Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates Risks and Uncertainties • Impact of LIBOR Phase-Out phase-out • Impact of COVID-19 COVID-19 COVID-19 COVID-19 in-home in-home in-home pre-COVID The Company has applied for loans under programs offered by the governmental agencies in the United States and in the United Kingdom. In addition, the Company furloughed employees in the U.K. beginning in April through August 2020 and again starting January 2021 through August 2021. See Note 8 for additional information on the Paycheck Protection Program offered by the Small Business Administration under the CARES Act established by the United States federal government. For the U.K. operations, during the year ended December 31, 2021 and 2020 the Company recorded reimbursed costs of approximately £0.3 million ($0.4 million) and £0.8 million ($1.1 million), respectively, under the Coronavirus Job Retention Scheme (“CJRS”) set up by the U.K. government to help employers pay the wages of those employees who would otherwise have been laid off during the coronavirus outbreak but under the CJRS were furloughed instead. This program reimbursed the Company for 80% of the compensation expense plus national insurance and certain benefits paid to the furloughed employees, resulting in lower salary expense for the Company. The Company recorded the reimbursed amounts as reductions to the associated expenses. The Company expects to receive tax-related COVID-19 The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 COVID-19 Foreign Currency Segment Information Segment Reporting are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker (“CODM”) is our Chief Executive Officer. The Company has two operating and reportable segments: North America and Europe. Segment information is presented in the same manner that the CODM reviews the operating results in assessing performance and allocating resources. Cash and Cash Equivalents Restricted Cash The reconciliation of cash and cash equivalents and restricted cash is as follows (in thousands): December 31, 2021 2020 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 85,836 $ 58,452 Restricted cash 1,710 5,494 Total cash, cash equivalents and restricted cash $ 87,546 $ 63,946 Accounts Receivable and Allowance for Doubtful Accounts Property and Equipment, Net Property and Equipment Useful Life Office equipment 3 years Computer equipment 3 years Vehicles 3 years Vehicle equipment 4 years Leasehold improvements Shorter of estimated life of the asset or remaining lease term Furniture and fixtures 5 years Intangible Assets, Net Debt Issuance Costs Impairment of Long-Lived Assets Property, Plant and Equipment Classification of Redeemable Convertible Preferred Stock Revenue Recognition set-up, Revenue from Contracts with Customers, • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies a performance obligation. Each customer contract contains only one performance obligation, which is a stand-ready obligation for the Company’s Experts to provide visits to Consumers throughout the Company’s contractual term. The stand-ready obligation consists of a series of distinct services that are substantially the same and have the same pattern of transfer, represented as visits provided to Consumers satisfied over time. Customer payments are due when control of services is transferred to the customer and are not conditional on anything other than payment terms, which typically are less than 60 days. No material contract asset or liabilities exist for any period reported within these consolidated financial statements. The transaction prices of the Company’s contracts are entirely variable, as the number of visits and the specific services provided at each visit are unknown at contract inception. Each contract includes pricing whereby the Company and the customer agree to payments for various elements of a visit, which generally include the base fee for conducting the visit and delivering product, as well as incremental amounts for add-ons From time to time, the Company’s Experts sell a Consumer incremental services on behalf of the customer during a visit. Certain of the Company’s contracts contain provisions that allow for a chargeback by the customer of the Company’s fee for selling the incremental service if the Consumer cancels such services within a specified period from the visit. Chargebacks are recognized as a reduction of revenue, in the period such visit occurs, using an estimate derived from historical information regarding Consumer cancelations of specific services as well as real-time information provided by the customer. As of December 31, 2021 and 2020, the Company has recorded $8.6 million and $5.4 million, respectively, in chargeback estimates related to such services, which are presented as a reduction of revenue in the consolidated statements of operations and comprehensive loss and as a reduction to accounts receivable, net, in the consolidated balance sheets, as the contractual right of offset exists. Changes in the chargeback accounts were as follows (in thousands): Chargebacks Balance as of January 1, 2020 $ 2,178 Provision 8,981 Credits/payments made (5,763 ) Balance as of December 31, 2020 5,396 Provision 16,841 Credits/payments made (13,646 ) Balance as of December 31, 2021 $ 8,591 The Company applies the practical expedient to not disclose information about its remaining performance obligations in contracts with original expected durations of one year or less or amounts attributable to the variable consideration that solely relate to future services. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The Company disaggregates its revenue from contracts with customers by reportable segment, as it believes this best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors, as well as company expansion into international markets. The Company’s revenue is attributable to its operations in North America and Europe. Refer to Note 15 for revenue disaggregated by reportable segment. Cost of Revenue Operations and Technology General and Administrative Stock Based Compensation Compensation—Stock Compensation non-cash The weighted-average assumptions used to estimate the fair value of stock options granted during the year is as follows: Years Ended December 31, 2021 2020 Risk-free interest rate 0.86 % 1.18 % Expected term (in years) 5.95 6.01 Expected volatility 59.5 % 48.4 % Expected dividend yield — % — % Fair value of common stock $ 9.02 $ 2.59 Leases Income Taxes The Company records a valuation allowance to reduce its deferred tax assets to the net amount that the Company believes is more-likely-than-not and ongoing tax planning strategies. If in the future, the Company determines that it would be able to realize the deferred tax assets, the Company may reduce its valuation allowance, which may result in income tax benefits to be recognized in the Company’s consolidated statement of operations and comprehensive loss. The Company accounts for uncertain tax positions using a two-step more-likely-than-not more-likely-than-not The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of the provision for income tax expense in the consolidated statement of operations and comprehensive loss. Regarding the Global Intangible Low Taxed Income (“GILTI”) rules enacted as part of the Tax Cuts and Jobs Act of 2017, the Company is required to make an accounting policy election to either treat taxes due on future GILTI inclusions in U.S. taxable income as a current period expense when incurred or reflect such portion of the future GILTI inclusions in U.S. taxable income that relate to existing basis differences in the Company’s current measurement of deferred taxes. The Company has made a policy election to treat GILTI taxes as a current period expense. Net Loss Per Share two-class Under the two-class Fair Value Measurements Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 Level 2 Level 3 The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. The Company’s consolidated financial instruments consist of accounts receivable, accounts payable and accrued expenses and are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. The consolidated financial statements also include fair value level 1, 2 and 3 measurements of cash and cash equivalents, investments, debt and warrant liabilities. Derivative Warrant Liabilities 815-15. re-assessed The Company assumed 9,343,750 public warrants and 6,316,667 private placement warrants issued to MRAC’s sponsor upon the Merger, all of which were issued in connection with MRAC’s initial public offering. Subsequent to the Merger and as of December 31, 2021, all of these warrants remained outstanding. All of the Company’s outstanding warrants are recognized as derivative liabilities in accordance with ASC 815-40. re-measurement Related Parties members of the Company’s Board of Directors serve as directors, executive officers, or are investors in, companies that are customers or vendors of the Company. With the exception of the Backstop Agreements and the LCH Transaction as defined and discussed in Note 3, and the 2020 Convertible Loan and 2021 Convertible Loan as defined and discussed in Note 8, related party transactions Concentrations of Credit Risk The Company generally does not require collateral to secure accounts receivable. The risk with respect to accounts receivable is mitigated by credit evaluations the Company performs on its customers and by the short duration of its payment terms for the majority of the Company’s customer contracts. Additionally, the Company factors a substantial portion of its accounts receivable for certain customers, such that the Company sells these receivables balances to a third-party banking institution at a discount without further recourse to the Company, thereby reducing the risk related to these receivables even further. These receivable balances which are transferred to a third party are accounted for under ASC 860, Transfers and Servicing (“ASC 860”) Transaction costs paid-in Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use 350-40): 2018-15 Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases right-of-use 2020-05, 2016-02 As such, the Company has elected the following: • the package of practical expedients which allows for not reassessing (1) whether existing contracts contain leases, (2) the lease classification for existing leases, and (3) whether existing initial direct costs meet the new definition; • the practical expedient to not separate non-lease non-lease • the practical expedient not to recognize right-of-use The Company has not elected the hindsight practical expedient. We expect the adoption on January 1, 2022 will result in the recognition of total righ asset lease liabilitie s million, primarily related to real estate. The recognition, measurement, and presentation of expenses and cash flows by a lessee will not significantly change from previous guidance; accordingly, the impact on our results of operations as reflected in our Consolidated Statements of Operations is not expected to be material. Accordingly, the Company does not expect the adoption of Topic 842 to have a material impact to the consolidated statements of operations or on its cash flows from operating, investing or financing activities. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, 2016-13 In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) 2019-12 In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) 815-40): 2020-06 2020-06 ASU 2020-06 In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Company for the year beginning after December 15, 2023, with early adoption permitted. The Company will apply the guidance in ASU 2021-08 |