Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 09, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-04321 | |
Entity Registrant Name | Limeade, Inc. | |
Entity Incorporation, State or Country Code | WA | |
Entity Tax Identification Number | 06-1771116 | |
Entity Address, Address Line One | 10885 NE 4th Street | |
Entity Address, Address Line Two | Suite #400 | |
Entity Address, City or Town | Bellevue | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98004 | |
City Area Code | (888) | |
Local Phone Number | 830-9830 | |
Title of 12(b) Security | None | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 259,048,362 | |
Entity Central Index Key | 0001381507 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
No Trading Symbol Flag | true |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 1,625 | $ 2,559 |
Accounts receivable, net of allowance for doubtful accounts of $271 and $268, respectively | 10,037 | 10,862 |
Capitalized sales commissions | 760 | 716 |
Prepaid expenses and other current assets | 5,177 | 6,105 |
Total current assets | 17,599 | 20,242 |
Property and equipment, net | 350 | 413 |
Capitalized software development costs, net | 15,360 | 14,634 |
Capitalized sales commissions, net of current portion | 927 | 1,023 |
Operating lease right-of-use assets | 875 | 1,236 |
Goodwill | 8,562 | 8,562 |
Intangible assets, net | 2,556 | 2,830 |
Other non-current assets | 408 | 411 |
Total assets | 46,637 | 49,351 |
Current liabilities | ||
Trade payables | 1,711 | 2,719 |
Accrued expenses and other current liabilities | 11,161 | 13,056 |
Operating lease liabilities | 955 | 1,328 |
Deferred revenue | 21,439 | 16,344 |
Customer deposits | 2,676 | 3,152 |
Revolving credit facility | 1,165 | 2,450 |
Total current liabilities | 39,107 | 39,049 |
Operating lease liabilities, net of current portion | 5 | 38 |
Deferred tax liability | 12 | 13 |
Total liabilities | 39,124 | 39,100 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Preferred stock (no par value, 10,000,000 shares authorized, zero shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively) | 0 | 0 |
Common stock (no par value, 550,000,000 shares authorized, 258,132,147 and 257,245,284 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively) | 0 | 0 |
Additional paid-in capital | 73,114 | 72,735 |
Accumulated other comprehensive income | 122 | 148 |
Accumulated deficit | (65,723) | (62,632) |
Total stockholders' equity | 7,513 | 10,251 |
Total liabilities and stockholders' equity | $ 46,637 | $ 49,351 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts, current | $ 271 | $ 268 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 550,000,000 | 550,000,000 |
Common stock, shares, issued (in shares) | 258,132,147 | 257,245,284 |
Common stock, shares outstanding (in shares) | 258,132,147 | 257,245,284 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue: | ||
Total revenue | $ 14,336,000 | $ 12,687,000 |
Cost of revenue | 4,921,000 | 4,467,000 |
Gross profit | 9,415,000 | 8,220,000 |
Operating expenses: | ||
Sales and marketing | 3,791,000 | 5,212,000 |
Research and development | 5,505,000 | 6,031,000 |
General and administrative | 3,125,000 | 3,471,000 |
Total operating expenses | 12,421,000 | 14,714,000 |
Loss from operations | (3,006,000) | (6,494,000) |
Other expense (income), net | 81,000 | (26,000) |
Loss before income taxes | (3,087,000) | (6,468,000) |
Provision (benefit) for income taxes | 4,100 | 5,600 |
Net loss | $ (3,091,000) | $ (6,474,000) |
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (0.01) | $ (0.03) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (0.01) | $ (0.03) |
Weighted-average shares of common stock outstanding, basic (in shares) | 257,694,585 | 254,093,967 |
Weighted-average shares of common stock outstanding, diluted (in shares) | 257,694,585 | 254,093,967 |
Subscription services | ||
Revenue: | ||
Total revenue | $ 13,750,000 | $ 12,188,000 |
Other | ||
Revenue: | ||
Total revenue | $ 586,000 | $ 499,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (3,091) | $ (6,474) |
Other comprehensive income: | ||
Foreign currency translation adjustments | (26) | (55) |
Total comprehensive loss | $ (3,117) | $ (6,529) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 253,621,067 | ||||
Beginning balance at Dec. 31, 2021 | $ 20,869 | $ 70,241 | $ (49,407) | $ 35 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options and release of restricted stock units (in shares) | 786,748 | ||||
Exercise of stock options and release of restricted stock units | 41 | 41 | |||
Stock-based compensation | 592 | 592 | |||
Loss on translation adjustments | (55) | (55) | |||
Net loss | (6,474) | (6,474) | |||
Ending balance (in shares) at Mar. 31, 2022 | 254,407,815 | ||||
Ending balance at Mar. 31, 2022 | $ 14,973 | 70,874 | (55,881) | (20) | |
Beginning balance (in shares) at Dec. 31, 2022 | 257,245,284 | 257,245,284 | |||
Beginning balance at Dec. 31, 2022 | $ 10,251 | 72,735 | (62,632) | 148 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of stock options and release of restricted stock units (in shares) | 886,863 | ||||
Exercise of stock options and release of restricted stock units | 12 | 12 | |||
Stock-based compensation | 367 | 367 | |||
Loss on translation adjustments | (26) | (26) | |||
Net loss | $ (3,091) | (3,091) | |||
Ending balance (in shares) at Mar. 31, 2023 | 258,132,147 | 258,132,147 | |||
Ending balance at Mar. 31, 2023 | $ 7,513 | $ 73,114 | $ (65,723) | $ 122 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,091) | $ (6,474) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities | ||
Depreciation and amortization | 1,191 | 742 |
Stock-based compensation | 367 | 592 |
Non-cash operating lease expense | 360 | 338 |
Amortization of capitalized sales commissions | 184 | 64 |
Foreign currency transactions | (10) | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | 827 | 831 |
Prepaid expenses and other current assets | 928 | (651) |
Capitalized sales commission | (133) | (112) |
Other non-current assets | 3 | 2 |
Trade payables | (1,008) | (1,020) |
Accrued expenses and other current liabilities | (1,897) | 224 |
Deferred revenue | 5,095 | 3,494 |
Customer deposits | (468) | (1,081) |
Operating lease liabilities | (405) | (365) |
Net cash provided by (used in) operating activities | 1,943 | (3,416) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capitalized software development costs | (1,547) | (1,669) |
Purchases of property and equipment | (35) | (93) |
Net cash used in investing activities | (1,582) | (1,762) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings under revolving credit facility | 7,500 | 0 |
Repayments under revolving credit facility | (8,785) | 0 |
Proceeds from exercise of stock options | 12 | 41 |
Net cash (used in) provided by financing activities | (1,273) | 41 |
Foreign currency effect on cash and cash equivalents | (22) | (57) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (934) | (5,194) |
CASH AND CASH EQUIVALENTS | ||
Beginning of period | 2,559 | 13,939 |
End of period | 1,625 | 8,745 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||
Cash paid for interest | 116 | 1 |
Cash paid for taxes | 0 | 28 |
NON-CASH OPERATING, INVESTING, AND FINANCING ACTIVITIES | ||
Property and equipment included in accounts payable | $ 0 | $ 2 |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Description of Business Limeade, Inc. (the “Company” or “Limeade”) was incorporated in the state of Washington on February 23, 2006, and is headquartered in Bellevue, Washington. Limeade is an immersive employee well-being company that creates healthy employee experiences. By putting well-being at the heart of the employee experience, Limeade helps reduce burnout and turnover while increasing well-being and engagement — ultimately elevating business performance. The Company generates revenue through the sale of its software solutions to customers, which are provided via the cloud, under a subscription-based revenue model. The Company has wholly owned subsidiaries in Canada, Germany, Vietnam, and a branch registered in Australia. These entities provide business development, software development, and support services. Certain Significant Risks and Uncertainties The Company operates in a dynamic industry and accordingly, can be affected by a variety of factors. Management believes that changes in several areas could have a significant negative effect on the Company in terms of the Company’s future financial position and results of operations or cash flows. These areas include increasing demand for the Company’s products and services, reliance on key personnel including the ability to attract and retain qualified employees and key personnel, competition from other companies with greater financial, technical, and marketing resources, scaling and adaptation of existing technology and network infrastructure, management of the Company’s stabilization, and protection of the Company’s brand and intellectual property, among other things. In light of the current weak economic conditions, including as a result of recessions, or other adverse economic changes, financial and credit market fluctuations, military conflict, including the continuing war between Russia and Ukraine, and public health crises, such as the COVID-19 pandemic, the Company is currently unable to fully determine its future impact on the Company’s business. However, the Company is monitoring these factors and its potential effect on the Company’s financial position, results of operations, and cash flows. Liquidity The Company has incurred losses from operations since inception. The Company incurred net losses of $3.1 million and $6.5 million for the three months ended March 31, 2023, and 2022, respectively, and had accumulated deficits totaling $65.7 million and $62.6 million as of March 31, 2023, and December 31, 2022, respectively. Net cash provided by operating activities was $1.9 million for the three months ended March 31, 2023, and net cash used by operating activities was $3.4 million for the three months ended March 31, 2022. As of March 31, 2023, and December 31, 2022, the Company’s balance of cash and cash equivalents was $1.6 million and $2.6 million, respectively. To meet our obligations as they come due, we need to increase our operating cash flows and/or obtain additional sources of debt or equity financing. To improve operations and cash flows, we have taken and continue to take measures to improve our liquidity and increase our cash flow through cost-cutting programs. Based on our current and projected level of operations, we believe that our future cash flows from operating activities, our existing cash and cash equivalents and our borrowing capacity under the Credit Facility described in Note 9 will provide adequate funds for ongoing operations and working capital requirements for at least the next twelve months. Based on the above considerations, the Company’s Condensed consolidated financial statements have been prepared on a going concern basis. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Condensed consolidated financial statements include those of the Company and its subsidiaries after elimination of all intercompany accounts and transactions. These Condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of the Condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the Condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates include revenue recognition, allowances for doubtful accounts, useful lives of property and equipment and capitalized software development costs, assumptions used in stock-based compensation, measurement of the valuation allowance for deferred tax assets and estimates of fair value of acquired assets and liabilities. Actual results could differ from management’s estimates and assumptions. Recent market conditions and the COVID-19 pandemic have introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed. Restructuring In January 2023, the Company executed a strategic restructuring plan that lowered our overall headcount by 15% and restructured our R&D, Product, Customer Operations, Customer Success, Marketing and Sales teams. Costs incurred were $1.1 million in one-time costs associated with the reduction in force related to severance payments and employee benefits. These costs were included within Operating Expenses depending on the cost center of the affected employee within the Condensed consolidated Statements of Operations. Concentration of Credit Risk and Significant Customers The Company maintains its cash accounts with one financial institution (as required by the covenants of the Credit Facility described in Note 9) where, at times, deposits exceed federal insurance limits. Credit risk with respect to accounts receivable is dispersed based on the number of customers. There was one customer that accounted for 10% of total revenue for the three months ended March 31, 2023 and approximately 11% for the three months ended March 31, 2022. Segments The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate discrete financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is the chief executive officer. The CODM assesses the performance of the Company and makes allocation decisions. The Company’s long-lived assets are primarily located in the United States. Revenue by geographical region is included in Note 5. Foreign Currency Translation The Company’s Condensed consolidated financial statements are reported in U.S. dollars. The financial statements of the Company’s foreign subsidiaries with a functional currency other than U.S. dollars have been translated into U.S. dollars. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each period-end. Income statement amounts are translated at the average exchange rate during the period. Translation adjustments resulting from this process are included in other comprehensive income (loss). Fair Value Measurements U.S. GAAP has established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 – Quoted prices in active markets for identical assets and liabilities Level 2 – Observable inputs other than quoted prices included in Level 1 Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2023 and December 31, 2022. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded net of an allowance for doubtful accounts and are generally due within 30 to 75 days. The allowance for doubtful accounts represents the Company’s estimate of expected credit losses over the contractual life of the accounts receivable. To evaluate the adequacy of our allowance for doubtful accounts each reporting period, we analyze the accounts receivable balance with similar risk characteristics on a collective basis, considering factors such as the aging of receivable balances, payment terms, historical loss experience, current information and future expectations. Changes to the allowance for doubtful accounts are adjusted through credit loss expense, which is included in general and administrative expenses in the Condensed consolidated statements of operations. The Company considers accounts outstanding longer than the contractual payment terms as past due. The Company determines the allowance by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, a specific customer’s ability to pay its obligations, and the condition of the general economy and industry as a whole. Accounts receivable ultimately deemed uncollectible are written off against their allowance in the period in which they are deemed uncollectible. Accounts receivable include outstanding invoices issued to customers according to the terms of the Company’s contractual arrangements. The Company reviews accounts receivable regularly to determine if any receivable will be potentially uncollectible. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is reported on the Condensed consolidated Statements of Operations within the operating expense category that benefits from the use of the asset. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows: Useful Life (Years) Computer equipment and software 3 years Furniture and equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or 5 years Internally Developed Software All costs related to the development of software related to our products sold to customers are expensed until technical feasibility is achieved and capitalized after that. These costs are amortized over the estimated useful life of the software, which is typically three Goodwill, Intangible Assets, and Other Long-Lived Assets The Company’s long-lived assets with finite lives consist primarily of property and equipment, capitalized software development costs, capitalized sales commissions, operating lease right-of-use assets and acquired intangible assets. Acquired finite-lived intangible assets consist of acquired technology and customer relationships, which are amortized over their estimated useful lives. Amortization expense for these intangible assets is included in the cost of revenue and sales & marketing lines of the Condensed consolidated Statements of Operations . The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If the carrying value is not recoverable, the fair value is determined, and an impairment is recognized for the amount by which the carrying value exceeds the fair value. Impairment testing is performed at the reporting unit level. Management has determined that there was no impairment of long-lived assets for the three months ended March 31, 2023 and 2022. Goodwill represents the excess of the cost of an acquired business over the fair value of the assets acquired at the date of acquisition and is not amortized. The Company reviews goodwill for impairment at least annually in the fourth quarter, or more frequently, if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds the fair value, limited to the amount of goodwill. There was no impairment of goodwill recorded for the three months ended March 31, 2023 and 2022. Business Combinations The Company accounts for business acquisitions using the acquisition method of accounting, which requires that the assets acquired, liabilities assumed, contractual contingencies and contingent consideration are recorded at the date of acquisition at their respective fair values. Goodwill is recorded when consideration paid in a purchase acquisition exceeds the fair value of the net assets acquired. Revenue Recognition The Company generates revenue from two primary sources: (1) software-as-a-service ("SaaS”) subscriptions (“subscription services revenues”), and (2) add-on services (“other revenues”). Revenue is recognized when promised goods and services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: 1. Identify a contract(s) with a customer 2. Identify the performance obligation in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the Company satisfies a performance obligation Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. The Company determines the standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts, the products sold, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The following describes the nature of the Company’s revenue and related revenue recognition policies: Subscription Services Revenue SaaS subscriptions provide customers with a right to access software hosted on the web, and services that include when-and-if-available updates and technical support; customers do not have a contractual right to take possession of the software. We typically enter into agreements with a term of three years with our customers but the substantial majority of these contracts allow the customer to terminate at the anniversaries without penalty. Effectively, our subscription arrangements are considered one-year contracts under the revenue recognition standard. Subscription fees may be invoiced annually, quarterly, or monthly. The nature of the SaaS subscription promise to the customer is to provide continuous access to the Company’s application platform. As such, our SaaS offerings are generally viewed as a stand-ready performance obligation comprised of a series of distinct daily services. Customers are granted continuous access to the platform over the contractual period and accordingly revenue related to subscription fees is recognized on a straight-line basis over the subscription term, beginning when the customer first has access to the software. The Company also provides deployment and implementation services for the SaaS subscriptions for which the Company typically does not charge the customer. These services consist primarily of working with the customer on branding, program and incentive design, and curating the initial activities from the activity library. The Company also sells third-party SaaS subscriptions such as health coaching and content subscription services, which are contracted for and billed to the customer by the Company. In these arrangements, the Company is considered the agent, and therefore, revenue is recognized net of costs charged by the third-party providers to the Company on a ratable basis over the subscription period. Other Revenue Other revenue includes services pertaining to (i) onsite client program managers which are billed based on the number of managers and the associated fees as stated in the contract and (ii) add-on services like biometric data collection, and onsite screenings which are usage-based and billed based on the number of participants. Revenue for the services are recognized as the services are rendered, or ratably over the contract period, depending on the service. Remaining Performance Obligations Remaining performance obligations represent contracted revenues that have not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. A substantial majority of our subscription arrangements contain a stated contract period of three years, with the customer’s right to terminate without penalty at each anniversary resulting in an effective contract period of one year. Services included in other revenue are billed a year in advance and revenue is recognized over the year. As such the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Judgments and Estimates As mentioned above, the Company’s contracts require it to perform certain deployment/implementation services so customers can access SaaS subscriptions. These services are not a distinct service and are combined with the Company’s subscription services, as the Company has determined that they are a fulfillment activity in these arrangements and the customer cannot benefit from this service on its own or with other resources that are readily available to the customer and as such are not a distinct service. If in future periods the nature of setup services changes and the services qualify as a separate performance obligation, some of the transaction price will need to be allocated and such amounts will be recognized earlier than in the Company’s current arrangements. Judgment is also required to determine the SSP for each distinct performance obligation. The Company typically has more than one SSP for each of its products and services based on customer stratification, which is based on the size of the customer, their geographic region, and market segment. For SaaS subscriptions, SSP is generally determined using observable pricing in standalone sales and renewals. The Company evaluates contracts with customers that include options to purchase additional goods or services to determine whether the options give rise to a material right, which is a performance obligation. If a material right exists, the amount allocated from the transaction price is not recognized until the option is exercised or expires. Finally, the Company’s contracts with customers generally include performance or service level guarantees, which obligate the Company to certain service performance deliverables such as minimum engagement rates, minimum scores on customer satisfaction surveys and web-site uptime requirements. These guarantees are treated as variable consideration, which reduces the total transaction price for individual contracts. The Company monitors compliance with performance guarantees throughout the duration of each contract and has a history of meeting contract performance guarantees. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. Accordingly, sales commissions paid for the acquisition of the initial subscription contract are capitalized and will be amortized over the estimated customer life of 36 months. Contract Assets Contract assets represent the portion of the transaction price from a contract with a customer where control has transferred, but for which the Company currently does not have the contractual right to invoice. The Company reduces the gross contract asset balance for any impairments identified based on its consideration of a combination of factors including past collection experience, credit quality of the customer, age of other receivables balances due from the customer and current economic conditions. Deferred Revenue Deferred revenue represents billings or payments received in advance of revenue recognition from subscription and other revenue. The Company generally invoices customers monthly, semi-annually, or annually in advance of providing services. Customer Deposits Customer deposits represents payments received in advance of revenue recognition from subscription and third-party services that are subject to cancellation and refund provisions. Income Taxes The Company accounts for income taxes under the asset and liability method. The Company’s deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and income tax basis of assets and liabilities and are measured using the enacted tax rates expected to apply in the years when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company assesses its income tax positions and records income taxes based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The Company determines whether its uncertain tax positions are more likely than not to be sustained upon examination based on the technical merits of the position. For tax positions not meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company does not have any uncertain tax positions as of March 31, 2023 or December 31, 2022. The Company recorded a provision (benefit) for incomes taxes of $4.1 thousand and $5.6 thousand for the three months ended March 31, 2023 and 2022 respectively. A full valuation allowance has been established to reflect the uncertainty of generating future taxable income necessary to realize the Company’s tax loss carryforwards and other deferred tax assets. Current tax laws impose substantial restrictions on the utilization of net operating loss carryforwards in the event of an ownership change, as defined by Section 382 of the Internal Revenue Code. Since the losses incurred are fully reserved by a valuation allowance, any limitation related to Section 382 will not have a material impact on the financial statements. Stock-based Compensation The Company accounts for stock-based payment awards made to employees and directors under Accounting Standards Codification ("ASC") Share-Based Payments ("ASC 718"), which requires measurement and recognition of compensation expense for all share-based payment awards based on fair value. The Company estimates the fair value of stock-based payment awards using the Black-Scholes option-pricing model. The Black-Scholes model incorporates various assumptions, including expected volatility, dividend yields, risk-free interest rates, weighted-average expected lives, and estimated forfeitures of options. Under ASC 718, stock-based compensation expense is recognized based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. The Company recognizes compensation expense for all stock-based payment awards made to employees and directors using a straight-line method, generally over a service period of four years. Stock-based compensation cost for restricted stock units (“RSUs”) is recognized on a straight-line basis in the Consolidated Statements of Operations over the period during which the participant is required to perform services in exchange for the award, based on the fair value of the underlying common stock on the date of grant. The vesting period of each RSU grant is generally four years and stock-based compensation is adjusted for the impact of estimated forfeitures. Research and Development Expenses Research and development expenses include payroll, employee benefits, and other headcount-related costs associated with product development. Research and development costs are expensed as incurred. Leases The Company determines if an arrangement is a lease at inception, and leases are classified at commencement as either operating or finance leases. Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets are presented in long-term assets on the Consolidated Balance Sheets. As most of the Company’s operating leases do not provide an implicit rate, management uses its incremental borrowing rate in determining the present value of future payments. This rate is an estimate of the collateralized borrowing rate it would incur on the future lease payments over a similar term based on the information available at commencement date. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company utilizes certain practical expedients and policy elections available under the lease accounting standard. It does not record right-of-use assets or lease liabilities for leases with terms of 12 months or less, and it combines lease and non-lease components for contracts containing real estate leases. Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. Contingencies A loss contingency is recorded if it is probable and the amount of the loss can be reasonably estimated. The Company assesses, among other factors, the probability of an adverse outcome and its ability to make a reasonable estimate of the ultimate loss. Net Loss per Share Attributable to Common Stockholders The Company calculates basic net loss per share by dividing net loss by the weighted-average number of the Company’s common stock shares outstanding during the respective period. The diluted net loss per share is computed giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock and unvested restricted stock units are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share as the effect is antidilutive. During the periods presented, the impact is to decrease net loss per share and therefore the Company is precluded from adjusting its calculation for these securities. As a result, diluted net loss per share is calculated using the same formula as basic net loss per share. The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because of the impact of including them would have been anti-dilutive: Three Months Ended March 31, 2023 2022 Stock options 22,059,513 22,716,476 RSUs 17,858,794 7,914,353 Total 39,918,307 30,630,829 Recently Adopted Accounting Guidance In June 2016, the FASB issued ASU No. 2016-13, which amends the incurred loss impairment methodology in current GAAP with a methodology requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU No. 2019-10, which defers the effective date of this ASU to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method effective January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s Condensed consolidated financial statements. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: (in thousands) March 31, 2023 December 31, 2022 Prepaid gift card costs $ 3,071 $ 4,001 Prepaid software 1,589 1,386 Prepaid insurance 48 150 Prepaid marketing 105 57 Other 364 511 Total prepaid expenses and other current assets $ 5,177 $ 6,105 A way in which our customer can enhance their employees’ experiences utilizing our software solutions is to reward their employees through third-party gift cards. When customers deposit funds into the prepaid gift card accounts for their employees to redeem, a liability is recorded when the invoice is paid, and a corresponding asset is recorded as the funds are deposited with the third-party gift card provider. As employees of our customers redeem their earned third-party gift cards the balance of the asset and liability are both decreased until the deposit for the customer is exhausted or until the customer terminates the service and requests a refund of their unused balance. Revenue related to commissions earned from selling the third-party gift cards to our customers is recognized when the third-party gift cards are redeemed by our customers employees, which is immaterial for all periods presented. If a customer was to terminate their contract, the unused balances in their gift cards would be refunded. The Company does not expect to be entitled to a breakage amount, and to date, the likelihood of customers exercising their remaining rights is not remote. Property and Equipment Property and equipment consists of the following: (in thousands) March 31, 2023 December 31, 2022 Computer equipment and software $ 2,008 $ 2,001 Furniture and equipment 660 660 Leasehold improvements 607 606 Total 3,275 3,267 Less: accumulated depreciation and amortization (2,925) (2,854) Total property and equipment, net $ 350 $ 413 Depreciation and amortization expense for property and equipment was approximately $0.1 million for the three months ended March 31, 2023 and 2022 respectively. Capitalized Software Development Costs The Company capitalized $1.5 million and $1.7 million of internally developed software costs for the three months ended March 31, 2023 and 2022, respectively. Amortization expense related to capitalized software was $0.8 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively and the Company recorded accumulated amortization of $4.6 million and $3.8 million as of March 31, 2023 and December 31, 2022, respectively. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: (in thousands) March 31, 2023 December 31, 2022 Accrued compensation $ 2,612 $ 4,057 Accrued gift card liability 3,492 5,390 Accrued vendor costs 3,301 2,036 Performance guarantee liability 1,175 1,150 Other 581 423 Total accrued expenses and other current liabilities $ 11,161 $ 13,056 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Finite-lived intangible assets consisted of the following: March 31, 2023 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 5 $ 4,878 $ (2,722) $ 2,156 Technology 5 600 (200) 400 Total intangible assets $ 5,478 $ (2,922) $ 2,556 December 31, 2022 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 5 $ 4,878 $ (2,478) $ 2,400 Technology 5 600 (170) 430 Total intangible assets $ 5,478 $ (2,648) $ 2,830 Amortization expense for finite-lived intangible assets was $0.3 million for the three months ended March 31, 2023 and 2022, respectively. Estimated future amortization expense of intangible assets as of March 31, 2023 is as follows: (in thousands) 2023 (remaining nine months) 696 2024 720 2025 720 2026 420 Total $ 2,556 |
REVENUE AND DEFERRED REVENUE
REVENUE AND DEFERRED REVENUE | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND DEFERRED REVENUE | REVENUE AND DEFERRED REVENUE Disaggregation of Revenue The following table summarizes revenue by geographic area, which is based on the billing address of the customer: Three Months Ended March 31, (in thousands) 2023 2022 Revenue: United States $ 13,826 $ 11,933 Other 510 754 Total revenue $ 14,336 $ 12,687 Performance Guarantees Reserves for estimated contract performance guarantees are established based on historical performance and are recognized as a reduction of revenue and as accrued expenses and other current liabilities on the Condensed consolidated Balance Sheets. The performance guarantee reserve liability is $1.2 million and $1.2 million as of March 31, 2023 and December 31, 2022, respectively. Contract Costs The Company capitalized $0.1 million of sales commissions for the three months ended March 31, 2023 and 2022 respectively. The related amortization expense was $0.2 million and $0.1 million for the three months ended March 31, 2023 and 2022 respectively. Contract Assets and Contract Liabilities Contract assets represent the portion of the transaction price from a contract with a customer where control has transferred, but for which the Company currently does not have the contractual right to invoice. The Company did not have any contract assets as of March 31, 2023 and December 31, 2022. Contract liabilities consist of deferred revenue. Timing may differ between the satisfaction of performance obligations and the billing and collection of amounts related to contracts with customers. Revenue is deferred for amounts that are billed in advance of the satisfaction of performance obligations. Deferred revenue as of March 31, 2023 is expected to be recognized within the next 12 months as the revenue recognition criteria are met. A summary of the activity impacting deferred revenue balances are presented below: Three Months Ended March 31, (in thousands) 2023 2022 Beginning balance $ 16,344 $ 13,528 Additional amounts deferred 19,431 16,181 Revenue recognized (14,336) (12,687) Ending balance $ 21,439 $ 17,022 |
STOCKHOLDERS_ EQUITY AND STOCK-
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION | STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATIONThe 2019 Omnibus Incentive Plan (the “2019 Plan”) provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock grants, restricted stock unit grants, performance grants, and other grants to employees, directors, and consultants. Common Shares Reserved for Future Issuance The following shares of common stock have been reserved for future issuance: March 31, December 31, 2023 2022 Common stock options and restricted stock units outstanding 39,918,307 36,145,165 Common stock and restricted stock units available for grant 16,935,260 18,135,949 Total common shares reserved for future issuance 56,853,567 54,281,114 Stock-Based Compensation In determining the fair value of stock options granted to employees and directors, the following assumptions were used in the Black-Scholes option-pricing model. Note that no options were granted during the three months ended March 31, 2023. Three Months Ended March 31, 2023 2022 Estimated per share value of common stock $0 - $0.00 $0.19 - $0.22 Risk-free interest rates 0.00% - 0.00% 1.67% - 1.92% Expected term (in years) 0.00 5.60 Dividend rate —% —% Volatility —% 74.40% The impact on results of operations of recording stock-based compensation expense was as follows: Three Months Ended March 31, (in thousands) 2023 2022 Cost of revenue $ 62 $ 103 Sales and marketing 93 152 Research and development 144 184 General and administrative 68 153 Total stock-based compensation $ 367 $ 592 Stock Options The following table summarizes stock option activity for the three months ended March 31, 2023: Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2022 26,753,357 $ 0.38 7.32 $ 34 Options granted — — Options forfeited (2,848,469) 0.59 Options expired (1,757,375) 0.65 Options exercised (88,000) 0.14 Outstanding at March 31, 2023 22,059,513 $ 0.33 6.40 $ 197 Options vested or expected to vest at March 31, 2023 20,154,724 $ 0.35 6.12 $ 171 Exercisable at March 31, 2023 10,362,077 $ 0.37 3.43 $ 98 At March 31, 2023, total compensation cost related to stock options granted to employees but not yet recognized was $0.9 million, net of estimated forfeitures. This cost will be amortized using the straight-line method over a weighted average period of approximately 2.16 years. The aggregate intrinsic value represents the difference between the exercise price of the underlying options and the fair value of common stock for the number of options that were in-the-money. The Company issues new shares of common stock upon exercise of stock options. Restricted Stock Units The following table summarizes restricted stock unit (“RSU”) activity for the three months ended March 31, 2023: Number of Shares Weighted Average Grant Date Fair Value Restricted stock units unvested at December 31, 2022 9,391,808 $ 0.32 Restricted stock units granted 11,735,200 0.15 Restricted stock units vested (798,863) 0.38 Restricted stock units forfeited (2,469,351) 0.37 Restricted stock units unvested at March 31, 2023 17,858,794 $ 0.23 As of March 31, 2023, total compensation cost related to RSUs but not yet recognized was $1.7 million, net of estimated forfeitures, which is expected to be recognized over a weighted average period of approximately 2.44 years. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company’s leasing arrangements are primarily for corporate offices and automobiles. The following table summarizes weighted-average lease terms and discount rates: March 31, December 31, 2023 2022 Weighted-average remaining lease term (in years) for operating leases 0.6 0.8 Weighted-average discount rate 6.0 % 6.0 % Three Months Ended March 31, (in thousands) 2023 2022 Operating lease costs $ 519 $ 400 Expenses for variable payments 156 100 Cash paid for operating lease liabilities 423 400 Short-term lease costs were less than $0.1 million for the three months ended March 31, 2023 and 2022. The following table presents the Company’s future lease payments for long-term operating leases as of March 31, 2023: (in thousands) Operating Leases 2023 (remaining nine months) $ 939 2024 39 Thereafter — Total 978 Less: Imputed interest (18) Total operating lease liabilities $ 960 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation The Company is not aware of any pending legal proceedings that individually or in the aggregate would have a material adverse effect on the Company’s business, operating results, or financial conditions. The Company may in the future be party to litigation arising in the ordinary course of business. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Guarantees and Other The Company includes indemnification provisions in its contracts entered into with customers and business partners. Generally, these provisions require the Company to defend claims arising out of its products’ infringement of third-party intellectual property rights, breach of contractual obligations, and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs, and attorneys’ fees arising out of such claims. In most (but not all) cases, the total liability under such provisions is limited to either the value of the contract or a specified, agreed-upon amount. In some cases, the total liability under such provisions is not specified. In many (but not all) cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments the Company could be required to make under all the indemnification provisions is unlimited, the Company believes the estimated fair value of these provisions is minimal, as these provisions have never been triggered. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Loan and Security Agreement On May 10, 2019, the Company entered into a loan and security agreement with Comerica Bank (as amended or otherwise modified from time to time, the “Credit Facility”) that consists of a revolving line of credit and an adjusted EBITDA requirement wherein the Company is required to achieve and maintain certain minimum adjusted EBITDA at the various measurement periods outlined in the Credit Facility. The maturity date of the Credit Facility is March 31, 2024. The borrowing base is calculated weekly and is based on the Company’s eligible balance of accounts receivables. As most recently amended, the Credit Facility limits the borrowing capacity up to $6.0 million until the Company performs certain administrative tasks and thereafter the borrowing capacity increases to $10.0 million. See Note 10. Interest on outstanding borrowings is the Prime Referenced Rate and is equal to the prime rate in effect on such day and the Prime Referenced Rate shall not be less than the greater of (i) the sum of Secured Overnight Financing Rate (“SOFR Rate”) plus 2.50% per annum, or (ii) two and one-half percent (2.50%) per annum. If, at any time, Comerica Bank determines that it is unable to determine or ascertain the SOFR Rate for any day, the Prime Referenced Rate for each such day shall be the Prime Rate in effect at such time, but not less than two and one-half percent (2.50%) per annum. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In April 2023, the Company fulfilled the administrative tasks referred to in the amendment to the Credit Facility agreement and as a result the borrowing capacity increased from $6.0 million to $10.0 million. However based on the eligible accounts receivables balance as of April 30, 2023, the net loan availability is $2.7 million. The Company has evaluated subsequent events and transactions for potential recognition or disclosure in the Condensed consolidated financial statements and, except as described above, finds no qualifying events through the date the Condensed consolidated financial statements were available to be issued. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Condensed consolidated financial statements include those of the Company and its subsidiaries after elimination of all intercompany accounts and transactions. These Condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). |
Use of Estimates | Use of Estimates The preparation of the Condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the Condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates include revenue recognition, allowances for doubtful accounts, useful lives of property and equipment and capitalized software development costs, assumptions used in stock-based compensation, measurement of the valuation allowance for deferred tax assets and estimates of fair value of acquired assets and liabilities. Actual results could differ from management’s estimates and assumptions. Recent market conditions and the COVID-19 pandemic have introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed. |
Restructuring | Restructuring In January 2023, the Company executed a strategic restructuring plan that lowered our overall headcount by 15% and restructured our R&D, Product, Customer Operations, Customer Success, Marketing and Sales teams. Costs incurred were $1.1 million in one-time costs associated with the reduction in force related to severance payments and employee benefits. These costs were included within Operating Expenses depending on the cost center of the affected employee within the Condensed consolidated Statements of Operations. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers The Company maintains its cash accounts with one financial institution (as required by the covenants of the Credit Facility described in Note 9) where, at times, deposits exceed federal insurance limits. |
Segments | Segments The Company operates in one operating segment. Operating segments are defined as components of an enterprise about which separate discrete financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is the chief executive officer. The CODM assesses the performance of the Company and makes allocation decisions. The Company’s long-lived assets are primarily located in the United States. Revenue by geographical region is included in Note 5. |
Foreign Currency Translation | Foreign Currency Translation The Company’s Condensed consolidated financial statements are reported in U.S. dollars. The financial statements of the Company’s foreign subsidiaries with a functional currency other than U.S. dollars have been translated into U.S. dollars. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each period-end. Income statement amounts are translated at the average exchange rate during the period. Translation adjustments resulting from this process are included in other comprehensive income (loss). |
Fair Value Measurements | Fair Value Measurements U.S. GAAP has established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 – Quoted prices in active markets for identical assets and liabilities Level 2 – Observable inputs other than quoted prices included in Level 1 Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2023 and December 31, 2022. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded net of an allowance for doubtful accounts and are generally due within 30 to 75 days. The allowance for doubtful accounts represents the Company’s estimate of expected credit losses over the contractual life of the accounts receivable. To evaluate the adequacy of our allowance for doubtful accounts each reporting period, we analyze the accounts receivable balance with similar risk characteristics on a collective basis, considering factors such as the aging of receivable balances, payment terms, historical loss experience, current information and future expectations. Changes to the allowance for doubtful accounts are adjusted through credit loss expense, which is included in general and administrative expenses in the Condensed consolidated statements of operations. The Company considers accounts outstanding longer than the contractual payment terms as past due. The Company determines the allowance by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, a specific customer’s ability to pay its obligations, and the condition of the general economy and industry as a whole. Accounts receivable ultimately deemed uncollectible are written off against their allowance in the period in which they are deemed uncollectible. Accounts receivable include outstanding invoices issued to customers according to the terms of the Company’s contractual arrangements. The Company reviews accounts receivable regularly to determine if any receivable will be potentially uncollectible. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is reported on the Condensed consolidated Statements of Operations within the operating expense category that benefits from the use of the asset. Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows: Useful Life (Years) Computer equipment and software 3 years Furniture and equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or 5 years |
Internally Developed Software | Internally Developed Software All costs related to the development of software related to our products sold to customers are expensed until technical feasibility is achieved and capitalized after that. These costs are amortized over the estimated useful life of the software, which is typically three |
Goodwill, Intangible Assets, and Other Long-Lived Assets | Goodwill, Intangible Assets, and Other Long-Lived Assets The Company’s long-lived assets with finite lives consist primarily of property and equipment, capitalized software development costs, capitalized sales commissions, operating lease right-of-use assets and acquired intangible assets. Acquired finite-lived intangible assets consist of acquired technology and customer relationships, which are amortized over their estimated useful lives. Amortization expense for these intangible assets is included in the cost of revenue and sales & marketing lines of the Condensed consolidated Statements of Operations . |
Business Combinations | Business Combinations The Company accounts for business acquisitions using the acquisition method of accounting, which requires that the assets acquired, liabilities assumed, contractual contingencies and contingent consideration are recorded at the date of acquisition at their respective fair values. Goodwill is recorded when consideration paid in a purchase acquisition exceeds the fair value of the net assets acquired. |
Revenue Recognition and Customer Deposits | Revenue Recognition The Company generates revenue from two primary sources: (1) software-as-a-service ("SaaS”) subscriptions (“subscription services revenues”), and (2) add-on services (“other revenues”). Revenue is recognized when promised goods and services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: 1. Identify a contract(s) with a customer 2. Identify the performance obligation in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the Company satisfies a performance obligation Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. The Company determines the standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts, the products sold, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The following describes the nature of the Company’s revenue and related revenue recognition policies: Subscription Services Revenue SaaS subscriptions provide customers with a right to access software hosted on the web, and services that include when-and-if-available updates and technical support; customers do not have a contractual right to take possession of the software. We typically enter into agreements with a term of three years with our customers but the substantial majority of these contracts allow the customer to terminate at the anniversaries without penalty. Effectively, our subscription arrangements are considered one-year contracts under the revenue recognition standard. Subscription fees may be invoiced annually, quarterly, or monthly. The nature of the SaaS subscription promise to the customer is to provide continuous access to the Company’s application platform. As such, our SaaS offerings are generally viewed as a stand-ready performance obligation comprised of a series of distinct daily services. Customers are granted continuous access to the platform over the contractual period and accordingly revenue related to subscription fees is recognized on a straight-line basis over the subscription term, beginning when the customer first has access to the software. The Company also provides deployment and implementation services for the SaaS subscriptions for which the Company typically does not charge the customer. These services consist primarily of working with the customer on branding, program and incentive design, and curating the initial activities from the activity library. The Company also sells third-party SaaS subscriptions such as health coaching and content subscription services, which are contracted for and billed to the customer by the Company. In these arrangements, the Company is considered the agent, and therefore, revenue is recognized net of costs charged by the third-party providers to the Company on a ratable basis over the subscription period. Other Revenue Other revenue includes services pertaining to (i) onsite client program managers which are billed based on the number of managers and the associated fees as stated in the contract and (ii) add-on services like biometric data collection, and onsite screenings which are usage-based and billed based on the number of participants. Revenue for the services are recognized as the services are rendered, or ratably over the contract period, depending on the service. Remaining Performance Obligations Remaining performance obligations represent contracted revenues that have not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. A substantial majority of our subscription arrangements contain a stated contract period of three years, with the customer’s right to terminate without penalty at each anniversary resulting in an effective contract period of one year. Services included in other revenue are billed a year in advance and revenue is recognized over the year. As such the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. Judgments and Estimates As mentioned above, the Company’s contracts require it to perform certain deployment/implementation services so customers can access SaaS subscriptions. These services are not a distinct service and are combined with the Company’s subscription services, as the Company has determined that they are a fulfillment activity in these arrangements and the customer cannot benefit from this service on its own or with other resources that are readily available to the customer and as such are not a distinct service. If in future periods the nature of setup services changes and the services qualify as a separate performance obligation, some of the transaction price will need to be allocated and such amounts will be recognized earlier than in the Company’s current arrangements. Judgment is also required to determine the SSP for each distinct performance obligation. The Company typically has more than one SSP for each of its products and services based on customer stratification, which is based on the size of the customer, their geographic region, and market segment. For SaaS subscriptions, SSP is generally determined using observable pricing in standalone sales and renewals. The Company evaluates contracts with customers that include options to purchase additional goods or services to determine whether the options give rise to a material right, which is a performance obligation. If a material right exists, the amount allocated from the transaction price is not recognized until the option is exercised or expires. Finally, the Company’s contracts with customers generally include performance or service level guarantees, which obligate the Company to certain service performance deliverables such as minimum engagement rates, minimum scores on customer satisfaction surveys and web-site uptime requirements. These guarantees are treated as variable consideration, which reduces the total transaction price for individual contracts. The Company monitors compliance with performance guarantees throughout the duration of each contract and has a history of meeting contract performance guarantees. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. Accordingly, sales commissions paid for the acquisition of the initial subscription contract are capitalized and will be amortized over the estimated customer life of 36 months. Contract Assets Contract assets represent the portion of the transaction price from a contract with a customer where control has transferred, but for which the Company currently does not have the contractual right to invoice. The Company reduces the gross contract asset balance for any impairments identified based on its consideration of a combination of factors including past collection experience, credit quality of the customer, age of other receivables balances due from the customer and current economic conditions. Deferred Revenue Deferred revenue represents billings or payments received in advance of revenue recognition from subscription and other revenue. The Company generally invoices customers monthly, semi-annually, or annually in advance of providing services. Customer Deposits Customer deposits represents payments received in advance of revenue recognition from subscription and third-party services that are subject to cancellation and refund provisions. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method. The Company’s deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and income tax basis of assets and liabilities and are measured using the enacted tax rates expected to apply in the years when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company assesses its income tax positions and records income taxes based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The Company determines whether its uncertain tax positions are more likely than not to be sustained upon examination based on the technical merits of the position. For tax positions not meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company does not have any uncertain tax positions as of March 31, 2023 or December 31, 2022. The Company recorded a provision (benefit) for incomes taxes of $4.1 thousand and $5.6 thousand for the three months ended March 31, 2023 and 2022 respectively. A full valuation allowance has been established to reflect the uncertainty of generating future taxable income necessary to realize the Company’s tax loss carryforwards and other deferred tax assets. Current tax laws impose substantial restrictions on the utilization of net operating loss carryforwards in the event of an ownership change, as defined by Section 382 of the Internal Revenue Code. Since the losses incurred are fully reserved by a valuation allowance, any limitation related to Section 382 will not have a material impact on the financial statements. |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based payment awards made to employees and directors under Accounting Standards Codification ("ASC") Share-Based Payments ("ASC 718"), which requires measurement and recognition of compensation expense for all share-based payment awards based on fair value. The Company estimates the fair value of stock-based payment awards using the Black-Scholes option-pricing model. The Black-Scholes model incorporates various assumptions, including expected volatility, dividend yields, risk-free interest rates, weighted-average expected lives, and estimated forfeitures of options. Under ASC 718, stock-based compensation expense is recognized based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. The Company recognizes compensation expense for all stock-based payment awards made to employees and directors using a straight-line method, generally over a service period of four years. Stock-based compensation cost for restricted stock units (“RSUs”) is recognized on a straight-line basis in the Consolidated Statements of Operations over the period during which the participant is required to perform services in exchange for the award, based on the fair value of the underlying common stock on the date of grant. The vesting period of each RSU grant is generally four years and stock-based compensation is adjusted for the impact of estimated forfeitures. |
Research and Development Expenses | Research and Development Expenses Research and development expenses include payroll, employee benefits, and other headcount-related costs associated with product development. Research and development costs are expensed as incurred. |
Leases | Leases The Company determines if an arrangement is a lease at inception, and leases are classified at commencement as either operating or finance leases. Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets are presented in long-term assets on the Consolidated Balance Sheets. As most of the Company’s operating leases do not provide an implicit rate, management uses its incremental borrowing rate in determining the present value of future payments. This rate is an estimate of the collateralized borrowing rate it would incur on the future lease payments over a similar term based on the information available at commencement date. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company utilizes certain practical expedients and policy elections available under the lease accounting standard. It does not record right-of-use assets or lease liabilities for leases with terms of 12 months or less, and it combines lease and non-lease components for contracts containing real estate leases. Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets. |
Contingencies | Contingencies A loss contingency is recorded if it is probable and the amount of the loss can be reasonably estimated. The Company assesses, among other factors, the probability of an adverse outcome and its ability to make a reasonable estimate of the ultimate loss. |
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders The Company calculates basic net loss per share by dividing net loss by the weighted-average number of the Company’s common stock shares outstanding during the respective period. The diluted net loss per share is computed giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock and unvested restricted stock units are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share as the effect is antidilutive. During the periods presented, the impact is to decrease net loss per share and therefore the Company is precluded from adjusting its calculation for these securities. As a result, diluted net loss per share is calculated using the same formula as basic net loss per share. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance In June 2016, the FASB issued ASU No. 2016-13, which amends the incurred loss impairment methodology in current GAAP with a methodology requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU No. 2019-10, which defers the effective date of this ASU to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method effective January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s Condensed consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment | Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows: Useful Life (Years) Computer equipment and software 3 years Furniture and equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or 5 years Property and equipment consists of the following: (in thousands) March 31, 2023 December 31, 2022 Computer equipment and software $ 2,008 $ 2,001 Furniture and equipment 660 660 Leasehold improvements 607 606 Total 3,275 3,267 Less: accumulated depreciation and amortization (2,925) (2,854) Total property and equipment, net $ 350 $ 413 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because of the impact of including them would have been anti-dilutive: Three Months Ended March 31, 2023 2022 Stock options 22,059,513 22,716,476 RSUs 17,858,794 7,914,353 Total 39,918,307 30,630,829 |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: (in thousands) March 31, 2023 December 31, 2022 Prepaid gift card costs $ 3,071 $ 4,001 Prepaid software 1,589 1,386 Prepaid insurance 48 150 Prepaid marketing 105 57 Other 364 511 Total prepaid expenses and other current assets $ 5,177 $ 6,105 |
Schedule of Property and Equipment | Depreciation is calculated on a straight-line basis over the estimated useful lives of those assets as follows: Useful Life (Years) Computer equipment and software 3 years Furniture and equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or 5 years Property and equipment consists of the following: (in thousands) March 31, 2023 December 31, 2022 Computer equipment and software $ 2,008 $ 2,001 Furniture and equipment 660 660 Leasehold improvements 607 606 Total 3,275 3,267 Less: accumulated depreciation and amortization (2,925) (2,854) Total property and equipment, net $ 350 $ 413 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following: (in thousands) March 31, 2023 December 31, 2022 Accrued compensation $ 2,612 $ 4,057 Accrued gift card liability 3,492 5,390 Accrued vendor costs 3,301 2,036 Performance guarantee liability 1,175 1,150 Other 581 423 Total accrued expenses and other current liabilities $ 11,161 $ 13,056 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Finite-lived intangible assets consisted of the following: March 31, 2023 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 5 $ 4,878 $ (2,722) $ 2,156 Technology 5 600 (200) 400 Total intangible assets $ 5,478 $ (2,922) $ 2,556 December 31, 2022 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 5 $ 4,878 $ (2,478) $ 2,400 Technology 5 600 (170) 430 Total intangible assets $ 5,478 $ (2,648) $ 2,830 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization expense of intangible assets as of March 31, 2023 is as follows: (in thousands) 2023 (remaining nine months) 696 2024 720 2025 720 2026 420 Total $ 2,556 |
REVENUE AND DEFERRED REVENUE (T
REVENUE AND DEFERRED REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from External Customers by Geographic Areas | The following table summarizes revenue by geographic area, which is based on the billing address of the customer: Three Months Ended March 31, (in thousands) 2023 2022 Revenue: United States $ 13,826 $ 11,933 Other 510 754 Total revenue $ 14,336 $ 12,687 |
Summary of Deferred Revenue Balances | A summary of the activity impacting deferred revenue balances are presented below: Three Months Ended March 31, (in thousands) 2023 2022 Beginning balance $ 16,344 $ 13,528 Additional amounts deferred 19,431 16,181 Revenue recognized (14,336) (12,687) Ending balance $ 21,439 $ 17,022 |
STOCKHOLDERS_ EQUITY AND STOC_2
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Shares of Common Stock Reserved for Future Issuance | The following shares of common stock have been reserved for future issuance: March 31, December 31, 2023 2022 Common stock options and restricted stock units outstanding 39,918,307 36,145,165 Common stock and restricted stock units available for grant 16,935,260 18,135,949 Total common shares reserved for future issuance 56,853,567 54,281,114 |
Schedule of Valuation Assumptions for Fair Value of Stock Options | In determining the fair value of stock options granted to employees and directors, the following assumptions were used in the Black-Scholes option-pricing model. Note that no options were granted during the three months ended March 31, 2023. Three Months Ended March 31, 2023 2022 Estimated per share value of common stock $0 - $0.00 $0.19 - $0.22 Risk-free interest rates 0.00% - 0.00% 1.67% - 1.92% Expected term (in years) 0.00 5.60 Dividend rate —% —% Volatility —% 74.40% |
Schedule of Impact on Results of Operations of Recording Stock-Based Compensation | The impact on results of operations of recording stock-based compensation expense was as follows: Three Months Ended March 31, (in thousands) 2023 2022 Cost of revenue $ 62 $ 103 Sales and marketing 93 152 Research and development 144 184 General and administrative 68 153 Total stock-based compensation $ 367 $ 592 |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the three months ended March 31, 2023: Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value (in years) (in thousands) Outstanding at December 31, 2022 26,753,357 $ 0.38 7.32 $ 34 Options granted — — Options forfeited (2,848,469) 0.59 Options expired (1,757,375) 0.65 Options exercised (88,000) 0.14 Outstanding at March 31, 2023 22,059,513 $ 0.33 6.40 $ 197 Options vested or expected to vest at March 31, 2023 20,154,724 $ 0.35 6.12 $ 171 Exercisable at March 31, 2023 10,362,077 $ 0.37 3.43 $ 98 |
Schedule of Restricted Stock Unit Activity | The following table summarizes restricted stock unit (“RSU”) activity for the three months ended March 31, 2023: Number of Shares Weighted Average Grant Date Fair Value Restricted stock units unvested at December 31, 2022 9,391,808 $ 0.32 Restricted stock units granted 11,735,200 0.15 Restricted stock units vested (798,863) 0.38 Restricted stock units forfeited (2,469,351) 0.37 Restricted stock units unvested at March 31, 2023 17,858,794 $ 0.23 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Weighted-Average Lease Terms and Discount Rates and Lease Costs | The following table summarizes weighted-average lease terms and discount rates: March 31, December 31, 2023 2022 Weighted-average remaining lease term (in years) for operating leases 0.6 0.8 Weighted-average discount rate 6.0 % 6.0 % Three Months Ended March 31, (in thousands) 2023 2022 Operating lease costs $ 519 $ 400 Expenses for variable payments 156 100 Cash paid for operating lease liabilities 423 400 |
Schedule of Future Lease Payments for Long-Term Operating Leases | The following table presents the Company’s future lease payments for long-term operating leases as of March 31, 2023: (in thousands) Operating Leases 2023 (remaining nine months) $ 939 2024 39 Thereafter — Total 978 Less: Imputed interest (18) Total operating lease liabilities $ 960 |
ORGANIZATION - Narrative (Detai
ORGANIZATION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ 3,091 | $ 6,474 | |
Accumulated deficit | 65,723 | $ 62,632 | |
Net cash provided by (used in) operating activities | 1,943 | $ (3,416) | |
Cash and cash equivalents | $ 1,625 | $ 2,559 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Schedule of Depreciation (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Computer equipment and software | |
Property, Plant and Equipment [Line Items] | |
Useful Life (Years) | 3 years |
Furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful Life (Years) | 3 years |
Furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful Life (Years) | 5 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful Life (Years) | 5 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2023 USD ($) | Mar. 31, 2023 USD ($) source segment | Mar. 31, 2022 USD ($) | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of operating segments | segment | 1 | ||
Capitalized internally developed software costs | $ 1,500,000 | $ 1,700,000 | |
Capitalized software amortization expense | 800,000 | 400,000 | |
Impairment of long-lived assets | 0 | 0 | |
Goodwill impairment | $ 0 | 0 | |
Number of revenue sources | source | 2 | ||
Amortization period for capitalized contract costs | 36 months | ||
Provision (benefit) for income taxes | $ 4,100 | $ 5,600 | |
Award requisite service period | 4 years | ||
Employee Severance | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Reduction in headcount (as a percent) | 15% | ||
One-time costs associated with reduction in headcount | $ 1,100,000 | ||
Minimum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Contract period | 1 year | ||
Maximum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Contract period | 3 years | ||
Customer Concentration Risk | Accounts Receivable | Customer One | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Concentration risk percentage | 10% | 11% | |
Software Development | Minimum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Useful Life (Years) | 3 years | ||
Software Development | Maximum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Useful Life (Years) | 5 years | ||
RSUs | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Award vesting period | 4 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 39,918,307 | 30,630,829 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 22,059,513 | 22,716,476 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities (in shares) | 17,858,794 | 7,914,353 |
BALANCE SHEET COMPONENTS - Sche
BALANCE SHEET COMPONENTS - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid gift card costs | $ 3,071 | $ 4,001 |
Prepaid software | 1,589 | 1,386 |
Prepaid insurance | 48 | 150 |
Prepaid marketing | 105 | 57 |
Other | 364 | 511 |
Total prepaid expenses and other current assets | $ 5,177 | $ 6,105 |
BALANCE SHEET COMPONENTS - Sc_2
BALANCE SHEET COMPONENTS - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 3,275 | $ 3,267 |
Less: accumulated depreciation and amortization | (2,925) | (2,854) |
Total property and equipment, net | 350 | 413 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Total | 2,008 | 2,001 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 660 | 660 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 607 | $ 606 |
BALANCE SHEET COMPONENTS - Narr
BALANCE SHEET COMPONENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Depreciation and amortization expense | $ 0.1 | ||
Capitalized internally developed software costs | 1.5 | $ 1.7 | |
Capitalized software amortization expense | 0.8 | $ 0.4 | |
Capitalized software accumulated amortization | $ 4.6 | $ 3.8 |
BALANCE SHEET COMPONENTS - Sc_3
BALANCE SHEET COMPONENTS - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued compensation | $ 2,612 | $ 4,057 |
Accrued gift card liability | 3,492 | 5,390 |
Accrued vendor costs | 3,301 | 2,036 |
Performance guarantee liability | 1,175 | 1,150 |
Other | 581 | 423 |
Total accrued expenses and other current liabilities | $ 11,161 | $ 13,056 |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 5,478 | $ 5,478 |
Accumulated Amortization | (2,922) | (2,648) |
Total | $ 2,556 | $ 2,830 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 5 years | 5 years |
Gross | $ 4,878 | $ 4,878 |
Accumulated Amortization | (2,722) | (2,478) |
Total | $ 2,156 | $ 2,400 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (Years) | 5 years | 5 years |
Gross | $ 600 | $ 600 |
Accumulated Amortization | (200) | (170) |
Total | $ 400 | $ 430 |
INTANGIBLE ASSETS - Narrative (
INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 0.3 | $ 0.3 |
INTANGIBLE ASSETS - Schedule _2
INTANGIBLE ASSETS - Schedule of Estimated Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2023 (remaining nine months) | $ 696 | |
2024 | 720 | |
2025 | 720 | |
2026 | 420 | |
Total | $ 2,556 | $ 2,830 |
REVENUE AND DEFERRED REVENUE -
REVENUE AND DEFERRED REVENUE - Schedule of Revenue by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 14,336 | $ 12,687 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 13,826 | 11,933 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 510 | $ 754 |
REVENUE AND DEFERRED REVENUE _2
REVENUE AND DEFERRED REVENUE - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||
Performance guarantee liability | $ 1,175,000 | $ 1,150,000 | |
Capitalized sales commissions | 100,000 | $ 100,000 | |
Amortization of capitalized sales commissions | 184,000 | $ 64,000 | |
Contract assets | $ 0 | $ 0 |
REVENUE AND DEFERRED REVENUE _3
REVENUE AND DEFERRED REVENUE - Deferred Revenue Balances Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Contract with Customer, Liability [Roll Forward] | ||
Beginning balance | $ 16,344 | $ 13,528 |
Additional amounts deferred | 19,431 | 16,181 |
Revenue recognized | (14,336) | (12,687) |
Ending balance | $ 21,439 | $ 17,022 |
STOCKHOLDERS_ EQUITY AND STOC_3
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Schedule of Common Stock Reserved for Future Issuance (Details) - shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class of Stock [Line Items] | ||
Total common shares reserved for future issuance (in shares) | 56,853,567 | 54,281,114 |
Common stock options and restricted stock units outstanding | ||
Class of Stock [Line Items] | ||
Total common shares reserved for future issuance (in shares) | 39,918,307 | 36,145,165 |
Common stock and restricted stock units available for grant | ||
Class of Stock [Line Items] | ||
Total common shares reserved for future issuance (in shares) | 16,935,260 | 18,135,949 |
STOCKHOLDERS_ EQUITY AND STOC_4
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Weighted Average Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rates, minimum | 0% | 1.67% |
Risk-free interest rates, maximum | 0% | 1.92% |
Expected term (in years) | 0 years | |
Dividend rate | 0% | 0% |
Volatility | 0% | 74.40% |
Minimum | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Estimated per share value of common stock (in dollars per share) | $ 0 | $ 0.19 |
Expected term (in years) | 5 years 7 months 6 days | |
Maximum | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Estimated per share value of common stock (in dollars per share) | $ 0 | $ 0.22 |
STOCKHOLDERS_ EQUITY AND STOC_5
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation | $ 367 | $ 592 |
Cost of revenue | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation | 62 | 103 |
Sales and marketing | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation | 93 | 152 |
Research and development | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation | 144 | 184 |
General and administrative | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Total stock-based compensation | $ 68 | $ 153 |
STOCKHOLDERS_ EQUITY AND STOC_6
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Options Outstanding | |||
Outstanding at December 31, 2021 (in shares) | 26,753,357 | ||
Options granted (in shares) | 0 | ||
Options forfeited (in shares) | (2,848,469) | ||
Options expired (in shares) | (1,757,375) | ||
Options exercised (in shares) | (88,000) | ||
Outstanding at September 30, 2021 (in shares) | 22,059,513 | ||
Weighted-Average Exercise Price | |||
Options outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 0.33 | $ 0.38 | |
Options granted (in dollars per share) | 0 | ||
Options forfeited (in dollars per share) | 0.59 | ||
Options expired (in dollars per share) | 0.65 | ||
Options exercised (in dollars per share) | $ 0.14 | ||
Stock Options Additional Disclosures | |||
Options outstanding, Weighted-Average Remaining Contractual Life | 6 years 4 months 24 days | 7 years 3 months 25 days | |
Options outstanding, Aggregate Intrinsic Value | $ 197 | $ 34 | |
Options outstanding, vested and expected to vest (in shares) | 20,154,724 | ||
Options outstanding, vested or expected to vest, Weighted-Average Exercise Price (in dollars per share) | $ 0.35 | ||
Options outstanding, vested and expected to vest, Weighted-Average Remaining Contractual Life | 6 years 1 month 13 days | ||
Options outstanding, vested or expected to vest, Aggregate Intrinsic Value | $ 171 | ||
Options outstanding, exercisable (in shares) | 10,362,077 | ||
Options outstanding, exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 0.37 | ||
Options outstanding, exercisable, Weighted-Average Remaining Contractual Life | 3 years 5 months 4 days | ||
Options outstanding, exercisable, Aggregate Intrinsic Value | $ 98 |
STOCKHOLDERS_ EQUITY AND STOC_7
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Compensation costs not yet recognized related to stock options | $ 0.9 |
Stock options | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Period for recognition for compensation costs not yet recognized | 2 years 1 month 28 days |
RSUs | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Period for recognition for compensation costs not yet recognized | 2 years 5 months 8 days |
Compensation costs not yet recognized related to RSUs | $ 1.7 |
STOCKHOLDERS_ EQUITY AND STOC_8
STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION - Restricted Stock Unit Activity (Details) - RSUs | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | shares | 9,391,808 |
Restricted stock units granted (in shares) | shares | 11,735,200 |
Restricted stock units vested (in shares) | shares | (798,863) |
Restricted stock units forfeited (in shares) | shares | (2,469,351) |
Ending balance (in shares) | shares | 17,858,794 |
Weighted-Average | |
Beginning balance (in dollars per share) | $ / shares | $ 0.32 |
Restricted stock units granted, Weighted average grant date fair value (in dollars per share) | $ / shares | 0.15 |
Restricted stock units vested, Weighted average grant date fair value (in dollars per share) | $ / shares | 0.38 |
Restricted stock units forfeited, Weighted average grant date fair value (in dollars per share) | $ / shares | 0.37 |
Ending balance (in dollars per share) | $ / shares | $ 0.23 |
LEASES - Lease Information (Det
LEASES - Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Leases [Abstract] | |||
Weighted-average remaining lease term (in years) for operating leases | 7 months 6 days | 9 months 18 days | |
Weighted-average discount rate | 6% | 6% | |
Operating lease costs | $ 519 | $ 400 | |
Expenses for variable payments | 156 | 100 | |
Cash paid for operating lease liabilities | $ 423 | $ 400 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Short-term lease cost | $ 0.1 | $ 0.1 |
LEASES - Schedule of Future Ope
LEASES - Schedule of Future Operating Lease Payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Lessee, Operating Lease, Liability, to be Paid [Abstract] | |
2023 (remaining nine months) | $ 939 |
2024 | 39 |
Thereafter | 0 |
Total | 978 |
Less: Imputed interest | (18) |
Total operating lease liabilities | $ 960 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - Revolving Credit Facility - Line of Credit - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Apr. 30, 2023 | |
Line of Credit Facility [Line Items] | ||
Current revolving line of credit | $ 6 | |
Revolving credit facility | $ 6 | |
Floor rate | 2.50% | |
Stated interest rate | 2.50% | |
Net loan availability | $ 3.3 | |
Total debt outstanding | $ 1.2 | |
Subsequent Event | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility | $ 10 | |
Net loan availability | $ 2.7 | |
Secured Overnight Financing Rate (SOFR) | ||
Line of Credit Facility [Line Items] | ||
Variable interest rate | 2.50% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Revolving Credit Facility - Line of Credit - USD ($) $ in Millions | Apr. 30, 2023 | Mar. 31, 2023 |
Subsequent Event [Line Items] | ||
Revolving credit facility | $ 6 | |
Net loan availability | $ 3.3 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Revolving credit facility | $ 10 | |
Net loan availability | $ 2.7 |