UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 20222023

OR

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

For the transition period from:____________ to __________

Commission File Number: 001-39709

 

CVENT HOLDING CORP.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

98-1560055

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1765 Greensboro Station Place, 7th Floor

Tysons, VA

22102

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (703) 226-3500

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

CVT

 

The Nasdaq Global Market

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

 

Large accelerated filer

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 April 29, 2022,May 1, 2023, the registrant had 481,302,459491,620,840 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

21

 

Condensed Consolidated Balance Sheets

21

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

32

 

Condensed Consolidated Statements of Changes in Stockholders' Equity

43

 

Condensed Consolidated Statements of Cash Flows

54

 

Notes to Unaudited Condensed Consolidated Financial Statements

65

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1716

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

 

 

 

PART II.

OTHER INFORMATION

30

 

 

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

30

Signatures

32

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CVENT HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2023

 

 

December 31, 2022

 

 

(unaudited)

 

 

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,070

 

$

126,526

 

 

$

102,220

 

 

$

99,108

 

Restricted cash

 

104

 

103

 

 

 

2,535

 

 

 

815

 

Short-term investments

 

4,952

 

538

 

 

 

53,872

 

 

 

40,925

 

Accounts receivable, net of allowance of $3.6 million and $4.5 million, respectively

 

92,878

 

112,251

 

Accounts receivable, net of allowance of $1.8 million and $2.6 million, respectively

 

 

97,018

 

 

 

120,362

 

Capitalized commission, net

 

24,870

 

25,393

 

 

 

27,473

 

 

 

26,685

 

Prepaid expenses and other current assets

 

 

27,048

 

 

 

20,376

 

 

 

24,759

 

 

 

17,819

 

Total current assets

 

337,922

 

285,187

 

 

 

307,877

 

 

 

305,714

 

Property and equipment, net

 

14,727

 

15,334

 

 

 

14,577

 

 

 

15,250

 

Capitalized software development costs, net

 

104,920

 

108,851

 

 

 

92,759

 

 

 

96,959

 

Intangible assets, net

 

209,376

 

221,371

 

 

 

161,076

 

 

 

172,781

 

Goodwill

 

1,618,067

 

1,617,880

 

 

 

1,620,270

 

 

 

1,620,312

 

Operating lease-right-of-use assets

 

26,225

 

28,370

 

 

 

28,453

 

 

 

20,398

 

Capitalized commission, non-current, net

 

23,499

 

22,999

 

 

 

23,828

 

 

 

23,477

 

Deferred tax assets, non-current

 

2,370

 

2,403

 

 

 

2,440

 

 

 

2,425

 

Other assets, non-current, net

 

 

3,864

 

 

 

3,684

 

 

 

5,493

 

 

 

8,617

 

Total assets

 

$

2,340,970

 

 

$

2,306,079

 

 

$

2,256,773

 

 

$

2,265,933

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

0

 

$

0

 

 

$

-

 

 

$

-

 

Accounts payable

 

2,185

 

2,675

 

 

 

2,804

 

 

 

2,147

 

Accrued expenses and other current liabilities

 

66,739

 

79,827

 

 

 

88,993

 

 

 

82,249

 

Fees payable to customers

 

49,475

 

24,982

 

 

 

63,589

 

 

 

38,379

 

Operating lease liabilities, current

 

11,236

 

11,290

 

 

 

11,121

 

 

 

11,070

 

Deferred revenue

 

 

287,504

 

 

 

239,843

 

 

 

302,216

 

 

 

267,882

 

Total current liabilities

 

417,139

 

358,617

 

 

 

468,723

 

 

 

401,727

 

Deferred tax liabilities, non-current

 

16,664

 

16,695

 

 

 

18,126

 

 

 

18,103

 

Long-term debt, net

 

262,593

 

262,302

 

 

 

138,000

 

 

 

208,000

 

Operating lease liabilities, non-current

 

27,930

 

30,809

 

 

 

26,790

 

 

 

19,712

 

Other liabilities, non-current

 

 

8,235

 

 

 

8,200

 

 

 

6,413

 

 

 

7,526

 

Total liabilities

 

732,561

 

676,623

 

 

 

658,052

 

 

 

655,068

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value, 1,500,000,000 shares authorized at March 31, 2022 and December 31, 2021, respectively; 481,266,396 and 481,121,695 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

48

 

48

 

Common stock, $0.0001 par value, 1,500,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; 491,358,090 and 488,296,792 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

 

 

49

 

 

 

49

 

Additional paid-in capital

 

2,493,972

 

2,483,761

 

 

 

2,591,042

 

 

 

2,571,424

 

Accumulated other comprehensive loss

 

(2,615

)

 

(2,746

)

 

 

(7,850

)

 

 

(8,731

)

Accumulated deficit

 

 

(882,996

)

 

 

(851,607

)

 

 

(984,520

)

 

 

(951,877

)

Total stockholders’ equity

 

 

1,608,409

 

 

 

1,629,456

 

 

 

1,598,721

 

 

 

1,610,865

 

Total liabilities and stockholders’ equity

 

$

2,340,970

 

 

$

2,306,079

 

 

$

2,256,773

 

 

$

2,265,933

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

2


 

CVENT HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Revenue

 

$

137,356

 

$

117,287

 

 

$

166,205

 

 

$

137,356

 

Cost of revenue

 

 

56,200

 

 

 

43,845

 

 

 

60,691

 

 

 

56,200

 

Gross profit

 

81,156

 

73,442

 

 

 

105,514

 

 

 

81,156

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

40,091

 

28,837

 

 

 

44,960

 

 

 

40,091

 

Research and development

 

31,406

 

21,674

 

 

 

35,973

 

 

 

31,406

 

General and administrative

 

24,951

 

16,754

 

 

 

39,768

 

 

 

24,951

 

Intangible asset amortization, exclusive of amounts included in cost of revenue

 

 

12,154

 

 

 

13,035

 

 

 

11,713

 

 

 

12,154

 

Total operating expenses

 

108,602

 

80,300

 

 

 

132,414

 

 

 

108,602

 

Loss from operations

 

(27,446

)

 

(6,858

)

 

 

(26,900

)

 

 

(27,446

)

Interest expense

 

(2,592

)

 

(7,533

)

 

 

(2,647

)

 

 

(2,592

)

Amortization of deferred financing costs and debt discount

 

(320

)

 

(943

)

 

 

(158

)

 

 

(320

)

Other income, net

 

 

260

 

 

 

273

 

 

 

1,169

 

 

 

260

 

Loss before income taxes

 

(30,098

)

 

(15,061

)

 

 

(28,536

)

 

 

(30,098

)

Provision for income taxes

 

 

1,291

 

 

 

1,500

 

 

 

4,107

 

 

 

1,291

 

Net loss

 

$

(31,389

)

 

$

(16,561

)

 

$

(32,643

)

 

$

(31,389

)

Other comprehensive loss:

 

 

 

 

 

 

Foreign currency translation gain/(loss)

 

 

131

 

 

 

(621

)

Other comprehensive income:

 

 

 

 

 

 

Other comprehensive income

 

 

881

 

 

 

131

 

Comprehensive loss

 

$

(31,258

)

 

$

(17,182

)

 

$

(31,762

)

 

$

(31,258

)

Basic and Diluted net loss per common share

 

$

(0.07

)

 

$

(0.04

)

Basic and Diluted weighted-average common shares outstanding

 

481,144,118

 

416,325,183

 

Basic and diluted net loss per common share

 

$

(0.07

)

 

$

(0.07

)

Basic and diluted weighted-average common shares outstanding

 

 

488,983,183

 

 

 

481,144,118

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

3


 

CVENT HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Amount

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Accumulated deficit

 

 

other comprehensive income / (loss)

 

 

Total stockholders’ equity

 

Balance as of December 31, 2021

 

 

481,121,695

 

 

$

48

 

 

$

2,483,761

 

 

$

(851,607

)

 

$

(2,746

)

 

$

1,629,456

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

9,768

 

 

 

-

 

 

 

-

 

 

 

9,768

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(31,389

)

 

 

-

 

 

 

(31,389

)

Common stock issued under share-based compensation plans

 

 

144,701

 

 

 

-

 

 

 

443

 

 

 

-

 

 

 

-

 

 

 

443

 

Common stock repurchased

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

131

 

 

 

131

 

Balance as of March 31, 2022

 

 

481,266,396

 

 

$

48

 

 

$

2,493,972

 

 

$

(882,996

)

 

$

(2,615

)

 

$

1,608,409

 

 

Common Stock

 

 

Amount

 

 

 

 

 

Accumulated

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Accumulated deficit

 

 

other comprehensive income / (loss)

 

 

Total stockholders’ equity

 

Balance as of December 31, 2022

 

 

488,296,792

 

 

$

49

 

 

$

2,571,424

 

 

$

(951,877

)

 

$

(8,731

)

 

$

1,610,865

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

14,574

 

 

 

-

 

 

 

-

 

 

 

14,574

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(32,643

)

 

 

-

 

 

 

(32,643

)

Common stock issued under share-based compensation plans

 

 

3,061,298

 

 

 

-

 

 

 

5,044

 

 

 

-

 

 

 

-

 

 

 

5,044

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

881

 

 

 

881

 

Balance as of March 31, 2023

 

 

491,358,090

 

 

$

49

 

 

$

2,591,042

 

 

$

(984,520

)

 

$

(7,850

)

 

$

1,598,721

 

 

 

 

Common Stock

 

 

Amount

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Accumulated deficit

 

 

other comprehensive income / (loss)

 

 

Total stockholders’ equity

 

Balance as of December 31, 2020

 

 

416,303,325

 

 

$

42

 

 

$

1,936,406

 

 

$

(765,528

)

 

$

(69

)

 

$

1,170,851

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

608

 

 

 

-

 

 

 

-

 

 

 

608

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16,561

)

 

 

-

 

 

 

(16,561

)

Common stock issued under share-based compensation plans

 

 

221,001

 

 

 

-

 

 

 

319

 

 

 

-

 

 

 

-

 

 

 

319

 

Common stock repurchased

 

 

(123,435

)

 

 

-

 

 

 

(122

)

 

 

-

 

 

 

-

 

 

 

(122

)

Foreign currency translation loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(621

)

 

 

(621

)

Balance as of March 31, 2021

 

 

416,400,891

 

 

$

42

 

 

$

1,937,211

 

 

$

(782,089

)

 

$

(690

)

 

$

1,154,474

 

 

Common Stock

 

 

Amount

 

 

 

 

 

Accumulated

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Accumulated deficit

 

 

other comprehensive income / (loss)

 

 

Total stockholders’ equity

 

Balance as of December 31, 2021

 

 

481,121,695

 

 

$

48

 

 

$

2,483,761

 

 

$

(851,607

)

 

$

(2,746

)

 

$

1,629,456

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

9,768

 

 

 

-

 

 

 

-

 

 

 

9,768

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(31,389

)

 

 

-

 

 

 

(31,389

)

Common stock issued under share-based compensation plans

 

 

144,701

 

 

 

-

 

 

 

443

 

 

 

-

 

 

 

-

 

 

 

443

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

131

 

 

 

131

 

Balance as of March 31, 2022

 

 

481,266,396

 

 

$

48

 

 

$

2,493,972

 

 

$

(882,996

)

 

$

(2,615

)

 

$

1,608,409

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

4


 

CVENT HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,389

)

 

$

(16,561

)

 

$

(32,643

)

 

$

(31,389

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

30,187

 

31,273

 

 

 

30,582

 

 

 

30,187

 

Amortization of the right-of-use assets

 

2,077

 

2,439

 

 

 

2,231

 

 

 

2,077

 

Allowance for expected credit losses, net

 

279

 

9

 

 

 

(462

)

 

 

279

 

Amortization of deferred financing costs and debt discount

 

320

 

943

 

 

 

158

 

 

 

320

 

Amortization of capitalized commission

 

7,948

 

7,262

 

 

 

8,924

 

 

 

7,948

 

Unrealized foreign currency transaction gain

 

287

 

4

 

Unrealized foreign currency transaction (gain)/loss

 

 

(1,020

)

 

 

287

 

Stock-based compensation

 

9,768

 

608

 

 

 

14,556

 

 

 

9,768

 

Change in deferred taxes

 

2

 

384

 

 

 

7

 

 

 

2

 

Change in operating assets and liabilities, net of business combinations:

 

 

 

 

 

 

Change in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

18,968

 

(4,211

)

 

 

23,932

 

 

 

18,968

 

Prepaid expenses and other assets

 

(7,021

)

 

(2,316

)

 

 

(17,840

)

 

 

(7,021

)

Capitalized commission, net

 

(13,581

)

 

(12,496

)

 

 

(13,700

)

 

 

(13,581

)

Accounts payable, accrued expenses and other liabilities

 

16,783

 

11,238

 

 

 

47,168

 

 

 

16,783

 

Operating lease liability

 

(2,864

)

 

(3,293

)

 

 

(3,158

)

 

 

(2,864

)

Deferred revenue

 

 

48,160

 

 

 

35,922

 

 

 

33,790

 

 

 

48,160

 

Net cash provided by operating activities

 

79,924

 

51,205

 

 

 

92,525

 

 

 

79,924

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(1,375

)

 

(1,038

)

 

 

(2,356

)

 

 

(1,375

)

Capitalized software development costs

 

(11,891

)

 

(8,705

)

 

 

(12,725

)

 

 

(11,891

)

Purchase of short-term investments

 

(21,238

)

 

(24,336

)

Maturities of short-term investments

 

 

16,824

 

 

 

9,116

 

Purchase of investments

 

 

(56,051

)

 

 

(21,238

)

Maturities of investments

 

 

46,127

 

 

 

16,824

 

Net cash used in investing activities

 

(17,680

)

 

(24,963

)

 

 

(25,005

)

 

 

(17,680

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Principal repayments on first lien term loan

 

0

 

(1,984

)

Principal repayments of revolving credit facility

 

0

 

(8,400

)

 

 

(115,000

)

 

 

 

Proceeds from revolving credit facility

 

 

45,000

 

 

 

 

Proceeds from exercise of stock options

 

 

510

 

 

 

319

 

 

 

5,127

 

 

 

510

 

Net cash provided by (used in) financing activities

 

510

 

(10,065

)

Net cash (used in) provided by financing activities

 

 

(64,873

)

 

 

510

 

Effect of exchange rate changes on cash, cash equivalents and restricted
cash

 

 

(1,209

)

 

 

(626

)

 

 

2,185

 

 

 

(1,209

)

Change in cash, cash equivalents, and restricted cash

 

61,545

 

15,551

 

 

 

4,832

 

 

 

61,545

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

126,629

 

 

 

65,470

 

 

 

99,923

 

 

 

126,629

 

Cash, cash equivalents, and restricted cash, end of period

 

$

188,174

 

 

$

81,021

 

 

$

104,755

 

 

$

188,174

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

2,584

 

$

4,382

 

 

$

2,448

 

 

$

2,584

 

Income taxes paid

 

$

1,743

 

$

1,350

 

 

$

455

 

 

$

1,743

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding payments for purchase of property and equipment at period end

 

$

382

 

$

174

 

 

$

153

 

 

$

382

 

Outstanding payments for capitalized software development costs at period end

 

$

887

 

$

654

 

 

$

883

 

 

$

887

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

5


 

 

CVENT HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business

Cvent Holding Corp. (the(together with its subsidiaries, the “Company”) is the indirect parent company of Cvent, Inc. (“Cvent”).

The Company provides a cloud-based platform of enterprise event marketing and management platformand hospitality solutions with solutionscapabilities for both sides of the meetings and events value ecosystem: (i) for marketers and meeting and event planners, through its Event Cloud offering and (ii) for hoteliers and venues, through its Hospitality Cloud. The Company’s integrated event marketing and management platform powers the entire event lifecycle by enabling marketers and event planners to automate and streamline the process of creating, promoting, managing, and measuring events for organizations of all sizes. Cvent solutions empower customers to deliver and maximize live engagement across their event programs helping to forge deeper relationships with attendees, build brand advocacy and increase demand for their products and services. It also helps organizations more efficiently manage critical event processes, control spend and reduce meetings costs. The Company’s Hospitality Cloud provides hoteliers and venues with an integrated platform that enables properties to increase group and business transient revenue through a combination of cloud-based software products and targeted advertising to organizations that run events while they are in the process of sourcing their events. Hospitality Cloud solutions also improve purchasing intelligence through innovative demand management and business intelligence. By connecting event organizers to venues, the Company powers an entire ecosystem that increaseincreases Cvent’s “stickiness” and drives sales of ourits software offerings across ourits Event and Hospitality Cloud businesses.

Agreement and Plan of Merger

On December 8, 2021March 14, 2023, the Company entered into an Agreement and Plan of Merger (the “Closing Date”“Merger Agreement”) with Capstone Borrower, Inc. (“Capstone Parent”), Dragoneer Growth Opportunities Corp. II (“Dragoneer”), a special purpose acquisition company, consummated the Business Combination Agreement (the “Business Combination Agreement”) dated July 23, 2021, by and among Dragoneer, Redwood OpportunityCapstone Merger Sub, Inc., a Delaware corporationwholly owned subsidiary of Capstone Parent (“Merger Sub I”Sub”), Redwood. Capstone Parent and Merger Sub LLC, a Delaware limited liability company (“Merger Sub II”) and Papay Topco,are affiliates of investment funds affiliated with or managed by affiliates of Blackstone Inc., a Delaware corporation (“Legacy Cvent”).

Pursuant to the termsMerger Agreement and subject to the satisfaction of the Business Combination Agreement, a reverse recapitalization between Dragoneer and Legacy Cvent was consummated, where by (i)customary closing conditions, Merger Sub Iwill be merged with and into Legacy Cventthe Company, with the Company surviving as a wholly owned subsidiary of Capstone Parent (the “First Merger”“Merger”). If the Merger is consummated, the Company’s common stock (the “Company Common Stock”) will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Merger Agreement provides, among other things, that upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the First Merger becomes effective being referred to as the “First Effective(the “Effective Time”), each share of Company Common Stock that is issued and outstanding as of immediately prior to the separate corporate existenceEffective Time (other than any shares of Company Common Stock that may be held by the Company as treasury stock or that are owned by Capstone Parent, Merger Sub I ceasedor any other subsidiaries thereof, or any shares of common stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and Legacy Cvent becameconverted into the surviving corporation and (ii) promptly following the First Effective Time, Legacy Cvent merged with and into Merger Sub II (the “Second Merger” and, together with the First Merger, the “Mergers”; the Mergers together with the other transactions contemplated by the Business Combination Agreement, collectively, the “Reverse Recapitalization Transaction”), with Merger Sub II as the surviving company in the Second Merger and, after giving effectright to the Mergers, Merger Sub II becoming a wholly-owned subsidiary of Dragoneer (the time that the Second Merger becomes effective being referred to as the “Second Effective Time”). Upon the closing of, and inreceive $8.50 per share, without interest thereon.

In connection with the Reverse Recapitalization Transaction, Dragoneer became a Delaware corporationMerger, the Company expects to incur significant expenses. An estimate of those expenses cannot be made at this time. During the three months ended March 31, 2023, the company incurred $13.5 million of expenses related to the Merger, which are recorded as part of general and changed its name to “Cvent Holding Corp.”administrative expenses on the Company's condensed consolidated financial statements.

Response to COVID-19

The closing of the proposed Merger is subject to certain conditions, including the adoption of the Merger Agreement by stockholders representing a majority of the outstanding shares of Company believes thereCommon Stock and the receipt of applicable regulatory approvals. The proposed Merger is sufficient cash flowexpected to meets its business obligations, working capital needs,close mid-year 2023.

Trends and remain in financial compliance with covenants forEconomic Conditions

Global events, such as recent geopolitical instability, inflation and the next 12 months from the date of financial statement issuance. Nonetheless, in order to better enable the Company to weather the extraordinary business challenges brought about by the global COVID-19 pandemic to protect the safety and welfare of its employees, itself financially, maintain cash reserves, and ensure its long-term solvency, the Company instituted certain temporary measures during 2020 that continued into 2021. These measures, including undertaking restructuring actions to manage costs and headcount, provided the Company the financial flexibility needed to manage a wide array of outcomes that may result from the pandemic. These temporary measures were discontinued during the second half of 2021.

The global COVID-19 pandemic hashave created and may continueor contributed to create, significant uncertainty in macroeconomic conditions, including changes in interest rates, supply chain disruptions, labor shortages and increased labor costs, which, in turn, could decrease overall economic activity, hinder economic growth or cause a recession in the United States or in the global economy. Negative macroeconomic conditions may affect the businesses of the Company's clients, which could result in reduced demand for the Company's services or cancellations, increased demands for pricing accommodations or higher rates of delays in collection of, or losses on, the Company's accounts receivable, which could adversely affect its results of operations. If the Company is unable to offset any decrease in revenue by increasing sales to new or existing customers, or offset higher costs through price increases, its revenues may decline or grow at lower rates. The extent of itsthe impact of ongoing macroeconomic conditions on the Company’s operational and financial performance is uncertain and will depend on continuously evolvingpolitical, social, economic and regulatory factors that are outside of the Company's control, including but not limited to the durationincidence and spreadseverity of the outbreak, the speedadditional COVID-19 virus variants and degree of the anticipated economic recovery,actions that may be taken by regulators and the impact on the Company’s customers.businesses (including customers) in response to macroeconomic uncertainty. The Company considered the impact of the current economic environment and COVID-19 on theits estimates and assumptions and determined that there were no material adverse impacts on the unaudited condensed consolidated financial statements as of March 31, 2023 and


December 31, 2022 and for the three months ended March 31, 2022.2023 and 2022, respectively. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may change materially in future periods.

2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim condensed consolidated financial statements as of March 31, 20222023 and for the three months ended March 31, 20222023 and 20212022 include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and

6


transactions have been eliminated in consolidation. These unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair statement of the financial position as of March 31, 2022,2023, the results of operations for the three months ended March 31, 20222023 and 2021,2022, and cash flows for the three months ended March 31, 20222023 and 2021.2022. The condensed consolidated balance sheet at December 31, 20212022 was derived from audited annual financial statements and does not contain all of the footnote disclosures from the annual financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021.2022.

Restricted Cash

Restricted cash represents amounts required to be held as collateral in a money market account for treasury management service agreements.agreements as well as payroll deductions from employees associated with the 2021 Employee Stock Purchase Plan (see Note 10). The Company held $0.12.5 million and $0.8 million of restricted cash as of March 31, 20222023 and December 31, 2021.2022, respectively.

The following table presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s Condensed Consolidated Balance Sheetscondensed consolidated balance sheets (in thousands):

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2023

 

 

December 31, 2022

 

Cash and cash equivalents

 

$

188,070

 

$

126,526

 

 

$

102,220

 

 

$

99,108

 

Restricted cash

 

 

104

 

 

 

103

 

 

 

2,535

 

 

 

815

 

Cash, cash equivalents, and restricted cash

 

$

188,174

 

 

$

126,629

 

 

$

104,755

 

 

$

99,923

 

 

Revenue Recognition

The Company derives revenue from two primary sources: Event Cloud subscription-based solutions and Hospitality Cloud marketing and subscription-based solutions. Subscription services revenue consists primarily of fees to provide the Company’s customers with access to its cloud-based platform. Subscription service contracts do not provide customers with the right to take possession of the software, are non-cancellable, and do not contain rights of return. Hospitality Cloud marketing solutions primarily relate to digital advertising on the Company’s hosted venue sourcing networks. Revenue is recognized when control of these services is transferred to a customer. A time-elapsed method is used to measure progress for subscription contracts because control is transferred evenly over the contract term. For the three months ended March 31, 2022,2023, the Company recognized approximately 85.881.1% of its revenue from services transferred to the customer over time, with the remaining 14.218.9% of revenue recognized at a point in time upon delivery, generally when an event occurred. The Company’s services are generally provided under annual and multi-year contracts with invoicing occurring in annual or quarterly installments at the beginning of each year, or quarter, as applicable, in the contract period. Revenue is presented net of sales and other taxes the Company collects on behalf of governmental authorities.

Certain contracts may include multiple distinct performance obligations which may consist of some or all of subscription services, marketing packages, and professional services. When an arrangement includes multiple performance obligations relating to SaaS subscriptions, which are concurrently delivered and have the same pattern of transfer to the customer (the services transfer to the customer ratably over the contract period), the entire contract value is recognized on a straight-line basis over the contract term. When an arrangement includes multiple performance obligations that do not have the same pattern of transfer to the customer, revenue is recognized at each performance obligation’s respective standalone selling price (“SSP”), when the performance obligations are satisfied. The SSP is the price at which the Company would sell a promised good or service separately to a customer. The Company estimates SSP based on internal margin analysis, competitor data, and other industry standards for SaaS-based companies.

Segment and Geographic Data

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in 1 operating segment and 1 reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

7


Property and equipment outside North America geographic locations represented 32.2% and 33.4% of total property and equipment, net as of March 31, 2022 and December 31, 2021, respectively, and are located primarily in India. The composition of the Company’s property and equipment between North America and locations outside of North America is set forth below (in thousands):

 

 

March 31, 2022

 

 

December 31, 2021

 

North America

 

$

9,986

 

 

$

10,205

 

Outside North America

 

 

4,741

 

 

 

5,129

 

Total

 

$

14,727

 

 

$

15,334

 

 

Net Loss per Share of Common Stock

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share adjusts basic earnings per share for the potentially dilutive impact of stock options. As the Company has reported losses for all periods presented, all potentially dilutive securities, including stock options, are antidilutive and accordingly not considered, therefore basic net loss per share equals diluted net loss per share.

For the three months ended March 31, 2023 and 2022, 48,782,589and 2021, 55,354,536 and 36,768,058stock options, respectively, were excluded from the computation of diluted net loss per share of common stock respectively, because including them would have been antidilutive.

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 will require companies to apply the definition of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. ASU No. 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2021-08 on January 1, 2022 and will apply the provisions on a prospective basis. The adoption of ASU 2021-08 had no impact on our operating results for the three months ended March 31, 2022.

In November 2021, the FASB issued Accounting Standards Update No 2021-10, Government Assistance (Topic 832)—Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). ASU 2021-10 requires additional disclosures regarding the nature of government assistance, the related accounting policy used to account for assistance, the affected line items and applicable amounts within the consolidated financial position and results of operations, and significant terms and conditions related to the assistance. Government assistance within the scope of ASC 832 includes assistance that is administered by domestic, foreign, local, state, national governments, as well as departments, independent agencies and intergovernmental organizations. The updated guidance increases transparency of government assistance including 1) the type of assistance, 2) the entity's accounting for assistance, and 3) the effect of assistance on the entity's financial statements. The Company adopted ASU 2021-10 on January 1, 2022 and will apply the provisions on a prospective basis. During the three months ended March 31, 2022, the Company received $0.5 million in government wage and rent subsidies, which are recorded as contra-expenses included in our cost of revenue and operating expenses on our unaudited interim condensed consolidated statement of operations and comprehensive loss.

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is may be adopted any time prior to December 31, 2022. The Company is currently evaluating the impact of this ASU on its consolidated financial statements but does not expect that it will have a material impact on its consolidated financial position, results of operations and cash flows.

8


 

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Property and equipment outside North America geographic locations represented 32.9% and 35.5% of total property and equipment, net as of March 31, 2023 and December 31, 2022, respectively, and are located primarily in India. The composition of the Company’s property and equipment between North America and locations outside of North America is set forth below (in thousands):

 

March 31, 2023

 

 

December 31, 2022

 

North America

 

$

9,785

 

 

$

9,829

 

Outside North America

 

 

4,792

 

 

 

5,421

 

Total

 

$

14,577

 

 

$

15,250

 

3. Revenue

Disaggregation of Revenue

The Company derives revenue from two primary sources: Event Cloud subscription-based solutions and Hospitality Cloud marketing and subscription-based solutions. They are principally generated from North America, which comprises the United States and Canada, with Canada representing 2.3% and 2.4% of total revenue for each of the three months ended March 31, 2023 and 2022, and 2021.respectively. Revenue from sources outside North America represented 12.013.7% and 13.612.0% of total revenue for three months ended March 31, 20222023 and 2021,2022, respectively. The Company’s disaggregation of revenue by primary geographic region is as follows (in thousands):

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

North America

 

$

120,823

 

$

101,282

 

 

$

143,364

 

 

$

120,823

 

Outside North America

 

 

16,533

 

 

 

16,005

 

 

 

22,841

 

 

 

16,533

 

Revenue

 

$

137,356

 

 

$

117,287

 

 

$

166,205

 

 

$

137,356

 

 

The Company’s disaggregation of revenue by major business activity is as follows (in thousands):

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Event Cloud

 

$

94,988

 

$

81,133

 

 

$

114,686

 

 

$

94,988

 

Hospitality Cloud

 

 

42,368

 

 

 

36,154

 

 

 

51,519

 

 

 

42,368

 

Revenue

 

$

137,356

 

 

$

117,287

 

 

$

166,205

 

 

$

137,356

 

 

Deferred Revenue

Deferred revenue represents billings under signed contracts before the related products or services are transferred to customers. The portion of deferred revenue that is expected to be recognized as revenue during the subsequent 12-month period is recorded as deferred revenue in current liabilities and the remaining portion is recorded as other liabilities, non-current, which is not material. Deferred revenue was $287.5302.2 million and $239.8267.9 million as of March 31, 20222023 and December 31, 2021,2022, respectively. During the three


months ended March 31, 2022,2023, the Company recognized $98.8108.5 million of revenue that was included in the deferred revenue balance at the beginning of 2022.2023.

Remaining Performance Obligations

For multiple-year agreements for either Event Cloud or Hospitality Cloud, wethe Company typically invoiceinvoices the amount for the first year of the contract at signing followed by subsequent annual invoices at the anniversary of each year. Since we billthe Company bills most of ourits customers in advance, there can be amounts that we havecontractually the Company is not yet been contractually able to invoice. Until such time as these amounts are invoiced or recognized in revenue, they are considered by usthe Company to be unbilled contract value, and together with deferred revenue, remaining performance obligations. As of March 31, 20222023 and December 31, 2021, our2022, the Company's total current deferred revenue was $287.5302.2 million and $239.8267.9 million, respectively, which amount does not include unbilled contract value for contracts of approximately $518.8532.1 million and $573.4539.7 million, respectively. We expectThe Company expects that the amount of unbilled contract value relative to the total value of our contracts will change from year to year for several reasons, including the amount of cash collected early in the contract term, the specific timing and duration of customer agreements, varying invoicing cycles of agreements, the specific timing of customer renewal,renewals, changes in customer financial circumstances and foreign currency fluctuations. We expectThe Company expects to recognize 69.271.5% of our remaining performance obligations as revenue over the subsequent 24 months, and the remainder thereafter.

Sales Commission

The current portion of capitalized commissions, net was $24.927.5 million and $25.426.7 million and the noncurrent portion of capitalized commissions, net was $23.523.8 million and $23.023.5 million as of March 31, 20222023 and December 31, 2021,2022, respectively. During the three months ended March 31, 2023 and 2022, $8.9 million and 2021, $7.9 million and $7.3 million of capitalized commissions, respectively, were amortized to sales and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss, respectively.loss.

9


Allowance for Expected Credit Losses

The change in the Company’s allowance for expected credit losses is as follows (in thousands):

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2023

 

 

December 31, 2022

 

Allowance for expected credit losses, beginning of period

 

$

4,547

 

$

3,287

 

 

$

2,644

 

 

$

4,547

 

Credit loss expense

 

279

 

8,316

 

Credit loss (recovery)/expense

 

 

(461

)

 

 

1,316

 

Write-offs and adjustments

 

 

(1,225

)

 

 

(7,056

)

 

 

(336

)

 

 

(3,219

)

Allowance for expected credit losses, end of period

 

$

3,601

 

 

$

4,547

 

 

$

1,847

 

 

$

2,644

 

 

4.4. Property and Equipment

Property and equipment are summarized as follows (in thousands):

 

 

March 31,

 

December 31,

 

 

March 31,

 

December 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Computer equipment, purchased software and software
developed for internal-use

 

$

23,992

 

$

22,517

 

 

$

20,100

 

 

$

18,190

 

Leasehold improvements

 

22,744

 

22,747

 

 

 

21,954

 

 

 

21,906

 

Furniture and equipment

 

9,137

 

9,087

 

 

 

8,213

 

 

 

8,048

 

Rentable onsite solutions equipment

 

6,324

 

6,324

 

 

 

6,531

 

 

 

6,531

 

Other

 

 

250

 

 

 

511

 

 

 

349

 

 

 

1,231

 

Property and equipment, gross

 

62,447

 

61,186

 

 

 

57,147

 

 

 

55,906

 

Less accumulated depreciation

 

 

(47,720

)

 

 

(45,852

)

 

 

(42,570

)

 

 

(40,656

)

Property and equipment, net

 

$

14,727

 

 

$

15,334

 

 

$

14,577

 

 

$

15,250

 

 

Depreciation of property and equipment was $2.01.8 million and $3.12.0 million duringfor the three months ended March 31, 20222023 and 2021,2022, respectively.


5. Capitalized Software Development Costs

Capitalized software for the Company’s software platforms was developed either internally or was acquired through acquisitions. Capitalized software development costs and acquired software technology are summarized as follows (in thousands):

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2023

 

 

December 31, 2022

 

Capitalized software development costs, gross

 

$

397,447

 

$

385,384

 

 

$

398,644

 

 

$

385,717

 

Less, accumulated depreciation

 

 

(292,527

)

 

 

(276,533

)

Less, accumulated amortization

 

 

(305,885

)

 

 

(288,758

)

Capitalized software development costs, net

 

$

104,920

 

 

$

108,851

 

 

$

92,759

 

 

$

96,959

 

 

Amortization of capitalized software development costs, recorded as cost of revenue, was $16.017.0 million and $15.216.0 million during the three months ended March 31, 20222023 and 2021,2022, respectively.

 

6. Goodwill and Intangible Assets

 

The change in carrying amount of goodwill is summarized as follows (in thousands):

 

Goodwill as of January 1, 2022

 

$

1,617,880

 

Foreign currency translation adjustments

 

 

187

 

Goodwill as of March 31, 2022

 

$

1,618,067

 

Goodwill as of January 1, 2023

 

$

1,620,312

 

Foreign currency translation adjustments

 

 

67

 

Measurement period adjustments

 

 

(109

)

Goodwill as of March 31, 2023

 

$

1,620,270

 

10


 

Intangible assets are amortized based on a pattern in which the asset’s economic benefits are consumed, or if not reliably determined, amortized on a straight-line basis over their estimated useful lives between two and fifteen years.

 

Intangible assets consisted of the following as of March 31, 20222023 (in thousands):

 

 

Intangible Assets, Gross

 

 

Accumulated Amortization

 

 

Intangible Assets, Net

 

 

Weighted-average remaining life (in years)

 

Intangible Assets, Gross

 

 

Accumulated Amortization

 

 

Intangible Assets, Net

 

 

Weighted
average
remaining
life as of
March 31, 2023

Customer relationships

 

$

438,350

 

$

(267,123

)

 

$

171,227

 

4.1 years

 

$

433,832

 

 

$

(302,540

)

 

$

131,292

 

 

3.2 years

Trademarks

 

96,905

 

(58,818

)

 

38,087

 

3.8 years

 

 

82,235

 

 

 

(52,513

)

 

 

29,722

 

 

3.5 years

Non-compete agreements

 

 

588

 

 

 

(588

)

 

 

-

 

 

 

Intangible assets subject to amortization

 

535,843

 

(326,529

)

 

209,314

 

 

 

 

516,067

 

 

 

(355,053

)

 

 

161,014

 

 

 

Indefinite-lived assets

 

 

62

 

 

 

-

 

 

 

62

 

 

 

 

 

62

 

 

 

-

 

 

 

62

 

 

 

Intangible assets, net

 

$

535,905

 

 

$

(326,529

)

 

$

209,376

 

 

 

 

$

516,129

 

 

$

(355,053

)

 

$

161,076

 

 

 

 

Intangible assets consisted of the following as of December 31, 20212022 (in thousands):

 

 

Intangible Assets, Gross

 

 

Accumulated Amortization

 

 

Intangible Assets, Net

 

 

Weighted-average remaining life (in years)

 

Intangible Assets, Gross

 

 

Accumulated Amortization

 

 

Intangible Assets, Net

 

 

Weighted
average
remaining
life as of
December
31, 2022

Customer relationships

 

$

438,002

 

$

(256,885

)

 

$

181,117

 

4.6 years

 

$

433,825

 

 

$

(292,935

)

 

$

140,890

 

 

3.4 years

Trademarks

 

96,902

 

(56,710

)

 

40,192

 

4.2 years

 

 

82,234

 

 

 

(50,405

)

 

 

31,829

 

 

3.8 years

Non-compete agreements

 

 

588

 

 

 

(588

)

 

-

 

 

 

Intangible assets subject to amortization

 

535,492

 

(314,183

)

 

221,309

 

 

 

 

516,059

 

 

 

(343,340

)

 

 

172,719

 

 

 

Indefinite-lived assets

 

 

62

 

 

-

 

 

 

62

 

 

 

 

 

62

 

 

 

-

 

 

 

62

 

 

 

Intangible assets, net

 

$

535,554

 

 

$

(314,183

)

 

$

221,371

 

 

 

 

$

516,121

 

 

$

(343,340

)

 

$

172,781

 

 

 

 

The total amount of amortization expense related to intangible assets, recorded as intangible asset amortization, exclusive of amounts included in cost of revenue, was $12.211.7 million and $13.012.2 million during the three months ended March 31, 20222023 and 2021,2022, respectively. The intangible asset balance remaining as of March 31, 20222023 will be amortized into expense in future years as follows (in thousands):

 

2022 (remaining nine months)

 

$

36,467

 

2023

 

 

46,715

 

2024

 

 

45,150

 

2025

 

 

39,308

 

2026

 

 

35,584

 

2027 and thereafter

 

 

6,090

 

Total amortization expense related to acquired intangible assets

 

$

209,314

 


2023 (remaining nine months)

 

$

35,017

 

2024

 

 

45,164

 

2025

 

 

39,322

 

2026

 

 

35,540

 

2027

 

 

3,997

 

2028 and thereafter

 

 

1,974

 

Total amortization expense related to acquired intangible assets

 

$

161,014

 

 

7. Accrued Expenses and Other Current Liabilities

 

Accrued expenses and other current liabilities consist of accrued compensation, such as bonus, commission,bonuses, commissions, and payroll taxes, sales and other tax liabilities, etc.liabilities. The following table summarizes the Company’s accrued expenses and other current liabilities foras of the periodsdates indicated (in thousands):

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2023

 

 

December 31, 2022

 

Accrued compensation

 

$

38,511

 

$

49,015

 

 

$

39,482

 

 

$

49,219

 

Sales and other tax liabilities

 

8,920

 

10,774

 

 

 

13,960

 

 

 

11,877

 

Other

 

 

19,308

 

 

 

20,038

 

 

 

35,551

 

 

 

21,153

 

Accrued expenses and other current liabilities

 

$

66,739

 

 

$

79,827

 

 

$

88,993

 

 

$

82,249

 

 

8. Income Taxes

 

The effective tax rate for the three months ended March 31, 20222023 and 20212022 was (4.2914.39%) and (9.964.29%), respectively. The difference between the Company’s effective tax rates for the 20222023 and 20212022 periods and the U.S. statutory tax rate of 21% related primarily to U.S. taxes on foreign earnings, foreign tax rate differentials, and valuation allowance.

 

11


The Company evaluates its tax positions on a quarterly basis. There were 0no material changes to the Company’s uncertain tax positions, interest, or penalties during the three months ended March 31, 20222023 and 2021.2022.

9.9. Stockholders’ Equity

The Company’s Certificate of Incorporation authorizes 1,500,000,000 shares of Common Stockcommon stock and 1,000,000 of Preferred Stock,preferred stock, each $0.0001 par value per share. As of March 31, 2023 and 2022, 491,358,090and 2021, 481,266,396 and 416,400,891shares of Common Stockcommon stock were outstanding, respectively, and no shares of Preferred Stockpreferred stock were outstanding. The holders of the Common Stockcommon stock are entitled to dividends only when declared by the Board of Directors ratably on a per share basis. Each share of Common Stockcommon stock has one vote under the Company’s Certificate of Incorporation.

Stock-based Compensation

The weighted-average assumptions used in the valuation of stock option awards granted under the Black-Scholes model are summarized as follows:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

2022

 

Dividend yield

 

0.0

%

 

0.0

%

 

N/A

 

 

0.0

%

Volatility

 

45.30

%

 

44.55

%

 

N/A

 

 

45.30

%

Expected term (years)

 

5.92

 

 

5.89

 

 

N/A

 

5.92

 

Risk-free interest rate

 

1.85

%

 

 

1.23

%

 

N/A

 

 

1.85

%


 

Stock Option Activity Rollforward

 

Stock options

 

Number of shares subject to option

 

 

Weighted average exercise price per share

 

 

Weighted average remaining contractual term (years)

 

 

Aggregate intrinsic value (in thousands)

 

 

Unrecognized compensation expense (in thousands)

 

 

Number of shares subject to option

 

 

Weighted average exercise price per share

 

 

Weighted average remaining contractual term (years)

 

 

Aggregate intrinsic value (in thousands)

 

 

Unrecognized compensation expense (in thousands)

 

Balance as of January 1, 2022

 

51,646,456

 

$

4.13

 

6.29

 

$

208,614

 

$

40,337

 

Balance as of December 31, 2022

 

 

50,013,426

 

 

$

4.45

 

 

 

5.61

 

 

$

58,326

 

 

$

19,997

 

Granted

 

4,129,380

 

8.05

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Exercised

 

(140,970

)

 

3.80

 

 

 

 

 

 

 

 

 

 

 

(1,181,835

)

 

 

4.35

 

 

 

 

 

 

 

 

 

 

Forfeited

 

(280,330

)

 

5.07

 

 

 

 

 

 

 

 

 

 

 

(49,002

)

 

 

7.83

 

 

 

 

 

 

 

 

 

 

Expired

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2022

 

 

55,354,536

 

 

$

4.42

 

 

 

6.32

 

 

$

153,377

 

 

$

47,586

 

Vested and exercisable as of January 1, 2022

 

 

43,842,127

 

 

$

3.71

 

 

 

5.47

 

 

$

195,710

 

 

$

-

 

Vested and exercisable as of March 31, 2022

 

 

47,844,651

 

 

$

3.82

 

 

 

5.53

 

 

$

161,118

 

 

$

-

 

Balance as of March 31, 2023

 

 

48,782,589

 

 

$

4.45

 

 

 

5.35

 

 

$

190,657

 

 

$

13,043

 

Vested and exercisable as of December 31, 2022

 

 

35,321,479

 

 

$

3.85

 

 

 

4.42

 

 

$

54,842

 

 

 

 

Vested and exercisable as of March 31, 2023

 

 

43,963,138

 

 

$

4.11

 

 

 

4.97

 

 

$

186,839

 

 

 

 

During the three months ended March 31, 2022, the Company granted 4,129,380 stock options.

The weighted-averageCompany did not grant date fair value ofany options granted during the three months ended March 31, 2022 was $3.72 per share.2023.

The total intrinsic value of options that were exercised during the three months ended March 31, 20222023 was $0.53.9 million. During the three months ended March 31, 2022,2023, 140,9701,181,835 options were exercised.

As of March 31, 2022,2023, the $47.613.0 million in unrecognized compensation cost related to stock options will be recognized over a weighted-average period of 1.641.83 years.

Restricted Stock Units

DuringThe following table summarizes RSU activity for the three months ended March 31, 2022,2023.

Restricted Stock Units

 

Number of shares

 

 

Weighted Average Grant Date Fair Value

 

Balance at December 31, 2022

 

 

13,685,748

 

 

$

7.56

 

Granted

 

 

-

 

 

 

 

Vested

 

 

(1,879,277

)

 

 

7.28

 

Forfeited

 

 

(169,765

)

 

 

7.74

 

Balance at March 31, 2023

 

 

11,636,706

 

 

$

7.61

 

The Company did not grant any RSUs during the Company granted three months ended March 31, 2023.

12,043,248 service-based restricted stock units (“RSUs”), 3,731 of which had vested asAs of March 31, 2022. The outstanding2023, $73.2 million in unrecognized compensation cost related to RSUs vest on dates ranging from March 2022 to March 2026 as measured from the grant date.will be recognized over a weighted-average period of 1.88

12


years.

Stock-based Compensation Expense

Stock-based compensation expense for equity and liability classified awards is recognized using the straight-line attribution method. In addition, the Company ensures that it has fully recognized expense for at least the option and RSU tranches that have fully vested in the period in which they vest.

Stock-based compensation expense is summarized as follows (in thousands):

 

 

Three Months Ended March 31,

 

��

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Cost of revenue

 

$

590

 

$

59

 

 

$

1,231

 

 

$

590

 

Sales and marketing

 

2,980

 

335

 

 

 

4,938

 

 

 

2,980

 

Research and development

 

2,588

 

141

 

 

 

3,829

 

 

 

2,588

 

General and administrative

 

 

3,610

 

 

 

73

 

 

 

4,557

 

 

 

3,610

 

Total stock-based compensation

 

$

9,768

 

 

$

608

 

 

$

14,555

 

 

$

9,768

 

 

2021 Employee Stock Purchase Plan

 

At the Special Meeting of the shareholders of Dragoneer on December 7, 2021, the shareholders of Dragoneer considered and approved theThe Cvent Holding Corp. 2021 Employee Stock Purchase Plan (the “ESPP”), which was adopted by the Board and became effective for the Company immediately upon the closing of the Reverse Recapitalization Transaction. The ESPP permits employees to purchase common stock through payroll deductions during biannual offering periods, or during such other offering periods as the Board of Directors may determine. Participants may authorize payroll deductions of a specific percentage of compensation not to exceed 15%, with such deductions being accumulated for biannual purchase periods beginning on the first business day of each offering period and ending on the last business day of each offering period.


 

The ESPP provides that 11,500,000 shares of common stock may be made available for sale under the ESPP (the “ESPP Reserve”). The ESPP Reserve automatically increases on each January 1 of each year, by an amount equal to 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number as may be determined by the Board of Directors. The Board of Directors waived the automatic increase that would have taken effect on January 1, 2022 under the ESPP. Under the terms of the ESPP, the purchase price per share will equal 85% of the fair market value of a share of common stock on the first day of an offering period or the last date of an offering period, whichever is lower, although the Board of Directors has discretion to change the purchase price with respect to future offering periods. An employee may not purchase more than $25,000 of stock during any calendar year. Payroll deductions from employees related to the ESPP are classified as restricted cash on the condensed consolidated balance sheets.

 

At March 31, 2022,2023, there were 11,500,00015,060,931 shares available for issuance under the ESPP. NaN contributions were made by employees during the three months endedAs of March 31, 2022. The first ESPP offering period will begin on June 1, 2022.

2017 Long-Term Incentive Plan

The Company recorded 0 expense for the 2017 Long-Term Incentive Plan (the “2017 LTI Plan”) during the three months ended March 31, 2022 and 2021 because the incentive remains unvested and2023, the Company is only liable to make the 2017 LTI Plan cash bonus payments upon a sale of the Company, or other Qualified Event, as defined in the 2017 LTI Plan, which is not currently determined to be probable. On February 28, 2022, the Compensation and Nominating Committee of the Board approved a plan that allows employees to convert their awards (the “Legacy Cvent LTIP Awards”) granted under the 2017 LTI Plan to an aggregate of approximately had $3.70.2 million RSUs in exchangeof unrecognized compensation cost related to the offering period beginning on December 1, 2022. The last date for cancellation of such employees’ outstanding Legacy Cvent LTIP Awards. The RSUs are subject to varying vesting periods ranging from April 2022 to October 2024. The RSUs were granted effective as of April 15, 2022 to employees who elected to participate in such exchange. Substantially all of the Company's employees have participated in the exchange.current offering period is May 31, 2023.

10. Debt

The outstanding principal amount and related unamortized debt issuance costs, net, are summarized as follows (in thousands):

 

 

 

March 31, 2022

 

 

December 31, 2021

 

First Lien Principal amount

 

$

265,696

 

 

$

265,696

 

Revolving Credit Facility Principal amount

 

0

 

 

 

0

 

Less: original issue discount

 

 

(401

)

 

 

(438

)

Less: unamortized deferred financing costs

 

 

(2,702

)

 

 

(2,956

)

Total principal amount and related unamortized debt issuance costs, net

 

$

262,593

 

 

$

262,302

 

 

March 31, 2023

 

 

December 31, 2022

 

Senior Secured Revolving Credit Facility

 

$

138,000

 

 

$

208,000

 

Less: unamortized deferred financing costs

 

 

(2,609

)

 

 

(2,766

)

Total principal amount and related unamortized debt issuance costs, net

 

$

135,391

 

 

$

205,234

 

a) First Lien

Senior Secured Revolving Credit Facility

As of January 1,On May 27, 2022, the Company hadCvent, as borrower, entered into a five-year$265.7500.0 million balance onsenior secured revolving credit facility (the “Revolving Credit Facility”) pursuant to the Company's variable rate first lienCredit Agreement, dated as of May 27, 2022, by and among Cvent, Holdings (as defined below) and the other loan or Term Loan Facility, with a consortium ofparties party thereto, the lenders (including Vista Credit Partners)party thereto, and Goldman Sachs actingPNC Bank, National Association, as the administrative agent with a(the “Credit Agreement”).

13A portion of the Revolving Credit Facility, not to exceed $


35.0

million, will be available for the issuance of letters of credit, and Cvent has the option to increase borrowing capacity under the Revolving Credit Facility or to incur incremental term loans, subject to certain provisions outlined in the Credit Agreement. The Revolving Credit Facility has a maturity date of May 27, 2027.

November 30, 2024. As of the end of the 2021 calendar year, the Financial Conduct Authority in the United Kingdom (“U.K.”) has phased out the one-week and two-month LIBOR tenors, and no new loans beginning in 2022 will be priced using those LIBOR tenors. The Company’s existing loan agreements may still utilize the remaining one, three, or six-month LIBOR tenors until the complete discontinuation of LIBOR, which is currently expected in June 2023. The Company does not anticipate a significant impact to our financial position or results of operations as we expect our agreements to be modified utilizing a similar rate before phase-out occurs. As a result of the Company's voluntary prepayment in connection with the Reverse Recapitalization Transaction, the Company has no minimum payments due until Term Loan Facility's due date in 2024. The interest rate on outstanding borrowings under the first lienRevolving Credit Facility was 3.966.47% as of March 31, 2022.2023. The carrying value of variable rate debt approximates fair value due to the short-term nature of the Company's interest rates.rate elections.

As of March 31, 2023, the Company had $

138.0

Future minimum principal paymentsmillion outstanding borrowings under the debt agreementRevolving Credit Facility. The Company had $362.0 million available for borrowing under the Revolving Credit Facility based on the outstanding balance as of March 31, 2022 are2023. The Company is in compliance with all covenants outlined in the Credit Agreement as follows (in thousands):

2022 (remaining nine months)

 

$

-

 

2023

 

 

-

 

2024

 

 

265,696

 

 Total minimum principal payments on debt

 

$

265,696

 

b)of March 31, 2023 and currently has no required prepayments with respect to borrowings made under the Revolving Credit Facility

The Company has an agreement for a variable rate revolving credit facility in prior to the amount of $40.0 million, which has a maturity date of August 30, 2024. Due to the spread of COVID-19 in the beginning of 2020, the global economic activity slowed down and in anticipation of constraints on cash and working capital, the Company fully drew on the revolving credit facility on March 20, 2020, which currently bears interest at a rate of one-month LIBOR plus a 3.75May 27, 2027% margin payable monthly in arrears. The Company paid off portions of the revolving credit facility in May, September, December 2020, and March 2021 and fully repaid the remaining balance as of April 2021. If the revolving credit facility is drawn more than 35% of the $40.0 million commitment it requires the Company to maintain compliance with the financial covenant maintaining a First Lien Leverage Ratio of less than 7.20 to 1.00 as of the last day of any Test Period. During the three months ended March 31, 2022 and 2021, the Company was and is within compliance of the First Lien Leverage Ratio and all financial covenants..

11. Leases

 

The Company enters into lease arrangements for office facilities under non-cancellable operating leases with various expiration dates.

 

As of March 31, 2022,2023, the Company’s right-of-use (“ROU”) assets and total operating lease liabilities were $26.228.5 million and $39.237.9 million, respectively. As of December 31, 2021,2022, the Company’s ROU assets and total operating lease liabilities were $28.420.4 million and $42.130.8 million, respectively. During the three months ended March 31, 2022, 0 ROU assets were obtained in exchange for new operating lease liabilities. During the three months ended March 31, 2021, less than2023, $0.110.1 million of ROU assets were obtained in exchange for new operating lease liabilities related to a new office lease in Australia as well as the renewal and expansion of certain office leases in India. During the three months ended March 31, 2022, no ROU assets were obtained in exchange for new operating lease liabilities.


12. Commitments and Contingencies

a) Legal Proceedings, Regulatory Matters and Other Contingencies

FromThe Company is, and from time to time the Company may become, involved in legal proceedings, regulatory matters or other contingencies in the ordinary course of its business. In its opinion, the Company is not presently involved in any legal proceeding, regulatory matter or other contingency that, if determined adversely to it, would individually or in the aggregate have a material adverse effect on its business, operating results, financial condition or cash flows.

b) Purchase Commitments

In the ordinary course of business, the Company enters into various purchase commitments primarily related to third-party cloud hosting, technology operations and data services. Total non-cancellable purchase commitments as of March 31, 20222023 were approximately $14.931.1 million expiring at various dates through 2025.2026.

13. Related-Party Transactions

The Company did not incur any consulting fees from Vista CreditEquity Partners has a balance of $2.3 million inManagement, LLC (“Vista”) during the Term Loan Facility as ofthree months ended March 31, 2022. There were 0 other related parties that have a position in the Term Loan Facility.

14


The Company2023 and incurred less than $0.1 million for consulting fees from Vista Equity Partners Management, LLC (“Vista”) for both the three months ended March 31, 2022, and 2021, which areis recorded in general and administrative expenses. As of March 31, 20222023 and December 31, 2021,2022, respectively, less than $0.1 million was included in accrued expenses in the condensed consolidated balance sheet.

The Company also entered into transactions during the three months ended March 31, 20222023 and 20212022 to sell services to other Vista controlled entities. The Company recognized $0.20.4 million and $0.10.2 million in revenue related to these transactions for the three months ended March 31, 20222023 and 2021,2022, respectively. Cvent also purchased software subscription and other services from Vista affiliates. The Company recognized $0.60.7 million and $0.40.6 million in expenses related to these transactions for the three months ended March 31, 20222023 and 2021,2022, respectively.

15


 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “forward-looking statements” foras defined in the purposesPrivate Securities Litigation Reform Act of federal securities laws. Such forward-looking1995. All statements include, but are not limited to,other than statements of historical facts contained in this Quarterly Report, including, statements that reflect our current views with respect to future events and financial performance, business strategies, and expectations for our business and business; statements regarding our or our management’s expectations, hopes, beliefs, intentions, plans or strategies regarding the future. In addition, anyfuture and statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “ongoing,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” “will,” “approximately,” “likely,” “shall” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

In this Quarterly Report, the terms “Cvent,” the “Company,” “Cvent,” “we,” “us,” and “our” refer to Cvent Holding Corp. and its subsidiaries, unless the context indicates otherwise.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

 

 

our proposed acquisition by an affiliate of Blackstone Capital Partners VIII L.P. (“Blackstone”), including the occurrence of any event, change or other circumstance that could give rise to our right or the right of Blackstone or both of us to terminate the Merger Agreement, including circumstances requiring us to pay Blackstone a termination fee pursuant to the Merger Agreement;
the risk that the acquisition may not close in the anticipated timeframe or at all due to one or more of the closing conditions to the acquisition not being satisfied or, to the extent permitted by applicable law, waived, including due to the failure to obtain applicable regulatory approvals or the approval of our stockholders in a timely manner or otherwise;
the risk that the proposed acquisition disrupts our current plans and operations;
the risk that there may be unexpected costs, charges or expenses resulting from the proposed acquisition;
risks related to disruption of management's time and attention from ongoing business operations due to the proposed acquisition;
the risk that any announcements related to the proposed acquisition could have adverse effects on our ability to retain and hire key personnel and to maintain relationships with business partners, suppliers and customers and on our operating results and business generally;
the risk that certain restrictions during the pendency of the proposed acquisition may impact on Cvent’s operations and financial condition fromour ability to pursue certain business opportunities or strategic transactions;
the risk of litigation and/or regulatory actions related to the proposed acquisition, including the effects of the current COVID-19 pandemic;any outcomes related thereto;
Cvent’sthe impact of the global COVID-19 pandemic and other geopolitical, macroeconomic and market conditions on our industry, business and customers, and our susceptibility to declines or disruptions in the demand for meetings and events;
our ability to sell additional solutions to our customers;
our ability to retain our existing customer base and to attract and retain new customers;
Cvent’sour ability to maintain and expand relationships with hotels and venues;
the impact of a data breach or other security incident involving Cventour or itsour customers’ confidential or personal information stored in our or our third-party service providers’ systems;
risks associated with indemnity provisions in some of Cvent’sour agreements;
the competitiveness of the market in which Cvent operates;we operate;
the impact of a disruption of Cvent’sour operations, infrastructure or systems, or disruption of the operations, infrastructure or systems of the third parties on which Cvent relies;we rely;

14


Cvent’s ability to sell additional solutions to its customers;
Cvent’s
our
ability to maintain access to third-party licenses;
Cvent’s ability tolicenses and comply with itsour obligations under license or technology agreements with third parties;
Cvent’s ability to manage its growth effectively;
Cvent’sour ability to expand itsour sales force;
risks and uncertainties associated with potential and completed acquisitions and divestitures;
Cvent’sour ability to operate offices located outside of the United States, including India;
the impact of declines or disruptions in the demand for events and meetings;
risks associated with Cvent’s reliancethe impact of any significant reduction in spending by advertisers on third-party mobile application platforms such as the Apple App Store and the Google Play Store to distribute its mobile applications;our platforms;
Cvent’sour history of losses and ability to achieve profitability in the future;
Cvent’sour ability to develop, introduce and market new and enhanced versions of itsour solutions to meet customer needs and expectations;
the impact of Cvent’sdelays in product and service development, including delays beyond our control;
our ability to fund our research and development efforts;
the impact of our lengthy and unpredictable sales cycle;
Cvent’sour ability to retain, hire and integrate skilled personnel, including itsour senior management team;
Cvent’s abilitythe fluctuations due to fund its researchseasonality of our sales, billings, cash flow, operating expenses and development efforts;operating results;
the seasonality of Cvent’s sales and customer growth;

16


Cvent’sour ability to offer high-quality customer support;
the impact of contractual disputes with Cvent’sour customers;
the impact of any significant reduction in spending by advertisers on Cvent’s platforms;
Cvent’sour ability to maintain, enhance and protect itsour brand;
the impact of delays in product and service development, including delays beyond Cvent’s control;
Cvent’sour ability to maintain and develop the compatibility of itsour solutions with third-party applications;
risks related to incorrect or improper use of Cvent’sour solutions or itsour failure to properly train customers on how to utilize itsour solutions;
the impact of Cvent’sour reliance on data provided by third parties;
risks associated with privacy concerns and end users’ acceptance of Internet behavior tracking;
Cvent’sour ability to maintain itsour corporate culture as it grows;we grow;
Cvent’sour ability to comply with legal requirements, contractual obligations and industry standards relating to security, data protection and privacy;
Cvent’sour ability to comply with the rules and regulations adopted by the payment card networks;
Cvent’sour ability to obtain, maintain, protect and enforce itsour intellectual property and proprietary rights;
risks associated with lawsuits by third parties for alleged infringement, misappropriation or other violation of their intellectual property and proprietary rights;
risks associated with Cvent’sour use of open source software in certain of itsour solutions;
risks associated with changes in tax laws;
the impact of third-party or government claims, including by governmental bodies,regulatory claims or claims regarding the content and advertising distributed by Cvent’sour customers through itsour service;
risks associated with changes in financial accounting standards;
risks associated with fluctuations in currency exchange rates;
Cvent’sour ability to raise additional capital or generate cash flows necessary to expand itsour operations, consummate acquisitions and invest in new technologies in the future;
Cvent’sour ability to develop and maintain proper and effective internal control over financial reporting;
changes in applicable laws or regulations;

15

the ability of Cvent to expand or maintain its existing customer base;


the effect of global economic conditions or political transitions on Cvent’s customers and their ability to continue to purchase Cvent products;
the effect of COVID-19 on the foregoing, including the impact on our virtual, hybrid and in-person offerings, each of which has been and may continue to be impacted differently by COVID-19;

other factors discussed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 20212022 and included elsewhere in this Quarterly Report; and
other factors beyond our control.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these riskrisks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report may not, in fact, occur. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors. Accordingly, you should not place undue reliance on those statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

1716


 

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

Overview

 

CventThe Company was founded in 1999 in the Washington, D.C. metro area as a provider of event registration software to meeting and event organizers. Since that time, we have continually innovated to develop a comprehensive platform of event marketing and management solutions and hospitality solutions. We believe that since inception, we have demonstrated an entrepreneurial spirit, culture of teamwork and sense of resilience, particularly in moments of crisis. This is best evidenced by the Company’s continued progress and innovation in the midst of challenges like the recessions of 2001 and 2008 and the global COVID-19 pandemic.

 

CventThe Company is a leading cloud-based platform of enterprise event marketing and management and hospitality solutions. We power the marketing and management of meetings and events through our Event Cloud and Hospitality Cloud solutions. Our Event Cloud consists of tools to enable event organizers to manage the entire event lifecycle and deliver engaging experiences across every type of event and all event delivery models:formats: in-person, virtual and hybrid. Event Cloud serves as the system of record for event and engagement data collected across an organization’s total event program, which comprises every internal and external event an organization hosts or attends (“Total(its “Total Event Program”). Our Hospitality Cloud offers a marketplace that connects event organizers looking for the appropriate event space for their in-person and hybrid events with hoteliers and venue operators through a vertical search engine built on our proprietary database of detailed event space information. In addition, our Hospitality Cloud provides marketing and software solutions that hotels and venues leverage to digitally showcase their event space to attract valuable leads and grow their businesses. This combination of the Cventour Event Cloud and Hospitality Cloud offerings results in an integrated solution.

Proposed Merger

On March 14, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Capstone Borrower, Inc. (“Capstone Parent”), and Capstone Merger Sub, Inc., a cohesive platform that we believe generates powerful network effectswholly owned subsidiary of Capstone Parent (“Merger Sub”). Capstone Parent and attracts more event organizersMerger Sub are affiliates of investment funds affiliated with or managed by affiliates of Blackstone Inc. Pursuant to the Merger Agreement and hotelssubject to the satisfaction of customary closing conditions, Merger Sub will be merged with and venues.into the Company, with the Company surviving as a wholly owned subsidiary of Capstone Parent (the “Merger”). If the Merger is consummated, the Company’s common stock (the “Company Common Stock”) will be delisted from the Nasdaq Global Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The closing of the proposed Merger is subject to certain conditions, including the adoption of the Merger Agreement by stockholders representing a majority of the outstanding shares of Company Common Stock and the receipt of applicable regulatory approvals. The proposed Merger is expected to close mid-year 2023.

Trends and Economic Conditions

 

ImpactGlobal events, such as recent geopolitical instability, inflation and the COVID-19 pandemic, have created or contributed to uncertainty in macroeconomic conditions, including changes in interest rates, supply chain disruptions, labor shortages and increased labor costs, which, in turn, could decrease overall economic activity, hinder economic growth or cause a recession in the United States or in the global economy. Negative macroeconomic conditions may affect our clients’ businesses, which could result in reduced demand for our services or cancellations, increased demands for pricing accommodations or higher rates of delays in collection of, or losses on, our accounts receivable, which could adversely affect our results of operations. If we are unable to offset any decrease in revenue by increasing sales to new or existing customers, or otherwise offset higher costs through price increases, our revenues may decline or grow at lower rates. The extent of the impact of ongoing macroeconomic conditions on our operational and financial performance is uncertain and will depend on political, social, economic and regulatory factors that are outside of our control, including but not limited to the incidence and severity of additional COVID-19 virus variants and actions that may be taken by regulators and businesses (including customers) in response to macroeconomic uncertainty. We considered the impact of the current economic environment and COVID-19 on Operating Results

The global COVID-19 pandemic significantly impacted our ability to sign new clients,estimates and to upsell toassumptions and renew contracts with our existing clients, starting in March 2020. Our customer count declined 9.5%determined that there were no material adverse impacts on the consolidated financial statements as of March 31, 2022 as compared2023. As events continue to March 31, 2021. The extent to which the global COVID-19 pandemic will affectevolve and additional information becomes available, our business will depend onestimates and assumptions may change materially in future developments in the United States and around the world, which are highly uncertain and cannot be predicted, including the duration and spread of the pandemic and different COVID-19 variants, new information which may emerge concerning the severity of COVID-19 and the actions required to contain and treat it, among others. Although the ultimate impact of the global COVID-19 pandemic on our business and financial results remains uncertain, a continued and prolonged public health crisis such as the global COVID-19 pandemic could have a material negative impact on our business, operating results and financial condition. See Part I. Item 1A. “Risk Factors — The effects of the global COVID-19 pandemic have materially affected how we and our customers are operating our businesses, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain” in our Annual Report on Form 10-K for the year ended December 31, 2021 for more information.periods.

 

Key Business Metric

 

In addition to our GAAP financial information, determined in accordance with generally accepted accounting principles (“GAAP”), we review the following key business metric to measure our performance, identify trends, formulate business plans and make strategic decisions.

17


 

Net Dollar Retention Rate

 

To evaluate the efficacy of our land and expand model, we examine the rate at which our customers increase their spend with us for our solutions. Our net dollar retention rate measures our ability to retain and increase spend across our existing customer base through expanded use of our platform, offset by customers who choose to stop using our solutions or spend less with us.

 

We calculate our net dollar retention rate as a quotient of the following:

Denominator: Revenue from customers whose revenue existed in the twelve months ending on the day twelve months prior to the date as of which the retention rate is being reported.
Numerator: Revenue in the last twelve months from the customers whose revenue is reflected in the denominator.

 

In the Event Cloud, we define a customer as a party who has entered into an active subscription contract with us. The majority of our customers are parties who are separate organizations. In certain instances, separate business units of an organization that have each entered into separate subscription agreements with us are considered separate customers. In the Hospitality Cloud, we define a customer as an entity with an active account with the Company, where the customer pays for the account or the account has been paid

18


for by the customer’s parent company. For example, a corporate brand’s individual hotel properties whose accounts are paid for by that property’s corporate brand would be considered separate customers.

 

The calculation excludes transactional revenue associated with our Cvent CONNECT client conference and revenue associated with acquisitions where by-clientwhereby client revenue is not available, revenue is recognized on a transactional basis and revenue associated with our client conference.available. This revenue comprised 3.6%1.7% and 3.2%3.6% of revenue for three months ended March 31, 20222023 and 2021,2022, respectively.

 

We believe our ability to not only retain, but upsell and cross-sell additional features and products to, our existing customers will continue to support our net dollar retention rate. As of March 31, 20222023 and 2021,2022, our net dollar retention rate was 108.7%115.1% and 83.9%108.7%, respectively. The return ofyear-over-year increase in our net dollar retention rate to pre-COVID levels wasis primarily due to the lessening impact of the global COVID-19 pandemic in 20212022 and 20222023 on both the Event Cloud and Hospitality Clouds andCloud, resulting in increased spend on products supporting in-person events, in addition to the adoption of Attendee Hub, our newsolution for ongoing engagement and virtual solution, Attendee Hub. Weevents. With in-person meetings and events continuing to quickly return, our net dollar retention rate currently exceeds pre-pandemic levels. In the near-term, we believe our net dollar retention rate will return to pre-pandemic levels as the rate of growth of in-person meetings and events continues to normalize. Longer-term, we believe our net dollar retention rate may exceed historicalpre-pandemic levels as a result of the market opportunity created by virtual and hybrid events and the accelerated digitization of the meetings and events industry.

 

Our net dollar retention rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of products and features, our ability to retain our customers and our ability to upsell and cross-sell to our customers. Our calculation of net dollar retention rate may differ from similarly titled metrics presented by other companies.

 

Components of Operating Results

 

Revenue

 

We generate revenue from two primary sources: Event Cloud subscription-based solutions and Hospitality Cloud marketing-based and subscription-based solutions. Subscription-based solution revenue consists primarily of fees to provide our customers with access to our cloud-based software platform. Marketing-based solution revenue consists primarily of fees for digital advertising on the Cvent Supplier Network (“CSN”) or one of our other online advertising platforms.

 

Event Cloud

 

We generate the majority of our Event Cloud revenue from subscriptions for our event marketing and management software solution. Subscription revenue is driven primarily by the number of registrations purchased and the number and complexity of mobile applications, onsite events and virtual events purchased in addition to additional modules that enhance the functionality of the software solution. In some cases, the subscription price is based on the number of subscriptions being purchased by the customer.

 

The terms of our Event Cloud contracts are typically non-cancellable, have annual or multi-year terms, and are billed in advance generally annually, but also on aan annual or quarterly basis.basis, as applicable. In the case of multi-year agreements, the agreement sometimes includes annual price increases over the contract term. Our agreements are sum-certain and not pay-as-you-go. Generally, if a customer exceeds their purchased number of registrations, the customer will incur an overage fee. We recognize revenue associated with Event Cloud

18


subscription agreements ratably over the term of the contract. Certain revenue associated with Onsite Solutions and Attendee Hub products is recognized at a point in time as the services are performed and the performance obligations are satisfied. Amounts that have been contractually invoiced are initially recorded as deferred revenue and are recognized as revenue ratably over the subscription period. We refer to contractual amounts that have not been invoiced as unbilled contract value, and together with deferred revenue, remaining performance obligations. Unbilled contract value is not reflected in our consolidated financial statements.

 

Hospitality Cloud

 

We generate our Hospitality Cloud revenue from marketing and subscription-based software solutions. Marketing solutions revenue is primarily driven by the number of advertisements purchased on CSN. The advertisement price is primarily determined by the term, targeted geography, market tier, number and prominence of the advertising placement. Subscription revenue is driven primarily by the number of licenses purchased for our lead scoring solution to prioritize group RFPs, three-dimensional hotel tours, event diagramming to collaborate with event organizers on designing optimal event layouts and viewing three-dimensional renderings, room block management to enable event attendees to reserve hotel rooms, business transient solutions and business intelligence solutions to benchmark against internal and targeted competitive metrics. In some cases, the subscription price is based on the number of subscriptions being purchased by the customer.

 

The terms of our subscription and marketing contracts are typically non-cancellable, annual or multi-year terms, and are typically billed in advance generally annually, but also on aan annual or quarterly basis.basis, as applicable. In the case of multi-year agreements, the agreement sometimes includes annual price increases over the contract term. Our agreements are typically sum-certain and not based on usage.

19


We recognize revenue associated with these agreements ratably over the term of the subscription or advertising period. AmountsFor both Event Cloud and Hospitality Cloud, amounts that have been contractually invoiced are initially recorded as deferred revenue and are recognized as revenue ratably over the subscription or advertising period. We refer to contractual amounts that have not been invoiced as unbilled contract value, and together with deferred revenue, remaining performance obligations.

We refer to contractual amounts that have not been invoiced as unbilled contract value, and together with deferred revenue, remaining performance obligations. Unbilled contract value is not reflected in our consolidated financial statements. See “Key Factors Affecting Our Performance Seasonality” included in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 20212022 for the effects of seasonality on our Hospitality Cloud Revenue.revenue.

 

For multi-year agreements for either Event Cloud or Hospitality Cloud solutions, we typically invoice the amount for the first year of the contract at signing, followed by subsequent annual invoices at the anniversary of each year. Since we bill most of our customers in advance, there can be amounts that we have not yet been contractually able to invoice. Until such time as these amounts are invoiced or recognized in revenue, they are considered by us to be unbilled contract value, and together with deferred revenue, remaining performance obligations. As of March 31, 20222023 and December 31, 20212022 our total current deferred revenue was $287.5$302.2 million and $239.8$267.9 million, which amounts do not include unbilled contract value for contracts not yet billed of $518.8$532.1 million and $573.4$539.7 million, respectively. We expect that the amount of unbilled contract value relative to the total value of our contracts will change from year to year for several reasons, including the amount of cash collected early in the contract term, the specific timing and duration of customer agreements, varying invoicing cycles of agreements, the specific timing of customer renewal,renewals, changes in customer financial circumstances and foreign currency fluctuations. We expect to recognize approximately 69.2%71.5% of our remaining performance obligations as revenue over the subsequent 24 months, and the remainder thereafter.

 

Cost of revenueRevenue

 

Cost of revenue primarily consists of employee-related expenses, such as salaries, benefits, bonuses and stock-based compensation, related to providing support and hosting our solutions, costs of cloud-based data center capacity, software license fees, costs to support our onsite, solutionsvirtual and virtual products,hybrid solutions, interchange fees related to merchant services and amortization expense associated with capitalized software. In addition, we allocate a portion of overhead, such as rent and depreciation and amortization to cost of revenue based on headcount.

 

Although Cvent breakswe break out revenue by cloud,solution, we do not track or manage the business by cost of revenue by cloud.solution. Rather, we manage cost of revenue by type of direct cost, and a significant portion of these direct costs are shared costs to support both Event Cloud and Hospitality Cloud solutions. This is consistent with Cvent’sour approach to management of the business as one comprehensive solution for the entire event management lifecycle.

 

We are invested in our customers’ success and as such, we will continue to invest in providing support, expanding our capacity to support our growth and developing new features to support virtual, hybrid and hybridin-person events and enhance our existing products, which in the near-term willis expected to result in higher cost of revenue in absolute dollars and as a percentage of revenue.dollars.

 

19


Gross profitProfit and gross marginGross Margin

 

Gross profit is total revenue less total cost of revenue. Gross margin is gross profit expressed as a percentage of total revenue. We expect that our gross margin may fluctuate from period to period as a result of seasonality related to our onsite, virtual and hybrid solutions virtual and merchant services products in the near-term, and additional costs associated with potential future acquisitions.

 

Operating expensesExpenses

 

Our operating expenses include selling and marketing expenses, research and development expenses, general and administrative expenses and intangible asset amortization, exclusive of amounts included in cost of revenue.

 

Sales and marketingMarketing

 

Sales and marketing expenses primarily consist of personnel and related expenses for our sales and marketing staff, including salaries, benefits, bonuses, commissions and stock-based compensation. We capitalize commissions when they are earned by staff, which is when the customer contract is signed. We amortize capitalized commissions over the average historic customer contract life. In addition to staff costs, our cost of marketing includes product marketing and other brand-building and lead generation tactics such as webinars, trade shows, product seminars, content marketing, digital marketing, third-party content distribution and our annual client

20


conference, Cvent CONNECT. In addition, we also allocate a portion of overhead, such as rent and depreciation to sales and marketing based on headcount.

 

We intend to continue to invest in sales and marketing and expect spending in these areasexpenses to increase in absolute dollars in the near-term as we continue to expand our business both domestically and internationally and take advantage of the growing need for virtual and hybrid events. WeAlthough we expect sales and marketing expenses to continue to be among the most significant components of our operating expenses.expenses, we expect sales and marketing expenses as a percentage of revenue to decrease in the near-term.

 

Research and developmentDevelopment

 

Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, bonuses and stock-based compensation and the cost of third-party contractors. Research and development expenses, other than software development costs that qualify for capitalization, are expensed as incurred. In addition, we allocate a portion of overhead, such as rent and depreciation to research and development based on headcount.

 

With the exception of software developed by companies we have acquired, we maintain a unified software code base for our entire platform, which we believe improves the efficiency of our research and development activities. We expect research and development expenses to remain consistentincrease in absolute dollars in the near-term as we continue to expand our product offerings, including our virtual and hybrid event functionality, and integrate and support potential future acquired businesses and technologies. However, we expect research and development expenses as a percentage of revenue to decrease in the near-term.

 

General and administrativeAdministrative

 

General and administrative expenses consist primarily of personnel and related expenses for administrative, internal information technology operations, finance, legal, corporate development, strategy and human resource staff, including salaries, benefits, bonuses and stock-based compensation, as well as professional fees, insurance premiums and other corporate expenses.expenses, including expenses associated with the Merger. In addition, we allocate a portion of overhead, such as rent and depreciation to general and administrative based on headcount.

 

We expect our general and administrative expenses to increase in absolute dollars in the near-term, as we continueprimarily due to expand our operations and hire additional personnel to support our growth. Additionally, we expect to incur incremental general and administrative expenses to complyin connection with the additional requirements of being a public company.Merger.

 

Intangible asset amortization, exclusiveAsset Amortization, Exclusive of amounts includedAmounts Included in costCost of revenueRevenue

 

Intangible asset amortization, exclusive of amounts included in cost of revenue, consists entirely of amortization expenses related to acquired customer relationship and trademark intangible assets. This line item excludes intangible asset amortization related to cost of revenue, which is defined as acquired developed technology and capitalized software intangible asset amortization.

 

We expect to continue to pursue strategic acquisition opportunities, subject to any restrictions under the Merger Agreement, and if successful, we expect that our intangible asset amortization expenses towill increase in absolute dollars in the near-term as we expect to strategically acquire companies to aid in our near-term growth.dollars.

20


 

Other

 

Our other income/expense items include interest expense, amortization of deferred financing costs and debt discount gain/loss on divestitures, net and other income/expense,income, net.

 

Interest expenseExpense

 

Interest expense relates primarily to interest payments on our outstanding borrowings under theour credit facility with a syndicate of lenders (such term loan facility as increased by the incremental facilities the “Term Loan Facility,” as further described in Note 10. “Debt” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report) and a $40.0Report. As of March 31, 2023, we had outstanding borrowings of $138.0 million under our five-year, $500.0 million senior secured revolving loancredit facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Credit Facilities”Facility”) we entered into pursuant to the Credit Agreement dated November 30, 2017 (the “Credit Agreement”) by and between Cvent, Inc. as borrower, Papay Holdco, LLC, as Holdings, Goldman Sachs Bank USA, as administrative agent, the guarantors from time to time party thereto, and the lenders and other parties from time to time party thereto, as amended, restated, amended and restated, supplemented or otherwise modified from time to time. As of March 31, 2022, the Company had an outstanding balance of $265.7 million on the term loan facility and no outstanding borrowings on the revolving loan facility..

21


 

Amortization of deferred financing costsDeferred Financing Costs and debt discountDebt Discount

 

Amortization of deferred financing costs and debt discount consists of the amortization of up-front fees paid at the inception of our Credit Facilities.credit facilities.

Other Income, Net

 

Other income, net

Other income/(expense), net consists primarily of interest income and foreign currency gains or losses, and import tax credits.losses.

 

Provision for income taxesIncome Taxes

Provision for income taxes consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business.

 

2221


 

Results of Operations

Comparison of the Three Months Ended March 31, 20222023 and 20212022

The following table sets forth our consolidated statement of operations for the periodperiods indicated:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

 

(in thousands)

 

 

(in thousands)

 

Consolidated Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Event cloud

 

$

94,988

 

$

81,133

 

Hospitality cloud

 

 

42,368

 

 

 

36,154

 

Event Cloud

 

$

114,686

 

 

$

94,988

 

Hospitality Cloud

 

 

51,519

 

 

 

42,368

 

Total revenue

 

137,356

 

117,287

 

 

 

166,205

 

 

 

137,356

 

Cost of revenue

 

56,200

 

43,845

 

 

 

60,691

 

 

 

56,200

 

Gross profit

 

81,156

 

73,442

 

 

 

105,514

 

 

 

81,156

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

40,091

 

28,837

 

 

 

44,960

 

 

 

40,091

 

Research and development

 

31,406

 

21,674

 

 

 

35,973

 

 

 

31,406

 

General and administrative

 

24,951

 

16,754

 

 

 

39,768

 

 

 

24,951

 

Intangible asset amortization, exclusive of amounts included in cost of revenue

 

 

12,154

 

 

 

13,035

 

 

 

11,713

 

 

 

12,154

 

Total operating expenses

 

 

108,602

 

 

 

80,300

 

 

 

132,414

 

 

 

108,602

 

Loss from operations

 

(27,446

)

 

(6,858

)

 

 

(26,900

)

 

 

(27,446

)

Interest expense

 

(2,592

)

 

(7,533

)

 

 

(2,647

)

 

 

(2,592

)

Amortization of deferred financial costs and debt discount

 

(320

)

 

(943

)

 

 

(158

)

 

 

(320

)

Other income, net

 

 

260

 

 

 

273

 

 

 

1,169

 

 

 

260

 

Loss before income taxes

 

 

(30,098

)

 

 

(15,061

)

 

 

(28,536

)

 

 

(30,098

)

Provision for income taxes

 

 

1,291

 

 

 

1,500

 

 

 

4,107

 

 

 

1,291

 

Net loss

 

$

(31,389

)

 

$

(16,561

)

 

$

(32,643

)

 

$

(31,389

)

 

The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periodperiods indicated:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

Consolidated Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Event Cloud

 

69.2

%

 

69.2

%

 

 

69.0

%

 

 

69.2

%

Hospitality Cloud

 

 

30.8

%

 

 

30.8

%

 

 

31.0

%

 

 

30.8

%

Total revenue

 

100.0

%

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Cost of revenue

 

40.9

%

 

37.4

%

 

 

36.5

%

 

 

40.9

%

Gross profit

 

59.1

%

 

62.6

%

 

 

63.5

%

 

 

59.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

29.2

%

 

24.6

%

 

 

27.1

%

 

 

29.2

%

Research and development

 

22.9

%

 

18.5

%

 

 

21.6

%

 

 

22.9

%

General and administrative

 

18.2

%

 

14.3

%

 

 

23.9

%

 

 

18.2

%

Intangible asset amortization, exclusive of amounts included in cost of revenue

 

 

8.8

%

 

 

11.1

%

 

 

7.0

%

 

 

8.8

%

Total operating expenses

 

 

79.1

%

 

 

68.5

%

 

 

79.7

%

 

 

79.1

%

Loss from operations

 

(20.0

%)

 

(5.8

%)

��

 

(16.2

%)

 

 

(20.0

%)

Interest expense

 

(1.9

%)

 

(6.4

%)

 

 

(1.6

%)

 

 

(1.9

%)

Amortization of deferred financial costs and debt discount

 

(0.2

%)

 

(0.8

%)

 

 

(0.1

%)

 

 

(0.2

%)

Other income, net

 

 

0.2

%

 

 

0.2

%

 

 

0.7

%

 

 

0.2

%

Loss before income taxes

 

(21.9

%)

 

(12.8

%)

 

 

(17.2

%)

 

 

(21.9

%)

Provision for income taxes

 

 

0.9

%

 

 

1.3

%

 

 

2.5

%

 

 

0.9

%

Net loss

 

 

(22.9

%)

 

 

(14.1

%)

 

 

(19.6

%)

 

 

(22.9

%)

 

2322


 

 

Revenue

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

(in thousands)

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Event Cloud

 

$

94,988

 

$

81,133

 

$

13,855

 

17.1

%

 

$

114,686

 

 

$

94,988

 

 

$

19,698

 

 

 

20.7

%

Hospitality Cloud

 

 

42,368

 

 

 

36,154

 

 

 

6,214

 

 

17.2

%

 

 

51,519

 

 

 

42,368

 

 

 

9,151

 

 

 

21.6

%

Total revenue

 

$

137,356

 

 

$

117,287

 

 

$

20,069

 

 

 

17.1

%

 

$

166,205

 

 

$

137,356

 

 

$

28,849

 

 

 

21.0

%

 

Total revenue for the three months ended March 31, 20222023 was $137.4$166.2 million, an increase of $20.1$28.8 million, or 17.1%21.0% compared to the three months ended March 31, 2021.2022. Event Cloud revenue accounted for $95.0$114.7 million, or 69.2%69.0% of total revenue, and Hospitality Cloud revenue accounted for $42.4$51.5 million, or 30.8%31.0% of total revenue, for three months ended March 31, 2022.2023.

Event Cloud revenue for the three months ended March 31, 20222023 was $95.0$114.7 million, an increase of $13.9$19.7 million, or 17.1%20.7%, compared to the three months ended March 31, 2021. This2022. The increase was primarily due to the strong performance of products that support in-person meetings starting to return and events because of the lessening impact of the global COVID-19 pandemic between the first quarter of 2022 and continued momentum in virtual events, which drove increases in products across the platform.first quarter of 2023.

Hospitality Cloud revenue for the three months ended March 31, 20222023 was $42.4$51.5 million, an increase of $6.2$9.2 million, or 17.2%21.6%, compared to the three months ended March 31, 2021.2022. The increase was primarily due to increased demand forof our advertising and software solutions driven by the sustained return of in-person meetings and events beginning to return.meetings.

We generate the majority of our revenue from North America. Revenue from outside North America accounted for 12.0%13.7% and 13.6%12.0% of total revenue for the three months ended March 31, 20222023 and 2021,2022, respectively. In the near-term, in absolute dollars, we expect that total revenue from outside North America will increase at the same rate as the rest of our business, and as such, we expect total revenue from outside of North America as proportion of total revenue will not substantially change.

Cost of Revenue

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Cost of revenue

 

$

56,200

 

 

$

43,845

 

 

$

12,355

 

 

 

28.2

%

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

Cost of revenue

 

$

60,691

 

 

$

56,200

 

 

$

4,491

 

 

 

8.0

%

 

Cost of revenue for the three months ended March 31, 20222023 was $56.2$60.7 million, an increase of $12.4$4.5 million, or 28.2%8.0%, compared to the three months ended March 31, 2021.2022. This increase was primarily driven by a $3.9$2.0 million increase in employee expense due to a 33.3%an 8.2% increase in average headcount, a $0.5$1.0 million increase in amortization of capitalized software development costs and a $0.6 million increase in stock-based compensation, a $2.8 million increase in hosting expense and a $0.8 million decrease in wage subsidies received in 2021 pursuant to the Canada Emergency Wage Subsidy program in 2022 compared to 2021.compensation. Additionally, third-party costs related to supporting virtual, in-person, and hybrid events increased $2.1$1.6 million and credit card interchange fees related to our merchant services business increased $1.7$1.5 million, both of which were primarily driven by the sustained return of in-person meetings and events beginningevents. These cost increases were partially offset by a $1.7 million decrease in hosting expense related to return.cost optimization and higher credits received in the first quarter of 2023 compared to the first quarter of 2022.

Operating Expenses

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

(in thousands)

 

 

 

Sales and marketing

 

$

40,091

 

$

28,837

 

$

11,254

 

39.0

%

 

$

44,960

 

 

$

40,091

 

 

$

4,869

 

 

 

12.1

%

Research and development

 

31,406

 

21,674

 

9,732

 

44.9

%

 

 

35,973

 

 

 

31,406

 

 

 

4,567

 

 

 

14.5

%

General and administrative

 

24,951

 

16,754

 

8,197

 

48.9

%

 

 

39,768

 

 

 

24,951

 

 

 

14,817

 

 

 

59.4

%

Intangible asset amortization, exclusive of amounts included in cost of revenue

 

 

12,154

 

 

 

13,035

 

 

 

(881

)

 

 

(6.8

%)

 

 

11,713

 

 

 

12,154

 

 

 

(441

)

 

 

(3.6

%)

Total operating expenses

 

$

108,602

 

 

$

80,300

 

 

$

28,302

 

 

 

35.2

%

 

$

132,414

 

 

$

108,602

 

 

$

23,812

 

 

 

21.9

%

 

2423


 

Sales and Marketing. Sales and marketing expenses for the three months ended March 31, 20222023 were $40.1$45.0 million, an increase of $11.3$4.9 million, or 39.0%12.1%, compared to the three months ended March 31, 2021.2022. This increase was primarily driven by a $5.6$3.6 million increase in employee expense due to a 15.0%10.4% increase in average headcount, and a $2.6$2.0 million increase in stock-based compensation, a $2.5compensation. These increases were partially offset by $0.9 million increase in lower marketing program spend, and a $0.6 million increase in travel related expense.spend.

Research and Development. Research and development expenses for the three months ended March 31, 20222023 were $31.4$36.0 million, an increase of $9.7$4.6 million, or 44.9%14.5%, compared to the three months ended March 31, 2021.2022. This increase was primarily driven by $5.2a $3.1 million increase in employee expense due to a 13.5%11.2% increase in average headcount, and a $2.4$1.2 million increase in stock-based compensation and a $2.4 million decrease in wage subsidies received pursuant to the Canada Emergency Wage Subsidy program in 2022 compared to 2021.compensation.

General and Administrative. General and administrative expenses for the three months ended March 31, 20222023 were $25.0$39.8 million, an increase of $8.2$14.8 million, or 48.9%59.4%, compared to the three months ended March 31, 2021.2022. This increase was primarily driven by $13.5 million in transaction costs related to the Merger, a $3.5$0.9 million increase in stock-based compensation, and a $2.0$0.7 million increase in employee expense due to a 24.9% increasetravel related expense. These increases were partially offset by $0.7 million decrease in average headcount, a $1.0 million increase in corporate insurance related to public company directors' and officers' insurance, and a $0.8 million increase in contracted services. A portion of these cost increases are related to additional costs incurred as a publicly traded company.bad debt expense.

Intangible Asset Amortization, Exclusive of Amounts Included in Cost of Revenue. Intangible asset amortization, exclusive of amounts included in cost of revenue for the three months ended March 31, 20222023 was $12.2$11.7 million, a decrease of $0.9$0.4 million, or 6.8%3.6%, compared to the three months ended March 31, 2021.2022. This decrease was driven primarily by the scheduled decline in the amortization of intangible assets acquired in past years and no significant business acquisitions occurring in 2022.the first quarter of 2023.

Interest Expense

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Interest expense

 

$

(2,592

)

 

$

(7,533

)

 

$

4,941

 

 

 

(65.6

%)

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

Interest expense

 

$

(2,647

)

 

$

(2,592

)

 

$

(55

)

 

 

2.1

%

 

Interest expense for the three months ended March 31, 20222023 was $2.6 million, a decreasean increase of $4.9$0.1 million, or 65.6%2.1%, compared to the three months ended March 31, 2021.2022. This decreaseincrease was driven primarily by a significantlyhigher interest rates in the three months ended March 31, 2023 as compared to the same period in 2022, partially offset by lower principal amount on our outstanding long-term debt. In addition, there were outstanding revolving borrowingsdebt balances during the three months ended March 31, 2021 incurring interest whereas there were zero outstanding borrowings during the three months ended March 31, 2022. The Revolving Credit Facility was fully repaid in April 2021.2023 as compared to prior year.

Amortization of Deferred Financing Costs and Debt Discount

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Amortization of deferred financing costs and debt discount

 

$

(320

)

 

$

(943

)

 

$

623

 

 

 

(66.1

%)

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

Amortization of deferred financing costs and debt discount

 

$

(158

)

 

$

(320

)

 

$

162

 

 

 

(50.6

%)

 

Amortization of deferred financing costs and debt discount for the three months ended March 31, 20222023 was $0.3$0.2 million, a decrease of $0.6$0.2 million, or 66.1%50.6%, compared to the three months ended March 31, 20212022 due to the acceleration of amortization of deferred financing costs and debt discount associated with the prepayment of $500.0 million ofthe outstanding principal indebtednessbalance under our Term Loan Facilitythe Company's variable rate first lien loan in December 2021.May 2022.

Other Income, Net

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Other income, net

 

$

260

 

 

$

273

 

 

$

(13

)

 

 

(4.8

%)

25


 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

Other income, net

 

$

1,169

 

 

$

260

 

 

$

909

 

 

 

349.6

%

 

Other income, net for the three months ended March 31, 20222023 was $0.3$1.2 million, which did not change significantly asan increase of $0.9 million, or 349.6%, compared to the three months ended March 31, 2021.2022. Other income for the three months ended March 31, 20222023 and 20212022 consisted primarily of foreign currency gains.interest income of $0.8 million in each period from short-term investments.

24


Provision for Income Taxes

 

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Provision for income taxes

 

$

1,291

 

 

$

1,500

 

 

$

(209

)

 

 

(13.9

%)

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

 

(in thousands)

 

 

 

 

Provision for income taxes

 

$

4,107

 

 

$

1,291

 

 

$

2,816

 

 

 

218.1

%

 

Provision for income taxes for the three months ended March 31, 20222023 was $1.3$4.1 million, a decreasean increase of $0.2$2.8 million, or 13.9%218.1%, compared to the three months ended March 31, 2021.2022. The decreaseincrease primarily resulted from the recording of lowerhigher pre-tax book income in high tax foreign jurisdictions.jurisdictions and an increase in state tax expense due to the prior year utilization of net operating losses in certain states.

 

Non-GAAP Financial Measures

 

In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow and Adjusted EBITDAFree Cash Flow margin are useful in evaluating our operating performance. We believe that non-GAAP financial information, when takenconsidered collectively with the corresponding GAAP measures, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

 

Adjusted EBITDA and Adjusted EBITDA Margin

 

Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to net loss or net loss margin, as determined by GAAP. We define Adjusted EBITDA as net loss adjusted for interest expense, amortization of deferred financing costs and debt discount, gain/(loss) on extinguishment of debt, gain/(loss) on divestitures, net, other income/(expense), net, provision for/(benefit from) income taxes, depreciation, amortization of software development costs, intangible asset amortization, stock-based compensation expense, restructuring expense, cost related to acquisitions, and other items. Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue. We use Adjusted EBITDA and Adjusted EBITDA margin to understand and evaluate our core operating performance and trends. We believe Adjusted EBITDA and Adjusted EBITDA margin are helpful to investors, analysts, and other interested parties because itthey can assist in providing a more consistent and comparable overview of our operations across our historical financial periods.

 

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider either in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net loss, net loss margin and our other GAAP results. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are not a presentation made in accordance with GAAP and the use of the term variesterms may vary from others in our industry.

 

2625


 

A reconciliation of Adjusted EBITDA to net loss and of Adjusted EBITDA margin to net loss margin (defined as net loss divided by revenue), the most directly comparable GAAP measure, respectively, is as follows:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

 

(in thousands)

 

 

(in thousands)

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,389

)

 

$

(16,561

)

 

$

(32,643

)

 

$

(31,389

)

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

2,592

 

7,533

 

 

 

2,647

 

 

 

2,592

 

Amortization of deferred financing costs and debt discount

 

320

 

943

 

 

 

158

 

 

 

320

 

Other income, net

 

(260

)

 

(273

)

 

 

(1,169

)

 

 

(260

)

Provision for income taxes

 

1,291

 

1,500

 

 

 

4,107

 

 

 

1,291

 

Depreciation

 

2,038

 

3,084

 

 

 

1,816

 

 

 

2,038

 

Amortization of software development costs

 

15,961

 

15,195

 

 

 

17,008

 

 

 

15,961

 

Intangible asset amortization

 

12,154

 

13,035

 

 

 

11,713

 

 

 

12,154

 

Stock-based compensation expense

 

9,768

 

608

 

 

 

14,556

 

 

 

9,768

 

Restructuring expense (1)

 

277

 

254

 

Restructuring (income) expense (1)

 

 

(4

)

 

 

277

 

Cost related to acquisitions (2)

 

187

 

422

 

 

 

13,585

 

 

 

187

 

Other items (3)

 

 

(180

)

 

 

(3,091

)

 

 

660

 

 

 

(180

)

Adjusted EBITDA

 

$

12,759

 

 

$

22,649

 

 

$

32,434

 

 

$

12,759

 

Adjusted EBITDA Margin:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

137,356

 

$

117,287

 

 

$

166,205

 

 

$

137,356

 

Net loss margin (4)

 

(22.9

%)

 

(14.1

%)

 

 

(19.6

%)

 

 

(22.9

%)

Adjusted EBITDA margin (4)

 

9.3

%

 

19.3

%

 

 

19.5

%

 

 

9.3

%

 

(1)
Restructuring expense includes retention bonuses to employees of acquired entities and costs to discontinue use of a back-office system and closing of office space.
(2)
Represents costs incurred in association with acquisition activity, including due diligence and post-acquisition earn out payments.payments, and costs incurred in relation to the Merger.
(3)
Includes other costs associated with litigation,prosecuting a trade secret misappropriation claim, private equity management fees, and credit facility fees, net of the gain from government subsidies related to the global COVID-19 pandemic.
(4)
Net loss margin represents net loss divided by revenue and Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue.

Liquidity and Capital Resources

 

Our principal sources of liquidity are cash and cash equivalents, on-going collection of our accounts receivable and borrowings under our Revolving Credit Facilities.Facility (see Note 10. Debt to the consolidated financial statements included in Part I1, Item 1 of this Quarterly Report). Outstanding borrowings under the Revolving Credit Facility may fluctuate on a quarterly basis due to the seasonality of the Company’s operating cash flows, and the Company’s desire to minimize interest expense. Cash and cash equivalents may include holdings in bank demand deposits, money market instruments and certificates of deposit. We also periodically invest a portion of our excess cash in short-term investments with stated maturity dates between three months and one year from the purchase date.

 

Our U.S. entities held $33.3 million and $40.2 million in cash and cash equivalents and short-term investments as of March 31, 2023 and December 31, 2022, respectively. Our non-U.S. entities held $122.8 million and $99.9 million in cash and cash equivalents and short-term investments as of March 31, 2023 and December 31, 2022, respectively.

We believe that existing cash and cash equivalents and short-term investments held by us, cash and cash equivalents anticipated to be generated by us and borrowing capacity under our revolving line of creditRevolving Credit Facility are sufficient to meet working capital requirements, anticipated capital expenditures, and contractual obligations for at least the next 12 months and beyond. We also believe that these financial resources will continue to allow us to manage the ongoing impact of COVID-19 on our business operations for the foreseeable future, including mitigating potential reductions in revenue and delays in payments from our customers and partners. Our future capital requirements will depend on several factors, including but not limited to our obligation to repay any amounts outstanding under our Revolving Credit Facilities,Facility, our subscription growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions, and the continuing market adoption of our platform.platform and our level of acquisition activity or other strategic transactions. In the future, we may enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights.

26


 

We may be required to seek additional equity or debt financing. 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 or generate cash flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our results of operations.

 

27


Cash Flows

 

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the three months ended March 31, 20222023 and 2021:2022:

 

 

Three Months Ended March 31,

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

2023

 

 

2022

 

 

(in thousands)

 

 

(in thousands)

 

Net cash provided by operating activities

 

$

79,924

 

$

51,205

 

 

$

92,525

 

 

$

79,924

 

Net cash used in investing activities

 

(17,680

)

 

(24,963

)

 

 

(25,005

)

 

 

(17,680

)

Net cash provided by financing activities

 

510

 

(10,065

)

Net cash (used in) provided by financing activities

 

 

(64,873

)

 

 

510

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(1,209

)

 

 

(626

)

 

 

2,185

 

 

 

(1,209

)

Change in cash, cash equivalents, and restricted cash

 

61,545

 

15,551

 

 

 

4,832

 

 

 

61,545

 

Cash, cash equivalents, and restricted cash at beginning of year

 

 

126,629

 

 

 

65,470

 

Cash, cash equivalents, and restricted cash at end of year

 

$

188,174

 

 

$

81,021

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

99,923

 

 

 

126,629

 

Cash, cash equivalents, and restricted cash at end of period

 

$

104,755

 

 

$

188,174

 

Cash paid for interest

 

$

2,584

 

$

4,382

 

 

$

2,448

 

 

$

2,584

 

 

Operating Activities

 

Net cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business and the amount and timing of customer payments. Cash provided by operations in the three months ended March 31, 20222023 and 20212022 is primarily attributable to net loss adjusted for non-cash items. Cash provided by operations is also attributable to the change in accounts receivable and deferred revenue, which is driven by the seasonality of our business as a result of higher levels of invoicing in the first and fourth quarters and our collections process. Our cash flows from operating activities are generally reflective of our ability to invoice annual subscription fees upfront with payments due 30 days after the customer’s receipt of the invoice. We experience seasonality in our accounts receivable. The first and fourth quarters historically include a higher level of cash collections, which is a result of higher levels of invoicing in the first and fourth quarters.

 

For the three months ended March 31, 2023, net cash provided by operating activities was $92.5 million, which was primarily driven by net loss adjusted for non-cash items, increased fees payable to customers related to registration fees collected on behalf of our customers for meetings and events in the future, and cash collections and increased deferred revenue related to calendar year contracts, partially offset by a right-of-use asset associated with a lease we renewed for our India office. For the three months ended March 31, 2022, net cash provided by operating activities was $79.9 million, which was primarily driven by net loss adjusted for non-cash items, a $48.2 million increaseincreased fees payable to customers related to registration fees collected on behalf of our customers for meetings and events in the future, and cash collections and increased deferred revenue and an $18.9 million decrease in accounts receivable, partially offset by a $13.6 million increase in capitalized commissions, net. For the three months ended March 31, 2021, net cash provided by operating activities was $51.2 million, which was primarily driven by net loss adjusted for non-cash items, a $35.9 million increase in deferred revenue, and an $11.2 million increase in accounts payable, partially offset by a $12.5 million increase in capitalized commissions, net, a $4.2 million increase in accounts receivable, and a $3.3 million reduction in operating lease liability.related to calendar year contracts.

Investing Activities

 

Our investing activities have consisted primarily of costs related to software developed for internal use, purchases of computer equipment and leasehold improvements, purchases and sales of short-term investments and business acquisitions. During 2021Investments in software developed for internal use, computer equipment and 2022,leasehold improvements and business acquisitions are intended to enable sales growth in new, existing, and expanding markets, help us meet product demand, and increase our product offerings across multiple platforms, while the impactpurchases of the pandemic lessened, and as these effects continueinvestments are intended to lessen and whenmaximize returns from our business begins to grow again, we expect our capital expenditures and our investment activity to continue to increase.existing cash balances.

 

For the three months ended March 31, 2023, net cash used in investing activities was $25.0 million, reflecting $12.7 million in capitalized software development, $9.9 million in net purchases of short-term investments and $2.4 million in purchases of property and equipment. For the three months ended March 31, 2022, net cash used in investing activities was $17.7 million, reflecting $11.9 million in capitalized software development, $4.4 million in net purchases of short-term investments and $1.4 million in purchases of property and equipment. For the three months ended March 31, 2021, net cash used in investing activities was $25.0 million, reflecting $15.2 million in net purchases of short-term investments, $8.7 million in capitalized software development and $1.0 million of purchases of property and equipment.

Financing Activities

 

Our financing activities have consisted primarily of proceeds from and principal payments on the Company’s Term Loan and Revolving Credit Facility and proceeds from the exercise of stock options. Our practice has been to minimize interest expense while maintaining reasonable liquidity. For the three months ended March 31, 2023, net cash used in financing activities was $64.9 million, consisting

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primarily of $115.0 million of principal repayments on the Company's Revolving Credit Facility, partially offset by $45.0 million in proceeds from the Company's Revolving Credit Facility and $5.1 million of proceeds from the exercise of stock options. For the three months ended March 31, 2022, net cash provided by financing activities was $0.5 million, consisting of proceeds from the exercise of stock options. For

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted Free Cash Flow and Adjusted Free Cash Flow margin are supplemental measures of operating performance monitored by management that are not defined under GAAP and that do not represent, and should not be considered as, an alternative to our consolidated cash flow statement, as determined by GAAP. We define Adjusted Free Cash Flow as our net cash provided by operating activities adjusted to: (i) include purchases of property and equipment, (ii) include capitalized software development costs, (iii) include the changes in fees payable to customers, and (iv) exclude cash payments for interest. Adjusted Free Cash Flow margin represents Adjusted Free Cash Flow divided by revenue. We use Adjusted Free Cash Flow and Adjusted Free Cash Flow margin to understand and evaluate our core operating performance and trends. We believe Adjusted Free Cash Flow and Adjusted Free Cash Flow margin are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods.

Adjusted Free Cash Flow and Adjusted Free Cash Flow margin have limitations as analytical tools, and you should not consider either in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted Free Cash Flow and Adjusted Free Cash Flow margin alongside other financial performance measures, including operating cash flows, investing cash flows and our other GAAP results. In evaluating Adjusted Free Cash Flow and Adjusted Free Cash Flow margin, you should be aware that in the future we may incur cash flow activities that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted Free Cash Flow and Adjusted Free Cash Flow margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted Free Cash Flow and Adjusted Free Cash Flow margin. Adjusted Free Cash Flow and Adjusted Free Cash Flow margin are not a presentation made in accordance with GAAP and the use of the terms may vary from others in our industry.

The following table presents a summary of our Adjusted Free Cash Flow for each of the three months ended March 31, 2021,2023 and 2022:

 

Three Months Ended March 31,

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Adjusted Free Cash Flow:

 

 

 

 

 

 

Net cash provided by operating activities:

 

$

92,525

 

 

$

79,924

 

Adjustments

 

 

 

 

 

 

Purchase of property and equipment

 

 

(2,356

)

 

 

(1,375

)

Capitalized software development costs

 

 

(12,725

)

 

 

(11,891

)

Change in fees payable to customers

 

 

(25,210

)

 

 

(24,493

)

Interest paid

 

 

2,448

 

 

 

2,584

 

Adjusted Free Cash Flow

 

$

54,682

 

 

$

44,749

 

 

 

 

 

 

 

 

Adjusted Free Cash Flow margin:

 

 

 

 

 

 

Revenue

 

$

166,205

 

 

$

137,356

 

Adjusted Free Cash Flow margin

 

 

32.9

%

 

 

32.6

%

Adjusted Free Cash Flow for the three months ended March 31, 2023 increased $9.9 million compared to the three months ended March 31, 2022 primarily as a result of an increase in cash provided by operating activities driven by increased fees payable to customers in the first quarter of 2023 as in-person meetings and events continue to return, net cash usedof decreased deferred revenue due to the timing of contract renewals and a right-of-use asset created in financing activities was $10.1 million, consistingthe first quarter of $8.4 million in repayments on the Company's Revolving Credit Facility and $2.0 million of scheduled principal payments on the Company’s Term Loan Facility, partially offset by $0.3 million in proceeds from the exercise of stock options.2023.

Commitments and Contingencies

 

See the information set forth in Note 12. “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

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Indemnification Agreements

 

In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses related to breach of confidentiality and claims by third parties of intellectual property infringement, misappropriation or other violation. See Part I, Item 1A. “Risk Factors—We have indemnity provisions under our contracts with our customers, channel partners and other third parties, which could have a material adverse effect on our business” in our Annual Report on Form 10-K for the year ended December 31, 2021. In addition, we enterhave entered into indemnification agreements with each of our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. There are no indemnification claims that we are currently aware of that could have a material adverse effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

 

Critical Accounting Estimates

 

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 2. “Summary of Significant Accounting Policies” to the condensed consolidated Financial Statements in Part I, Item 1 of this Quarterly Report and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 20212022 describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2021.2022.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency rates, although we also have some exposure due to potential changes in inflation or interest rates. We do not hold financial instruments for trading purposes.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting during the period ended March 31, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

From time to time, we may becomeare involved in legal proceedings, regulatory matters or other contingencies arising in the ordinary course of our business. We are not presently a party toinvolved in any legal proceedingsproceeding, regulatory matter or other contingency that, if determined adversely to us,the Company, in our opinion, would individually or in the aggregate have a material adverse effect on our business, operating results or financial condition or cash flows.condition.

Item 1A. Risk Factors.

The risks described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, which was filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2022,14, 2023, remain current in all material respects. Those risk factors do not identify all risks that we face—face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. If any of the identified risks or others not specified in our SEC filings materialize, our business, financial condition or results of operations could be materially adversely affected. In these circumstances, the market price of our common stock could decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed on the Exhibit Index attached hereto are filed or incorporated by reference (as stated therein) as part of this Quarterly Report.

 

 

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EXHIBIT INDEX

 

Exhibit

Number

Description

2.1

Agreement and Plan of Merger, by and among the Company, Capstone Borrower, Inc. and Capstone Merger Sub, Inc., dated as of March 14, 2023 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 14, 2023).

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

** Furnished herewith.

 

 

31


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

CVENT HOLDING CORP.

 

 

 

Date: May 9, 20225, 2023

By:

/s/ William J. Newman, III

 

 

William J. Newman, III

 

 

SVP and Chief Financial Officer

 

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