Powell Way

Lehi, Utah 84043
(Address of principal executive offices, including zip code)

(866) 439-2826
(Registrant's telephone number, including area code)

__________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading symbol:

Name of each exchange on which registered:

Common stock, par value $0.00001 per share

WEAV

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☐

Emerging growth company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 31, 2022, the registrant had 65,582,310 shares of common stock, par value $0.00001 per share, outstanding.

WEAVE COMMUNICATIONS, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 6.	Exhibits	91

	Signatures	92

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” listed under Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our expectations regarding our results of operations, including gross margin, financial condition and cash flows;

•our expectations regarding the development and expansion of our business;

•anticipated trends, challenges and opportunities in our business and in the markets in which we operate;

•the impact of the COVID-19 pandemic;

•our ability to expand our customer base and expand sales to existing customers;

•our ability to expand into new vertical markets and additional countries;

•the impact of competition in our industry and innovation by our competitors;

•our ability to anticipate and address the evolution of technology and the technological needs of our customers, to roll out upgrades to our existing platform and to develop new and enhanced products to meet the needs of our customers;

•the impact of our corporate culture and our ability to retain and hire necessary employees and staff our operations appropriately;

•our ability to remediate the material weaknesses in our internal control over financial reporting;

•our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

•our ability to maintain, protect and enhance our intellectual property; and

•the increased expenses associated with being a public company.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	118,358	$	135,996
Accounts receivable	3,653		3,059
Deferred contract acquisition costs, net	9,391		8,931
Prepaid expenses and other current assets	4,886		6,461
Total current assets	136,288		154,447

Non-current assets:
Property and equipment, net	10,929		24,502
Operating lease right-of-use assets	45,740		—
Finance lease right-of-use assets	10,612		—
Deferred contract acquisition costs, net, less current portion	7,810		7,873
Other non-current assets	1,161		663
TOTAL ASSETS	$	212,540	$	187,485

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,398	$	4,061
Accrued liabilities	15,773		12,250
Deferred revenue	32,722		29,511

Current portion of operating lease liabilities	5,149		—
Current portion of finance lease liabilities	7,718		8,485
Current portion of long-term debt	10,000		—
Total current liabilities	74,760		54,307

Non-current liabilities:
Deferred rent	—		4,319

Operating lease liabilities, less current portion	45,964		—
Finance lease liabilities, less current portion	5,290		6,558
Long-term debt	—		10,000
Total liabilities	126,014		75,184

COMMITMENTS AND CONTINGENCIES (Note 12)




Stockholders' equity:
Preferred stock, $0.00001 par value per share; 10,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Common stock, $0.00001 par value per share; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 65,453,292 and 64,324,628 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	309,023		294,230
Accumulated deficit	(222,369)		(181,898)
Accumulated other comprehensive (loss) income	(128)		(31)
Total stockholders' equity	86,526		112,301
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	212,540	$	187,485

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	36,230	$	30,302	$	104,432	$	84,031
Cost of revenue	13,023		12,868		40,525		35,693
Gross profit	23,207		17,434		63,907		48,338

Operating expenses:
Sales and marketing	16,292		16,021		49,259		42,475
Research and development	7,897		6,183		22,529		19,890
General and administrative	10,876		9,131		32,077		22,717
Total operating expenses	35,065		31,335		103,865		85,082
Loss from operations	(11,858)		(13,901)		(39,958)		(36,744)

Other income (expense):
Interest expense	(380)		(303)		(1,005)		(876)
Other income (expense)	451		(4)		574		10
Loss before income taxes	(11,787)		(14,208)		(40,389)		(37,610)
Provision for income taxes	(31)		(12)		(82)		(12)
Net loss	$	(11,818)	$	(14,220)	$	(40,471)	$	(37,622)
Less: cumulative dividends on redeemable convertible preferred stock	—		(585)		—		(1,691)
Net loss attributable to common stockholders	$	(11,818)	$	(14,805)	$	(40,471)	$	(39,313)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.18)	$	(1.03)	$	(0.62)	$	(2.97)
Weighted-average common shares outstanding - basic and diluted	65,143,929		14,317,575		64,898,948		13,250,767

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(11,818)	$	(14,220)	$	(40,471)	$	(37,622)
Other comprehensive loss
Change in foreign currency translation, net of tax	(110)		(7)		(97)		(15)
Total comprehensive loss	$	(11,928)	$	(14,227)	$	(40,568)	$	(37,637)

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(unaudited)


	Three Months Ended September 30, 2022
											Accumulated
							Additional				Other		Total
	Preferred Stock			Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Deficit		(Loss) Income		Equity
BALANCE - June 30, 2022	—	$	—	65,010,719	$	—	$	302,557	$	(210,551)	$	(18)	$	91,988
Issuance of common shares from stock option exercises	—	—		141,216	—		286		—		—		286
Issuance of common shares from the employee stock purchase plan	—	—		165,347	—		858		—		—		858
Vesting of restricted stock units	—	—		136,010	—		—		—		—		—
Stock-based compensation	—	—		—	—		5,322		—		—		5,322
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(110)		(110)
Net loss	—	—		—	—		—		(11,818)		—		(11,818)
BALANCE - September 30, 2022	—	$	—	65,453,292	$	—	$	309,023	$	(222,369)	$	(128)	$	86,526


	Three Months Ended September 30, 2021
											Accumulated
	Redeemable Convertible						Additional				Other		Total
	Preferred Stock			Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Deficit		(Loss) Income		Deficit
BALANCE - June 30, 2021	43,836,109	$	151,938	14,055,017	$	—	$	25,479	$	(153,610)	$	(6)	$	(128,137)
Issuance of common shares	—	—		689,424	—		1,115		—		—		1,115


Stock-based compensation	—	—		—	—		3,954		—		—		3,954
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(7)		(7)
Net loss	—	—		—	—		—		(14,220)		—		(14,220)
BALANCE - September 30, 2021	43,836,109	$	151,938	14,744,441	$	—	$	30,548	$	(167,830)	$	(13)	$	(137,295)

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(unaudited)


	Nine Months Ended September 30, 2022
											Accumulated
							Additional				Other		Total
	Preferred Stock			Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Deficit		(Loss) Income		Equity
BALANCE - December 31, 2021	—	$	—	64,324,628	$	—	$	294,230	$	(181,898)	$	(31)	$	112,301
Issuance of common shares from stock option exercises	—	—		826,540	—		979		—		—		979
Issuance of common shares from the employee stock purchase plan	—	—		165,347	—		858		—		—		858
Vesting of restricted stock units	—	—		136,777	—		—		—		—		—
Stock-based compensation	—	—		—	—		13,227		—		—		13,227
Offering costs	—	—		—	—		(271)		—		—		(271)
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(97)		(97)
Net loss	—	—		—	—		—		(40,471)		—		(40,471)
BALANCE - September 30, 2022	—	$	—	65,453,292	$	—	$	309,023	$	(222,369)	$	(128)	$	86,526


	Nine Months Ended September 30, 2021
											Accumulated
	Redeemable Convertible						Additional				Other		Total
	Preferred Stock			Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Deficit		(Loss) Income		Deficit
BALANCE - December 31, 2020	43,836,109	$	151,938	11,882,286	$	—	$	16,261	$	(130,208)	$	2	$	(113,945)
Issuance of common shares from stock option exercises	—	—		2,862,155	—		3,240		—		—		3,240
Stock-based compensation	—	—		—	—		11,047		—		—		11,047
Foreign currency translation adjustments, net of tax	—	—		—	—		—		—		(15)		(15)
Net loss	—	—		—	—		—		(37,622)		—		(37,622)
BALANCE - September 30, 2021	43,836,109	$	151,938	14,744,441	$	—	$	30,548	$	(167,830)	$	(13)	$	(137,295)

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(40,471)	$	(37,622)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	9,844		8,751
Amortization of operating right-of-use assets	2,742		—
Provision for losses on accounts receivable	458		227
Amortization of contract acquisition and fulfillment costs	8,236		6,846

Loss on disposal of assets	10		—
Stock-based compensation	13,227		11,047
Changes in operating assets and liabilities:
Accounts receivable	(1,052)		(2,263)
Contract acquisition costs	(8,490)		(10,041)
Prepaid expenses and other assets	934		(1,466)
Accounts payable	(712)		(335)
Accrued liabilities	3,923		5,832
Operating lease liabilities	(1,688)		—
Deferred revenue	3,114		5,567
Deferred rent	—		3,140
Net cash used in operating activities	(9,925)		(10,317)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets	9		—
Purchases of property and equipment	(1,191)		(5,730)
Capitalized internal-use software costs	(1,003)		(1,929)
Net cash used in investing activities	(2,185)		(7,659)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advance on line of credit	—		5,995
Principal payments on finance leases	(6,694)		(5,821)
Proceeds from stock option exercises	979		3,240
Proceeds from the employee stock purchase plan	858		—



Paid offering costs	(671)		(745)
Net cash provided by (used in) financing activities	(5,528)		2,669

NET DECREASE IN CASH AND CASH EQUIVALENTS	(17,638)		(15,307)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	135,996		55,698
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	118,358	$	40,391

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)




SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	1,005	$	876
Cash paid during the period for income taxes	$	82	$	—
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Equipment purchases financed with accounts payable	$	29	$	103
Finance lease liabilities arising from obtaining finance lease right-of-use assets	$	4,659	$	7,433



Accrued unpaid offering costs	$	—	$	1,075

See accompanying notes to these unaudited condensed consolidated financial statements

WEAVE COMMUNICATIONS, INC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Description of the Business

Weave Communications, Inc. (the “Company”) sells subscriptions for its integrated communications platform, which combines software communication and analysis tools with voice over internet protocol (“VoIP”) phone services. The Company was incorporated in the state of Delaware in October 2015 and its corporate headquarters are located in Lehi, UT.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of Weave Communications, Inc. and its wholly owned subsidiaries Weave Communications Canada, Inc. and Weave Communications India Private Limited (collectively, “Weave” or the “Company”). Intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The accompanying interim condensed consolidated balance sheets, statements of operations, comprehensive loss, statements of redeemable convertible preferred stock and stockholders' equity (deficit), statements of cash flows and accompanying notes are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial condition, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations are not necessarily indicative of the results to be expected for the full year or any other period.

Segments

The Company operates as one operating and reportable segment. The Company’s chief operating decision maker (“CODM”) evaluates reporting operations and financial information on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates included in the Company’s financial statements include the valuation allowance against deferred tax assets, recoverability of long-lived assets, fair value of stock-based compensation, amortization period of deferred contract acquisition costs, the incremental borrowing rate used in determining the value of right-of-use assets and lease liabilities, and useful lives for depreciable assets.

Cash and Cash Equivalents

Cash consists of deposits in financial institutions. Cash equivalents consist of highly liquid investments in money market securities with an original maturity of 90 days or less. The fair value of cash equivalents approximated their carrying value as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021 the Company did not have any restricted cash.

Liquidity and Capital Resources

The Company has incurred losses and generated negative cash flows from operations since inception. As of September 30, 2022 the Company had an accumulated deficit of $222.4 million. The Company has partially funded its operations through cash flows generated by sales of its product offerings, and as of September 30, 2022 the Company has completed several rounds of equity financing as a private company with total net proceeds approximating $159.0 million. In November 2021, the Company completed its initial public offering, which generated additional net proceeds of $111.6 million. As of September 30, 2022 the Company had outstanding borrowings under its revolving line of credit of $10.0 million and $40.0 million in available borrowings.

The Company believes its existing cash and cash equivalents, amounts available under our revolving line of credit, and cash flows provided by sales of product offerings will be sufficient to meet operating cash flow requirements for at least twelve months from the date of issuance of the September 30, 2022 condensed consolidated financial statements. As a result of the Company’s growth plans, the Company expects that losses and negative cash flows from operations may continue in the foreseeable future.

Advertising Expense

Advertising costs are expensed as incurred. For the three months ended September 30, 2022 and 2021, the Company recorded advertising expense of $1.4 million and $1.9 million, respectively, and $4.3 million and $5.1 million for the nine months ended September 30, 2022 and 2021, respectively. Advertising costs are included in sales and marketing expenses in the condensed consolidated statements of operations.

Revenue Recognition

The Company derives substantially all revenue from subscription services by providing customers access to its platform.

The Company adopted the provisions of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, (referred to collectively as "ASC 606") effective January 1, 2019 using the modified retrospective method. Following the adoption of ASC 606, the Company recognizes revenue when control of these services are transferred to customers in an amount that reflects consideration to which the Company expects to be entitled in exchange for those services, net of tax. Revenue recognition is determined from the following steps:

•Identification of a contract with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations within the contract;

•Recognition of revenue when, or as, performance obligations are satisfied.

The Company recognizes revenue as follows:

Subscriptions revenue (software and phone service) is generated from fees that provide customers access to one or more of the Company’s software applications and related services. These arrangements generally have contractual terms of month to month. Arrangements with customers do not provide the

customer with the right to take possession of the Company’s software at any time. Instead, customers are granted continuous access to the services over the contractual period. The Company transfers control of services evenly over the contractual period. Accordingly, the consideration related to subscriptions is recognized over time on a straight-line basis over the contract term beginning on the date the Company’s service is made available to the customer.

The Company also provides payment processing/collection services and receives a revenue share from a third-party payment facilitator on transactions between Weave customers that utilize the Weave payments platform and their end consumers. These payment transactions are generally for services rendered at customers’ business location via credit card terminals or through “text-to-pay” functionality. As the Company acts as an agent in these arrangements, revenue from payments services is recorded net of transaction processing fees and revenue is recognized as the performance obligation is performed each time transactions are processed.

Previously, as part of the onboarding process, the customer could request the Company install pre-configured applications on hardware which allow remote access to Weave's cloud solution. In addition, the customer could request the Company install phone hardware at the customer’s location. Whereas the Company continues to provide remote installation services, the in-office installation program was phased out during the second half of 2021. Whether performed remotely or in office, the Company considers onboarding/installation a separate performance obligation, and recognizes revenue at the time the installation services are complete.

With the exception of payments services and installation revenue, customers are billed in advance and they may elect to be billed on a monthly or annual basis. The Company records contract liabilities to deferred revenue when cash payments are received, or billings are due in advance of revenue recognition from services. Deferred revenue is recognized as revenue when, or as, the performance obligations are satisfied. Software and phone service revenue is recognized net of discounts in the statements of operations. The Company does not consider discounts variable consideration as they are stated on each agreement and not subject to contingencies or variability. The Company collects sales and communications taxes from its customers. In the statement of operations, amounts collected from taxes are excluded from the reported revenue amounts.

The Company elected to apply the practical expedient to not disclose the transaction price allocated to remaining performance obligations for contracts with a contract term of one year or less. As of September 30, 2022 and December 31, 2021, approximately $1.5 million and $2.2 million, respectively, in revenue is expected to be recognized from remaining performance obligations for contracts with original performance obligations that exceed one year. As the right to invoice for these remaining performance obligations does not begin until October 2022, this amount is not recorded in deferred revenue as of September 30, 2022. The Company expects to recognize revenue on these remaining performance obligations over the next 10 months.

In addition to providing VoIP phone and software services, the Company provides phone hardware to its customers as part of the subscription. The Company allows customers to include up to 5 phones without adjustment to the subscription base price. In such arrangements, the Company is deemed the lessor and the arrangement is an operating lease per guidance provided in ASC 842. Title of the phones does not transfer to the customer at any point. If a customer were to cancel at any time, the phones are returned to the Company. For customers subscribed prior to August 2021, the Company allowed customers to include up to 10 phones without adjustment to the subscription base price and title of the phones transfers to the customer after 36 months of subscription have occurred. If a customer were to cancel at any time prior to completion of the 36 months period, the phones are returned to the Company.

As a lessor, future minimum lease payments may vary due to customer agreements being month to month and the fact that subscription payments are allocated based on the fair value of all services provided to the customer. With phones being deployed to customers for their useful life, residual value

does not accrue to the benefit of the Company. Phones that are returned are refurbished and placed into service.

Deferred Contract Costs

In accordance with ASC-340, the Company capitalizes incremental costs of obtaining and fulfilling a contract, provided the Company expects to recover those costs. The capitalized amounts mainly consist of sales commissions paid to the Company’s direct sales force. Capitalized costs also include:

•Commissions to sales management for achieving incremental sales quota.

•The associated payroll taxes and fringe benefit costs associated with the payments to the Company’s employees.

•One-time commissions paid to partners.

•One-time registration fees assessed by mobile carriers.

These costs are recorded as deferred contract acquisition and fulfillment costs on the consolidated balance sheet. Amortization of deferred contract acquisition costs related to commissions, and the associated taxes and fringe benefit costs, are included in sales and marketing expense. Deferred contract acquisition costs related to one-time commissions paid to partners are included in cost of revenue. Deferred contract fulfillment costs related to one-time registration fees paid to mobile carriers are included in cost of revenue. These expenses are amortized on a straight-line basis over the average period of consumer benefit, three years. In arriving at this average period of benefit, the Company evaluated both qualitative and quantitative factors which included the anticipated customer life, historical customer life, and the useful life of the Company’s product offerings.

Monthly commensurate revenue share fees paid to partners are expensed as incurred as their estimated period of benefit does not extend beyond 12 months and therefore fall under the practical expedient which allows these costs to be expensed as incurred.

Accounting Pronouncements Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. For all leases with a term greater than twelve months, the new standard also requires lessees to recognize a right-of-use (“ROU”) asset and a corresponding lease liability on their consolidated balance sheets. Upon adoption, lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements or they may record the amount in the year in which the ASU is adopted. The accounting applied by a lessor is largely unchanged from that applied under previous Topic 840. For example, the vast majority of operating leases should remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term.

On January 1, 2022, the Company adopted Topic 842 using the modified retrospective approach with the effective date as of the date of initial application. Consequently, results for the three and nine months ended September 30, 2022 are presented under Topic 842. Prior period amounts were not adjusted and continue to be reported in accordance with previous lease guidance under ASC Topic 840, Leases. The Company elected the package of practical expedients permitted under the transition guidance, which allows an entity to carryforward certain conclusions for leases that commenced prior to the effective date, including the determination of whether an existing contract contains a lease, the classification of the lease, and the accounting for initial direct costs. In addition, the Company elected the practical expedient that allows lessees the option to account for lease and non lease components together as a single component for all classes of underlying assets. The Company performed evaluations of its contracts to

ensure compliance with the new guidance of Topic 842. Upon adoption, the Company recognized cumulative operating lease liabilities of $52.8 million offset by a write off in deferred rent of $4.3 million and operating right-of-use assets of $48.5 million. Capital lease obligations of $15.0 million existing as of December 31, 2021 were renamed finance lease liabilities, and the related $12.4 million in assets that were reported within property and equipment, net, as of December 31, 2021 were reclassified as finance right-of-use assets as of the adoption date.

Accounting Pronouncements Pending Adoption

As an “emerging growth company,” the Jumpstart Our Business Startups Act (the “JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, and includes the Company's accounts receivable, certain financial instruments and contract assets. ASU 2016-13 results in more timely recognition of credit losses. For non-public companies, adoption is required for fiscal years beginning after December 15, 2022, including interim periods within fiscal years beginning after December 15, 2022. As a result, the Company expects to adopt the standard as of January 1, 2023 and is currently evaluating the expected impact of adoption on the financial statements.

3.Revenue

The Company accounts for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts With Customers for all periods presented. See Note 2 for a description of the Company’s revenue recognition accounting policy.

Contract Balances

The Company recognized revenue that was included in the corresponding deferred revenue balance at the beginning of the period of $16.7 million and $13.0 million for the three months ended September 30, 2022 and 2021, respectively, and $29.3 million and $22.7 million for the nine months ended September 30, 2022 and 2021, respectively.

The revenue recognized from amounts included in deferred revenue as of December 31, 2020, during the nine months ended September 30, 2021, presented above has been corrected from the previously reported amount of $36.1 million.

Capitalized Contract Costs

As discussed in Note 2, the Company capitalizes incremental costs of obtaining and fulfilling a contract. Amortization expense related to these costs were $2.8 million and $2.5 million for the three months ended September 30, 2022 and 2021, respectively, and $8.2 million and $6.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Disaggregation of Revenues

Revenue has been disaggregated into recurring and non-recurring categories to identify revenue and costs of revenue that are one-time in nature from those that are term-based and renewable.

The table below outlines revenue for our recurring subscription (software and phone services) and payment processing services, as well as for our onboarding services, and phone hardware (in thousands) for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Subscription and payment processing	$	34,943	$	28,377	$	100,431	$	78,509
Onboarding	278		1,016		859		3,088
Phone hardware lease	1,009		909		3,142		2,434
Total revenue	$	36,230	$	30,302	$	104,432	$	84,031

4.Fair Value Measurements

Financial instruments recorded at fair value in the financial statements are categorized as follows:

•Level 1: Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs reflecting management's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following table summarizes the assets measured at fair value on a recurring basis by level within the fair value hierarchy for the periods presented (in thousands):


	September 30, 2022		December 31, 2021
Level 1
Money market funds	$	109,247	$	118,962
Level 2	—		—
Level 3	—		—
Total	$	109,247	$	118,962

As of September 30, 2022 and December 31, 2021 the fair value of debt was $10.5 million and $10.6 million, respectively (Level 2). The carrying amounts of certain financial instruments, including accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term maturities and are excluded from the fair value tables above.

5.Property and Equipment

Property and equipment consisted of the following for the periods presented (in thousands):


	September 30, 2022		December 31, 2021
Office equipment	$	5,015	$	4,729
Office furniture	5,729		5,588
Leasehold improvements	2,615		2,496
Fixed assets not placed in service	2		118
Capitalized internal-use software	4,599		3,533
Phone hardware	—		26,034
Payment terminals	2,187		1,581
Property and equipment, gross	20,147		44,079
Less accumulated depreciation and amortization	(9,218)		(19,577)
Property and equipment, net	$	10,929	$	24,502

Depreciation and amortization expense on property and equipment (excluding amortization on operating ROU assets) was $3.2 million and $3.2 million for the three months ended September 30, 2022 and 2021, respectively, and $10.0 million and $8.8 million for the nine months ended September 30, 2022 and 2021, respectively. Of this expense, $2.2 million and $2.3 million for the three months ended September 30, 2022 and 2021, respectively, and $7.0 million and $6.7 million for the nine months ended September 30, 2022 and 2021, respectively, related to phone hardware finance ROU assets (see also footnote 7) and data center equipment which has been included in cost of revenue in the statements of operations. Note that these finance ROU assets were reported as “phone hardware” prior to January 1, 2022. Capitalized internal-use software amortization expense was $0.2 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively, and $0.7 million and $0.4 million for the nine months ended September 30, 2022 and 2021, respectively, which has been included in the cost of revenue in the statements of operations. Capitalized implementation amortization expense was zero and $0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $0.1 million and $0.1 million for the nine months ended September 30, 2022 and 2021, respectively, which has been included in operating expense in the statements of operations.

6.Accrued Liabilities

Accrued liabilities consisted of the following for the periods presented (in thousands):


	September 30, 2022		December 31, 2021
Payroll-related accruals	$	10,671	$	8,434
Sales and telecom taxes	2,502		1,508
Employee stock purchase plan liability	266		256
Third-party commissions	461		440

Other	1,873		1,612

Total	$	15,773	$	12,250

7.Leases

The Company has lease arrangements, both as a lessor and a lessee, and makes assumptions and judgments when assessing contracts for lease components, determining lease classifications and calculating right-of-use asset and lease liability values. These assumptions and judgements may include the useful lives and fair values of the leased assets, the implicit rate underlying the Company’s leases, the Company’s incremental borrowing rate or the Company’s intent to exercise or not exercise options available in lease contracts.

Lease expense and other information consisted of the following for the three and nine months ended September 30, 2022 (in thousands, except terms and rates):


	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Lease Expense
Finance lease expense:
Amortization of right-of-use assets	$	2,048		$	6,467
Interest on lease liabilities	237			667
Operating lease expense	1,417			4,252
Short-term lease expense	3			21
Total lease expense	$	3,705		$	11,407

Other information
Finance leases:
Operating cash outflow from finance leases	$	237		$	667
Financing cash outflow from finance leases	$	2,234		$	6,694
Finance lease liabilities arising from obtaining finance lease right-of-use assets	$	1,335		$	4,659
Operating leases:
Operating cash outflow from operating leases	$	1,214		$	3,197

Other information as of September 30, 2022
Finance leases:
Weighted-average remaining lease term (years)	1.7
Weighted-average discount rate lease term	7.7		%
Operating leases:
Weighted-average remaining lease term (years)	10.3
Weighted-average discount rate lease term	3.9		%

Operating leases

The Company as the Lessee

The Company leases office space for its headquarters and advertising space under non-cancelable operating lease agreements. These leases have expirations ranging from November 2022 to January 2033. Though the Company is considering renewal options on its leases nearing expiration, the Company has not recognized any renewal options as part of the current lease term as it is not reasonably certain that it will exercise its option as of September 30, 2022. The rates implicit in the Company’s operating leases are not readily determinable thus the Company uses its incremental borrowing rate to calculate the present value of the lease liabilities. The incremental borrowing rate is the rate incurred to borrow on a collateralized basis, and is based on the Company’s secured line of credit, which may be adjusted for the specific terms and collateral of the lease. The operating lease agreements do not contain any residual value guarantees or other restrictions or covenants that would cause the Company to incur additional significant financial obligations. These office space lease agreements contain non-lease components, which represent charges for common area maintenance, taxes and utilities. The Company has elected the practical expedient on not separating lease components from non-lease components.

The Company has other leases for office space with terms less than twelve months from contract inception and no options to purchase the underlying asset. These agreements are accounted for as short-term leases in accordance with ASC 842-20-25-2.

Total rent expense for office space leases was $1.4 million and $1.4 million for the three months ended September 30, 2022 and 2021, respectively, and $4.2 million and $3.9 million for the nine months ended September 30, 2022 and 2021, respectively. Note that rent expense amounts for periods prior to 2022 are reported under ASC 840.

Future maturities of remaining lease payments included in the measurement of operating lease as of September 30, 2022 are as follows (in thousands):


Years ending December 31,
Remaining 2022	$	1,345
2023	5,404
2024	5,539
2025	5,677
2026	5,819
Thereafter	38,667
Total	62,451
Less imputed interest	(11,338)
Present value of operating lease obligations	$	51,113

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the following table summarizes the future minimum lease payments related to operating leases as of December 31, 2021 under ASC 840 (in thousands):


Years ending December 31,
2022	$	4,407
2023	5,404
2024	5,539
2025	5,677
2026	5,819
Thereafter	38,666
Total	$	65,512

The Company as the Lessor

As discussed in the Revenue Recognition accounting policy, the Company provides varying quantities of phone hardware to customers without adjustments to the base subscription price. The Company is deemed a lessor in these arrangements. For the three months ended September 30, 2022 and September 30, 2021, the Company recorded lease revenues associated with phone hardware of $1.0 million and $0.9 million, respectively, and $3.1 million and $2.4 million for the nine months ended September 30, 2022 and 2021, respectively.

Finance leases

The Company is the lessee in all of its finance lease arrangements. In June 2016, the Company began financing its purchases of phone hardware through lease agreements classified as finance leases. As of September 30, 2022 the Company had 98 executed and active lease agreements, respectively, for phone hardware. These agreements require monthly payments ranging from approximately $121 to $21,975 and have maturity dates ranging from July 2022 to May 2025. As of September 30, 2022, the gross value of phone hardware acquired under these capital leases approximated $23.6 million. Amortization expense on finance-leased phone hardware was $2.0 million and $2.2 million for the three months ended September 30, 2022 and 2021, respectively, and $6.5 million and $6.3 million for the nine months ended September 30, 2022 and 2021, respectively, which is included in the depreciation expense referenced in Note 5.

Future minimum lease payments for the Company’s finance leases as of September 30, 2022 were as follows (in thousands):


Years ending December 31,
Remaining 2022	$	2,478
2023	6,717
2024	3,749
2025	1,158
2026	—
Thereafter	—
Total	14,102
Less amounts representing interest	(1,094)
Present value of finance lease obligations	$	13,008

8.Income Taxes

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. The Company reported provision for income taxes of $30.9 thousand and $11.9 thousand for the three months ended September 30, 2022 and 2021, respectively, and $82.0 thousand and $11.9 thousand for the nine months ended September 30, 2022 and 2021, respectively, which resulted in an effective tax rate of (0.2621)%, (0.0840)%, (0.2029)%, and (0.0317)%, respectively. The provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rate of 21% for the periods presented primarily due to changes in the Company’s valuation allowance, state and foreign taxes, and the tax effects of stock-based compensation.

The Company is subject to income tax in the U.S. as well as other tax jurisdictions in which the Company operates. The Company’s U.S. operations have resulted in losses, and as such, the Company maintains a valuation allowance against all U.S. deferred tax assets. While the Company believes its current valuation allowance is appropriate, the Company assesses the need for an adjustment to the valuation allowance on a quarterly basis. The assessment is based on all available positive and negative evidence including past results of operations, forecasted earnings, tax planning strategies, and all sources of future taxable income. In the event the Company determines that it will be able to realize all or part of its net deferred tax assets in the future, all or part of the valuation allowance will be released in the period in which the Company makes such determination. The release of all or part of the valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which it is released.

9.Current and Long-Term Debt

Prior to August of 2021, the Company held a $4.0 million note payable and a revolving line of credit with Silicon Valley Bank. The note required interest only payments through September 2021, followed by 36 principal payments of $0.1 million plus interest (maturity in February 2024). The revolving line of credit had a maximum borrowing capacity of $10.0 million.

In August of 2021, the Company amended the agreement with Silicon Valley Bank to increase the revolving line of credit from $10.0 million to $50.0 million. The total borrowing capacity is subject to reduction should the Company fail to meet certain expectations for recurring revenue and customer retention. Amounts outstanding on the line will accrue interest at the greater of prime rate plus 0.25% and 3.50%. As part of the agreement, the $4.0 million note payable was converted to a deemed advance on the line of credit and was deemed a debt modification. In connection with this transaction, the Company drew down an additional $6.0 million from the line of credit resulting in a total outstanding balance of $10.0 million. The Company is required to pay an annual fee of $0.1 million beginning on the effective date of the agreement, and continuing on the anniversary of the effective date as well as a quarterly unused line fee of 0.15% per annum of the available borrowing amount should the outstanding principal balance drop below $10.0 million (calculated based on the number of days and based on the average available borrowing amount). The line of credit is collateralized by substantially all of our assets. Under

the terms of this amendment, the loan and security agreement requires that, at any time, if total unrestricted cash and cash equivalents held at Silicon Valley Bank is less than $100.0 million, the Company must at all times thereafter maintain a consolidated minimum $20.0 million in liquidity, meaning unencumbered cash plus available borrowing on the line of credit, and the Company must meet specified minimum levels of EBITDA, as adjusted for stock-based compensation and changes in its deferred revenue. The Company was in compliance with all debt covenants as of and for the periods ended September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the total outstanding balance on the line of credit was $10.0 million. The balance on the line of credit is due on August 4, 2023, and therefore, is reflected as a current liability on the balance sheet as of September 30, 2022.

10.Stockholders’ Equity

Stock-Based Compensation Expense

Stock-based compensation expense, consisting of service-based expense related to the equity incentive plan, including expense from stock options and restricted stock units, and the employee stock purchase plan, as well as expenses related to secondary sales of shares of Company common stock, was classified as follows in the accompanying condensed consolidated statements of operations for each of the periods presented (in thousands):


	Three Months Ended September 30				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of revenue	$	190	$	139	$	514	$	418
Sales and marketing	844		693		2,296		1,504
Research and development	1,292		575		2,922		2,991
General and administrative	2,996		2,547		7,495		6,134
Total	$	5,322	$	3,954	$	13,227	$	11,047

Equity Incentive Plan

During 2016, the Company adopted the 2015 Equity Incentive Plan (the “2015 EIP”) under which common stock options could be issued for employee awards and the Company began issuing stock options under this plan in 2016.

In November 2021 in connection with the initial public offering (“IPO”), the Company adopted the 2021 Equity Incentive Plan (the “2021 EIP” and, together with the 2015 EIP, the “EIP”) under which the Company could issue stock options or restricted stock units (“RSUs”) as awards. Upon adoption of the 2021 EIP, the 2015 EIP plan was terminated. All options issued and outstanding or available for issuance under the 2015 EIP were absorbed into the 2021 EIP. Along with the absorbed 2015 EIP options, the Company reserved an additional 9,000,000 shares of common stock for future issuance under the 2021 EIP, with scheduled annual increases to the reserve for amounts to be determined by the Board, subject to a maximum amount. In the first quarter of 2022, the board reserved an additional 3.2 million common shares for future issuance under the 2021 EIP.

Stock-based compensation expense related to the EIP was $5.2 million and $4.0 million for the three months ended September 30, 2022 and 2021.

Stock Options

Most options have a four-year vesting schedule with a one-year cliff and are classified as incentive stock options (“ISOs”). Some options have been granted in lieu of bonuses and have expedited two- or three-year vesting schedules. All awards vest based on service conditions.

Options with accelerated vesting clauses, should there be a change in Company control, were 2,051,350 and 3,689,243 as of September 30, 2022 and 2021, respectively.

Unrecognized stock-based compensation expense as of September 30, 2022 and 2021 was $10.9 million and $38.6 million, respectively. Stock-based compensation expense is recognized on a straight-line basis over the remaining weighted-average vesting periods. As of September 30, 2022 and 2021 the weighted-average vesting periods approximated 2.06 years and 3.14 years, respectively.

Stock option activity was as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2021	7,574,136	$	8.60	8.35	$	52,257
Exercisable as of December 31, 2021	2,719,252	$	3.44	7.03	$	31,929

Granted	—	—
Exercised	(564,083)	$	1.65
Forfeited and expired	(380,947)	$	12.07
Outstanding as of March 31, 2022	6,629,106	$	8.99	7.81	$	8,815
Exercisable as of March 31, 2022	2,665,039	$	5.45	6.30	$	6,975

Granted	—	$	—
Exercised	(121,241)	$	1.55
Forfeited and expired	(649,298)	$	14.15
Outstanding as of June 30, 2022	5,858,567	$	8.58	6.86	$	2,402
Exercisable as of June 30, 2022	2,959,753	$	6.35	5.45	$	2,281

Granted	—	$	—
Exercised	(141,216)	$	2.02
Forfeited and expired	(1,253,226)	$	10.31
Outstanding as of September 30, 2022	4,464,125	$	8.28	4.99	$	5,259
Exercisable as of September 30, 2022	3,163,096	$	7.13	3.63	$	4,781

The aggregate intrinsic value of options exercised was $0.7 million for the three months ended September 30, 2022. The intrinsic value represents the excess of the estimated fair value of the Company's common stock on the date of exercise over the exercise price of each option.

Stock-based compensation expense is measured at the grant date based on the estimated fair value of the award. The fair value of the awards is fixed at grant date and amortized over the remaining service period. The Company uses the Black-Scholes model to estimate the value of its stock options issued under the EIP. Prior to the Company’s IPO, the common stock fair values used in the models were based on the most recent 409(a) valuation as of the option grant date. Management reviews option grants and determines whether further valuation adjustments are appropriate based on recent company performance and/or changes in market conditions. The volatility assumed in the estimate was based on publicly traded companies in the same industry and considers the expected term calculated by the Company. The expected term of the options was derived from a simplified method which estimates the term based on an averaging of the vesting period and contractual term of the option grant. The risk-free rate utilized was the average of the five- and seven-year U.S. Treasury yield as the estimated expected term for options approximates 6 years. The Company has no plans to declare dividends in the foreseeable future.

Restricted Stock Units

RSUs granted under the Plan vest and settle upon the satisfaction of a service-based condition. The service based condition for these awards is generally satisfied over three or four years. 171,075 RSUs have a four-year vesting schedule with 25% cliff vesting one year from grant date and the remaining 75% vesting monthly over the remaining three years. The remaining RSUs that have been issued have a

three-year vesting schedule with 33% vesting one year from grant date and the remaining 67% vesting quarterly over the remaining two years.

As of September 30, 2022, there was $35.6 million of unrecognized stock-based compensation expense related to outstanding RSUs which is expected to be recognized over a weighted-average period of 2.59 years.

Restricted Stock Unit activity was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2021	171,075	$	18.50

Granted	3,183,398	6.24
Vested	(593)	9.08
Canceled	(33,911)	16.02
Outstanding as of March 31, 2022	3,319,969	$	6.77

Granted	2,420,126	$	5.48
Vested	(174)	$